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Subscribe →JGBs are approaching what could be a significant breakout. I’m not sure how this will resolve, but ultimately, this appears to be a bullish pattern for the 10-year JGB, and a breakout could send rates significantly higher.
Last night, we surpassed the highs seen in February, making this a key development to watch.
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The 5-Yr JGB is also getting close to those February highs.
What matters here is the spread with US rates, because any narrowing could lead USDJPY to decline, potentially breaking below the critical 140 level, which has been a significant support area.
With Alphabet and Tesla reporting results, we saw the 1-month implied correlation index rise today, and I expect this index to now begin trending higher as we conclude the big earnings next week.
I’ve noticed that Wingstop has struggled lately, seemingly losing support at $315, likely influenced by Chipotle’s weak results. Still, the stock has been under pressure for a while now, and I can’t help but wonder if this signals something more profound about the broader market’s appetite for risk.
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It is essentially the same thing when it comes to Coreweave, which fell below $125 today, which was support. With support broken, if the stock doesn’t snap back quickly, it probably has further to fall.
Tesla closed just above its uptrend line after testing it earlier. The stock bounced because of the $300 put wall, but I’m not sure that will hold tomorrow. A break below this trend line likely means a pullback into the low $270s.
The IWM continues to knock on the door of resistance around $225, but can’t manage to break through. A break above this resistance would be bullish for the IWM, potentially leading to a climb back toward the November 2024 highs. However, volume is declining, momentum is fading, and it looks like it’s beginning to form a wedge pattern. So, while a breakout and push higher would be encouraging, I’m skeptical it has the strength to pull it off. Instead, it appears to be losing steam, making a potential pullback to $212 look more likely.
-Mike
Terms By ChatGPT
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JGB (Japanese Government Bond): Debt securities issued by the government of Japan, with yields influencing broader financial market trends.
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USDJPY: Currency pair representing the exchange rate between the US dollar (USD) and Japanese yen (JPY).
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Implied Correlation Index: A measure reflecting market expectations of how closely individual stocks will move together; rising correlations typically signal uncertainty or volatility around events like earnings.
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Put Wall: A level in options trading marked by heavy open interest in put options, often providing temporary support to stock prices.
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IWM: Ticker symbol for the iShares Russell 2000 ETF, representing small-cap US stocks.
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Wedge Pattern: A chart pattern used in technical analysis indicating consolidation, with narrowing price action potentially signaling upcoming breakouts or breakdowns.
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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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