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Stocks Rally And Now It Is Getting....

By Michael KramerMarket OverviewOct 05, 2022 03:19AM ET
www.investing.com/analysis/stocks-rally-and-now-it-is-getting-200630665
Stocks Rally And Now It Is Getting....
By Michael Kramer   |  Oct 05, 2022 03:19AM ET
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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
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.

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 Treasuries
S&P Vs. 10-Year Treasuries
Disclaimer:
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.
Stocks Rally And Now It Is Getting....
 

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Stocks Rally And Now It Is Getting....

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Comments (23)
ma ha
ma ha Oct 06, 2022 4:39AM ET
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awesome chaets. good stuff thank you!
Mario tragik
Mario tragik Oct 05, 2022 4:18PM ET
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Hey Kramaaaa, come out come out whenever you are. so what happen? another wave of buying by stupid bad bulls? bad greedy bulls bad.
Fred Berdach
Fred Berdach Oct 05, 2022 11:39AM ET
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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 .
David Bud
David Bud Oct 05, 2022 10:17AM ET
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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.
Logan CALDER
Logan CALDER Oct 05, 2022 10:17AM ET
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Same, I added blk and gnrc today, buying things I don't mind sitting on long term
Logan CALDER
Logan CALDER Oct 05, 2022 10:06AM ET
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So all of you talking about him being wrong must be going long very hard today?...lol, I bet you dont...
Ross Dre
Ross Dre Oct 05, 2022 9:18AM ET
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He’s right again. But the “stupid rally” comment prob should have been reserved or reworded. Love Kramer’s work though!
Joseph Troncale
Joseph Troncale Oct 05, 2022 9:14AM ET
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I’m a bear all the way…lots more room to fall.
Casador Del Oso
Casador Del Oso Oct 05, 2022 9:12AM ET
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I don't get it. If you don't like Kramer why read his articles and then down his analysis? Gaslighting 101.
Bob Smith
Bob Smith Oct 05, 2022 8:54AM ET
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"I can’t be right all the time".  Lol.  Amazing!
Mario tragik
Mario tragik Oct 05, 2022 8:46AM ET
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"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.
 
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