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Stocks rose sharply on Wednesday, only to give it all back by day’s end, basically finishing flat compared to Tuesday’s highs. Despite all the back and forth in the stock market, there’s essentially nothing happening for the third straight day. The 20-day moving average has continued to be a problem area for the S&P 500. I can’t really say what happens in a market this choppy heading into an OPEX date, other than the fact that 6,700 appears to be the short-term call wall and 6,500 is the put wall.
The pattern in the S&P 500 intraday chart resembles a head-and-shoulders formation, which would suggest a drop back to the lows of the day on Tuesday for Thursday. If that’s the case, then fine. If not—well, then I got one wrong this week.
More importantly, there was significant liquidity strain in the market today, and I’m not sure it will improve tomorrow with another Treasury settlement date coming up. About $40 billion settled today, and another $23 billion is set to settle tomorrow. On Tuesday, there was already a $29 billion settlement.
This pushed the average DTCC repo rate to 4.32%, which is well above the upper end of the Fed’s effective funds rate and above the rate on the standing repo facility, at 4.25%. Transaction volume also reached nearly $85 billion — the highest level since June.
The elevated repo rate sent $6.75 billion into the standing repo facility this morning, marking the highest volume at the facility since June 30.
Gold implied volatility levels rose to 27.1 today — the highest since April 2025, and comparable to peaks seen in March 2022, August 2020, March 2020, and February 2016. The outcomes for gold following those periods were generally not good. At this point, it’s very much a momentum and speculative trade.
Additionally, gold has a history of rising by 100% of the previous trend. If so, then we are pretty much there.
-Mike
Glossary by ChatGPT
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Call Wall – A strike price level in options markets where large concentrations of call open interest may act as a resistance point.
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DTCC (Depository Trust & Clearing Corporation) – A financial services firm providing clearing, settlement, and information services for financial markets.
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Head-and-Shoulders Formation – A technical chart pattern signaling a potential reversal in trend direction, typically from bullish to bearish.
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Implied Volatility – The market’s forecast of a security’s future volatility derived from options pricing.
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OPEX (Options Expiration) – The date when listed options contracts expire, often leading to heightened market volatility.
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Put Wall – A strike price level in options markets where large concentrations of put open interest may act as a support point.
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Repo Rate (Repurchase Agreement Rate) – The interest rate charged in short-term lending arrangements where securities are sold and later repurchased.
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Standing Repo Facility – A Federal Reserve tool that provides liquidity by offering overnight loans to eligible counterparties in exchange for high-quality collateral.
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Treasury Settlement – The process by which investors pay for newly issued Treasury securities, temporarily withdrawing liquidity from the financial system.
Disclosure
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
Subscribe to receive this FREE daily commentary directly in your email
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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