Entering text into the input field will update the search result below

Here We Are Again

Feb. 04, 2021 7:20 PM ETAdobe Inc. (ADBE), DOCU, MSFT3 Comments
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

February 3, 2021



Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL


So here we are again. The VIX is back to 21.8, basically the very bottom of the range. Meanwhile, the S&P 500 is back at the top of the range. No pause in between, just a vacuum in both directions. The market's behavior is beyond strange; it functions in one of the mechanical, algorithmic manors I can remember.

The amount of options volume that trades daily is jaw-dropping. But that is what keeps implied volatility levels and skew extremely high when looking across all stocks. All of this options volume will make it very difficult for the VIX to return to pre-pandemic levels because Implied volatility will remain high for dealers to properly account for all the added risks they are taking on.

So with the VIX at 21.8, maybe it drops to 20. I doubt it drops back to 14, and if that is the case, how much further can the S&P 500 index rise? It a tough question, but clearly, much of the energy the S&P 500 index generates is from implied volatility levels falling. If the VIX is at the bottom of the range, then implied volatility levels aren't falling.

The S&P 500 filled the gap yesterday along with a weak close. Today, the index was able to move right thru that 3,850 level like a hot knife through butter. So it means the next level to towards would come around 3,890 to 3,900. That is where the trend line was broken late last week. That would be the place the index could pause.

DocuSign (DOCU)

DocuSign has been trading in a very well defined trading channel. Whether the stock should be valued here or not is a separate question, but the upper end of the range is around $275, and that is probably where it will head over the short-term.

Adobe (ADBE)

Adobe might have a pretty bullish pattern forming. It needs to clear about $500 for a breakout.

Microsoft (MSFT)

Microsoft still has a fairly good shot of making it to $255.


Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.