Have Stocks Simply Stalled Out?
Growth, Long/Short Equity, Momentum, Macro
Seeking Alpha Analyst Since 2014
I am Michael Kramer, the founder of Mott Capital Management and creator of Reading The Markets, an SA Marketplace service. I focus on long-only macro themes and trends, look for long-term thematic growth investments, and use options data to find unusual activity.
I use my over 25 years of experience as a buy-side trader, analyst, and portfolio manager, to explain the twists and turns of the stock market and where it may be heading next. Additionally, I use data from top vendors to formulate my analysis, including sell-side analyst estimates and research, newsfeeds, in-depth options data, and gamma levels.
Stocks – GE, T, TSLA, GOOGL, FB
Macro – SPY, IWM
Mike’s Reading The Markets (RTM) Premium Content – Get An Extra 20% Off Thru January 1.
- Midday - Tesla Breaks Out
- Morning Note- Risk-On May Be In Trouble
- Midday Note – The Canaries Are Growing Louder
- Morning Note – Implied Volatility Is Rising
- RTM MIDDAY- Stocks Are Trying To Break Out
- RTM MORNING NOTE: Stocks Will Battle The Top End Of The Range.
- RTM Macro Note – New Leadership May Need To Emerge To Keep The Rally Alive
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TSLA AND GOOGLE
Stocks barely rose on December 30, and at this point, nothing eventful is likely to happen tomorrow. There is always a chance something happens, but I think people are just more than happy to wrap this year up and move on. I guess we have to ask ourselves, what's next? More stimulus? Maybe. At some, too much stimulus will not be a good thing for the equity market. (Premium content - Morning Note- Risk-On May Be In Trouble, or Midday Note – The Canaries Are Growing Louder )
S&P 500 (SPY)
The S&P 500 still has a gap down around 3,700 that needs to be filled from Monday's opening. It will not surprise me if that gap gets filled tomorrow. A rising wedge pattern has formed over the past few days on the hourly charts, and that would suggest lower prices come tomorrow.
The IWM doesn't look great, it broke a massive uptrend, and you can see the RSI is fading pretty fast. But what is more interesting is that of the top 10 holdings, two are among the most shorted, based on data from Refinitiv. Plug Power (PLUG) and Novavax (NVAX). I find it interesting because the most shorted index has clearly outperformed everything this year; it nearly overtook the NASDAQ 100.
We have reviewed the price action for the last couple of weeks in the subscriber section on Sundays. I added a spreadsheet that has a list of the tickers as well. So I will try to get some more data to compare. Of course, it doesn't say much about the quality of the index at this point that 2 of the top holding ten are among the most shorted in the market. It certainly could help to explain why Russell has soared so much.
Tesla had quiet the day rising back to $695; of course, it stopped right around there, bringing out the double top people. It looks more like an ascending triangle then a double top. Momentum is still bullish, and if I projected things right, a break out at $695 sends the stock higher towards $730. Of course, we should get Tesla's delivery numbers over the weekend. (Subscriber content - Midday - Tesla Breaks Out)
The Alphabet chart doesn't look too encouraging, with a potential head and shoulders pattern forming. I certainly hope not, since I own the thing. Unfortunately, we won't find out until it falls below $1700.
Facebook fell below the bottom of the triangle, and it looks like it may have confirmed that bearish pattern today. If it is confirmed, then $259 is likely the next stop, potentially worse than that to follow.
AT&T may be heading lower, too, with that giant gap left to fill around $27.50. I explain it in this story in more detail (should be free to read - With No Growth Drivers, AT&T's Stock Will Suffer In 2021)
GE looks somewhat interesting with a potential bull flag and a chance another meaningful leg higher. I will have to look more closely tomorrow.
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