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Stocks Rally And Now It Is Getting....

ByMichael Kramer
Published 10/05/2022, 03:19 AM
Updated 09/20/2023, 06:34 AM

I was thinking about the market and what is potentially behind this stupid rally, and at heart, this seems like nothing more than an oversold bounce, given a lot of bond market dislocation last week. Bonds have started to settle down.

Today we will get the ISM services, and estimates are for a reading of 56. The ADP job report is also expected to show 200,000 new jobs in September. But the most important data will be the jobs report on Friday, with jobs expected to rise by 263,000 and an unemployment rate of 3.7%.

So this data is going to have an impact one way or another. My thinking is that rates are closer to their lows at this point.

S&P 500

Looking at the S&P 500, there are many reasons to think this rally ends around 3,800 or goes higher to around 3,950. At this point, I can’t come up with enough to feel the rally extends to 3,950. Additionally, if it went all the way to 3,950, my five wave count lower would be invalidated. So, I am sticking with my view for an S&P 500 to head lower to 3,500.

At this point, the rally has been a 38.5% retracement of wave three down.

S&P Daily

Maybe I will be wrong; I can’t be right all the time. But even with the move lower in yields, the spread between the S&P 500 earning yields and the 10-year Treasury is right back to its lows on September 26. I don’t know precisely where the ERP should be, but something about it being near the equivalents of January 2018, October 2018, and March 2021 doesn’t feel right to me. In 2018, there were stock market tops, and in 2021, it was a peak in the 10-year rate.
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At this point, I’m more willing to bet that the 10-year yield doesn’t have too much further fall. This would mean equity values are too high, and if the ERP rises, it will be due to stock prices tumbling.

S&P Vs. 10-Year TreasuriesDisclaimer: Charts used with the permission of Bloomberg Finance LP. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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Latest comments

awesome chaets. good stuff thank you!
Hey Kramaaaa, come out come out whenever you are. so what happen? another wave of buying by stupid bad bulls? bad greedy bulls bad.
All the huge artificial money printing that was pumped into the global economy by shortsighted central bankers backed by politicians more interested in their reelection must be pumped out of the economy . We are a far cry from the required levels . I would not be surprised if the markets sharply fall an additional 20% to 35% by mid november .Granted It sounds farfetched but the fundamentals and the understanding of the market current structure and technicals and still extreme overevaluation all point in that direction .Let’s closely watch the PPI and CPI next week .Buying stocks now is a very risky business .
I still think this hasn't done hitting the bottom, but I've been buying back in on several good stocks that have taken a 20-30% haircut for no reason other than general market selloff. I'll just keep adding positions a bit along the way and buy puts after the small relief rallies to hedge.
Same, I added blk and gnrc today, buying things I don't mind sitting on long term
So all of you talking about him being wrong must be going long very hard today?...lol, I bet you dont...
He’s right again. But the “stupid rally” comment prob should have been reserved or reworded. Love Kramer’s work though!
I’m a bear all the way…lots more room to fall.
I don't get it. If you don't like Kramer why read his articles and then down his analysis? Gaslighting 101.
"I can’t be right all the time".  Lol.  Amazing!
"behind this STUPID rally" lol Kramer you are really loosing it. Come on, I am not your fan precisely because of this. You are a good analyst, biased but you do your homework. Cant you just be objective? If you can't in this business...oh boy you in for a ride. what is it to you if the market goes up and down, sideways or spirals? Its like if a weather man its pissed the next day because he couldn't predict the weather , and says well we had this stupid sunny day when we were expecting a storm 😅Thats how you sound like. In your bear thesis you only have one part, some factors but you don't hsve them all you can't see them all specially if you are this biased, even then at the end you miss the only sure thing there is. many people don't like this truth that anything can happen in the markets at any point in time.
This guy is wrong all of the time
No he is wrong all the time it’s good for us to trade against his post too easy
"Maybe I will be wrong; I can’t be right all the time" this line made me laugh. a quick search of your articles shows you are WRONG more times than you are right
Lol people that read charts have the most psychological bias and justification for things I have ever seen
Bears don't realize that sellers don't have enough profit to force another major move down. Weak hands already took it all
Lmao "stupid" rally huh? Take your losses like a man. Maybe you didn't notice the UN calling out the central bankersters for being reckless? Their independence is at stake if they cuase a global recession
Jason. Bull and Bears Shorts and Longs are labels after the fact. Fundamentals and values are facts. the tactic of pump and dump is old so is short and pump. point is mellifluous fake named accounts with name calling tendencies have little credibility in my book. show your work. did you not learn anything in kindergarten?
UN is a defunct entity and does nothing. it is not delving into interest rates to get some press to help its corrupt officials. FED has already said don't hope until the QT is done. grow uo mollies
facts and fundamentals can go down the drain in a game that is speculative by nature my friend. and its always been like this since the start of trade. that is why bubbles and cycles exists that is why no one can time them. even michael burry. i like a part in the movie where he says ... I might be early, but I am not wrong. ITS THE SAME THING. and yep from a trading perspective it is.
Have you switched to EWP? Thanks for your work!
Nice everyone u are wrong after you post this time you said stupid bounce hhhah that y I said bet against your post
I think you are right with your count down (1-5) and a move close to lows (3) has to be expected, but the latest move has to be considered as part of the ABC correction. Your ABC is the A, currently we are in B, waiting for the C.
It is not a stupid rally. It is dead cat bounce. Normal in bear market. Obviously we won't see S&P touches 4000 any time soon, we have problematic earning season, overbought major stocks. And correction time has arrived. Thanks for the article, I already reduced shorts and going to increase shorts investments (if you call this gambling game an investment) with every 2% up of the index. I expect s&p to touch 3400 (below 3450, I will start pivot my "investments".. with no expectation for a huge rally back to 4800 or something like that)
Right but I am sure you will know the difference between a DCB and the last drop 😉obviously
Stupid bounce? That means everything you sold made money these last 2 days………
Well the current Elliott wave theory is the most probable outcome. 38% retracement, typical for wave 4. I can agree that SP500 starts the wave 5 down. The H&S pattern also point to 3500s.
For this first time your trying to be nostradamus in an article. Nevertheless excellent article and take home for me is that any close above 3950 should strengthen a bullish sebtiment.
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