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1/20/21
STOCKS – AMZN, AAPL, NFLX, ROKU
MACRO – SPY, VXX
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Update Board 1.20.21 P&G Breakdown, Tesla May Head Higher
- Intel May Jump Following Quarterly Results
- Midday – One Giant Feedback Loop
- Morning Note – Wait For Implied Vol To Break
- Analysis: Netflix Delivers Blockbuster Results
- Midday: The Craziness Continues
- Morning Note – Tailwinds Returning To Equities?
- A Strong Dollar May Crush The Emerging Markets Trade
- Earnings Previews For The Week Of January 18
- T.W.A – Yields Pressuring Mega-Cap Stocks
Stocks rose on January 20, with the S&P 500 gaining about 1.4% to close at a new high, 3,851. Meanwhile, the Qs traded higher to around $323.75. Today’s move-up helped to bring the VIX index down to 21.6, which has been the very lower bound of the VIX trading range.
We really need to ask ourselves this question, are we in a new higher implied volatility regime? This is really important because if Vol still has much to fall, then the S&P 500 could see an epic melt-up. If this is the floor is in the VIX, then a melt-up scenario is less likely, with the better odds being a pullback.
S&P 500 (SPY)
The S&P 500 is nearing the upper end of the trading range, but the RSI is only at 67. So it would not surprise me to see the index push a little bit higher. Maybe 3,870 or so. There is still a good chance for 3950, but it all depends on how fast the market moves higher from here. If it can do so at an orderly pace, then odds for higher 3950 grow better. A lot of that will be determined by where the VIX goes. So this why it is critical to understand the VIX’s place. I am beginning to believe we are in a volatility regime change, and VOL will stay higher; you will see why I feel that way as we move forward in this write-up.
Apple (AAPL)
Apple rose by around 3% today, but that wasn’t all that went up. Call volume surged today, and 30-day implied VOL rose to 41% from 39.5% yesterday.
Amazon (AMZN)
Amazon rose by more than 4.4% today, and it saw its highest call volume in months, wits it’s Implied Vol rising 38% from 37.4%.
Typically, with big moves higher in stocks, you see Volatility come down. Now earnings are next week for Apple and the week after for Amazon. But it seems more likely that on a big up day with heavy call volume rising Implied volatility has more to do with market maker pricing. So, if we stay in this present state of big option trading, volatility will have a tough time come in.
Netflix (NFLX)
I thought Netflix results were outstanding. The company appears to have turned the operational corner, which managed to get investors to look past the disappointing subscriber growth. The stock finished above $575, which was a huge level of resistance. So this could be a big break out for the stock; it would be ideal for the stock to hold $575 tomorrow. (premium content – Analysis: Netflix Delivers Blockbuster Results – first two weeks free to try, cancel if you hate it!)
Roku (ROKU)
Roku did not benefit at all from Netflix, which was surprising. Roku reminds in ways to Tivo, anyone remembers that? Maybe not an exact comparison, but the similarities are there. Anyway, well see..(Should be free to read – Roku: Just When You Thought The Insanity Couldn’t Get Worse)
Anyway, that will be all-
Mike
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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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