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Stocks Lift As The Mechanical Bull Rides Again

By Michael KramerStock MarketsSep 20, 2022 03:37AM ET
www.investing.com/analysis/stocks-lift-as-the-mechanical-bull-rides-again-200630034
Stocks Lift As The Mechanical Bull Rides Again
By Michael Kramer   |  Sep 20, 2022 03:37AM ET
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US500
-0.29%
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TIP
-0.03%
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XBI
+1.36%
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VIX
+1.37%
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+0.95%
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It was a reasonably dull day for the market yesterday, with the S&P 500 flirting around the flat line all day. We did catch a late-day rally, with the index rising around 70 bps. Most of the rally was due to the VIX melting into the end of the day. With Vixperation on Wednesday, I’m not sure there is that much room for the market to rise or fall. It is all just a mechanical piece of the market and not due to buyers suddenly coming alive.

VIX Chart
VIX Chart

But the most important news was that the real yield continued to move higher, and the TIP continued to move lower. The TIP ETF made a new cycle low today, trading around $109.15, and is now back to the pandemic lows and the 2018 lows. It carries a terrible message and one that stocks will likely head lower over the next couple of weeks.

TIP ETF Daily Chart
TIP ETF Daily Chart

Biotech

The XBI had a weak day, dropping by more than 1% despite the end-of-day rally. The biotech sector is very rate sensitive, and with real yields moving sharply higher and at new lows, one would expect to see the XBI dropping and probably going to new lows in the not-to-distant future.

XBI ETF 2-Hr Chart
XBI ETF 2-Hr Chart

ARKK ETF

The ARK Innovation ETF (NYSE:ARKK) also had a bad day, dropping by around 30 bps. Again, this falls into the same category as biotech. The higher real rates climb, the lower the valuation of the long-duration growth stocks that the ARKK ETF owns, which makes the NAV worth less.

ARKK 2-Hr Chart
ARKK 2-Hr Chart

Zoom

We talked about Zoom Video (NASDAQ:ZM) earllier, and it again is down around another 50bps and inching closer to breaking technical support at $76.45.

Zoom Daily Chart
Zoom Daily Chart

Original Post

Stocks Lift As The Mechanical Bull Rides Again
 

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The S&P 500 finished lower by around 20 points yesterday. It was about rising rates and a stronger dollar. Surprisingly, the VIX moved lower by 1%, which is odd, given Federal...

Stocks Lift As The Mechanical Bull Rides Again

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Comments (10)
Kris Jay
Kris Jay Sep 20, 2022 11:09AM ET
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i dont see a rally in this chart
David Bud
David Bud Sep 20, 2022 10:54AM ET
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Simple easy rule: Just inverse Mario and you'll make money.
David Bud
David Bud Sep 20, 2022 9:34AM ET
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Supertard Mario is wrong again. So hilarious.
David Beckham
David Beckham Sep 20, 2022 8:48AM ET
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Just closed my short this morning based on your article and long immediately then it dropped like no bottom nice
David Beckham
David Beckham Sep 20, 2022 8:46AM ET
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When u just give up the market drop again every time you said lower them keep going up today u post an article that going up then drop after nice the best strategy is bet against your post
Mario tragik
Mario tragik Sep 20, 2022 7:54AM ET
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omg kramer just stop. will come back this afternoon as always to tell you you were wrong again.
Kris Jay
Kris Jay Sep 20, 2022 7:54AM ET
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he has guided properly since I started reading in June/July, not sure what you're on about.  Market is indeed going down.  there are small rallies but the trend is down and consistent with further hikes and TIPS market is headed down.   his analysis is far better than "we hit peak inflation" when what we have is now high inflation which will be protracted over multiple quarters with Fed hiking at every meeting to a sustaining 4.5-5% fed rate.
Mario tragik
Mario tragik Sep 20, 2022 7:52AM ET
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omg kramer just stop. will come back this afternoon as always to tell you you were wrong again.
M
M Sep 20, 2022 4:45AM ET
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👍
Stan Flation
Stan Flation Sep 20, 2022 4:11AM ET
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Thanks, Michael!!! It seems actually the higher S&P500 gains, higher hawkish the FED will be!!!
David Beckham
David Beckham Sep 20, 2022 3:39AM ET
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All in short easy short as you said but lost again
Tom Scheuermann
Tom Scheuermann Sep 20, 2022 3:39AM ET
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how are u losing on a short, it has been in a stead downtrend for the last month and since January? I've been short and done very well
Mario tragik
Mario tragik Sep 20, 2022 3:39AM ET
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because its been rallying and he's been stopped out?
Tom Scheuermann
Tom Scheuermann Sep 20, 2022 3:39AM ET
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well then I can't help him. I'm just riding an inverse index fund and making bank. not sure why everyone thinks you are supposed to make money every single day and if u don't make money one day or week it's wrong. on those days I add to my short
Kris Jay
Kris Jay Sep 20, 2022 3:39AM ET
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Mario tragik  where?  what is rallying?  Not NASDAQ or SP500.  do you consider small 0.5% one day gains amongst multiple 1% down days a "rally"?
Mario tragik
Mario tragik Sep 20, 2022 3:39AM ET
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You just said in a comment above "there are small rallies but the trend is down" So yeah, those rallies are the ones I am referring to.
 
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