Mott Capital Management
Michael Kramer is the founder of Mott Capital Management. His unique investment philosophy centers on seeking investment opportunities that are influenced by everyday life activities, and by observing new trends and products that are popular or are trending towards popularity. Additionally, he devotes a significant part of his research to global macroeconomics and central bank policies impacting financial markets. Michael has over 20 years of industry experience began his career in high-risk trading environments, trading both US and international equities. His trading skills coupled with his comprehensive, financial analysis of public companies, have given him a unique perspective on investing, which stands out from analysts who simply look at top-line numbers. In addition to fundamental analysis, Michael also incorporates technical and options market analysis into his research.
Stocks Dump Then Jump As Recession Fears Rise
Yesterday was exciting. The S&P 500 was close to breaking in the morning, but it held. A Head And Shoulders pattern was present on the Intraday charts, and it was close to being confirmed. But the confirmation never happened. The index managed to bounce where it had to around 3,750 to avoid a significant drop.
The S&P 500 continues to struggle at 3,830, and we will have to see if the index can gap higher today, to break that resistance level.
To keep this simple, the selling in the markets appears to have abated when Europe closed—allowing the VIX to go into melting mode, with the VIX closing around 27.5 after peaking around 29.8.
Of course, this persistent move lower in implied volatility helped push the S&P 500 higher and off the lows to finish the day flat after falling by nearly 2%.
The IEF/LQD ratio continues to increase, and typically when this ratio moves up, it indicates tightening financial conditions and increasing volatility in the equity market. It is not a perfect relationship with the VIX, but if this IEF/LQD ratio continues to move higher, I would expect the VIX is going to follow.
Copper prices have been hammered, and the way it is trading, it seems like the global economy is falling off a cliff. If copper doesn’t bounce around this $3.40 level, the next stop of copper could be around $3.20.
Oil prices fell by almost 10% yesterday to close below $100. Oil also closed below that key trend line that started in March 2021 and was resistance for some time and later became support in February 2022. If there is more follow-through to the downside today, that would be nasty for oil, opening the door to a drop to around $80.
PayPal (NASDAQ:PYPL) still has a lot of positive trends going for it, with the bullish reversal pattern and the rising RSI. A jump to around $82 still seems possible for this one.
Roblox (NYSE:RBLX) broke above resistance yesterday at $35.60 and increased to around $40. That makes $45 the next viable spot for the stock in the short term.
Anyway, we will see what today brings.