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 – GM, BA, GS
MACRO – SPY, QQQ, RSP
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Stocks jumped again on December 7 as the VIX fell back to 21.9. This type of price action coupled with implied volatility move lower suggests a short-covering rally from oversold conditions. The move lower in the VIX means that traders were likely closing out put positions which led to market makers buying S&P 500 futures.
But I won't expect the VIX to drop much more from these levels. The front-end of the term structure fell sharply, the rest of the VIX structure moved down less. Suggesting the market is still anticipating higher volatility in the future.
The volatility dump helped the S&P 500 to fill the gap at around the 4,695 area finally, we had spoken about in the past. The pattern today looks a lot like the pattern from November 29 and a few patterns we saw back in September. Most of the time, we have seen the S&P 500 give back the gains and fill the gap at lower levels, which would be around 4,600, with this type of pattern.
I have been working on something new the last few "weeks," and I thought I'd try it out tonight. It has worked reasonably well in the Asian markets, so I will give it a shot. The box in the QQQs suggests the ETF falls back to and fills the gap at $386. If it works, we will see.
S&P EW (RSP)
The gap in the RSP also filled the gap today. The ETF tried to take out the gap but was unable to. The RSP was very sold, falling below 30 on the RSI and the Bollinger band.
Goldman also filled the gap today but could not push beyond it. The trend here remains bearish at this point.
The gap in GM was also filled today, with a lower trend still in place.
The gap in Boeing was also filled today, with a solid downtrend still in place.
That's all today.
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