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Stocks Rip Higher But Nearing A Peak

By Michael KramerStock MarketsAug 04, 2022 03:16AM ET
www.investing.com/analysis/stocks-rip-higher-but-nearing-a-peak-200628041
Stocks Rip Higher But Nearing A Peak
By Michael Kramer   |  Aug 04, 2022 03:16AM ET
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Stocks continued to rally yesterday, as short-covering continued with the S&P 500 up another 1.7%. The most shorted stocks are outperforming by a wide margin. The GS Most shorted index has been up nearly 31 since the middle of June, while the NASDAQ is up around 19%.

Most Shorted Stocks
Most Shorted Stocks

The velocity of the move and the nature of the outperformance tells us a lot about the nature of the rally, which is due to a broad short-covering rally. As I mentioned previously, CTA flows remain favorable to the rally, continuing a bit more. But we are entering a region that is likely approaching the end; we need a few pieces to fall into place, with a decent zone of resistance around the 4175 to 4230 region.

S&P 500 Index, Daily Chart
S&P 500 Index, Daily Chart

Rates likely have to move higher, especially following more hawkish commentary and the reshaping of the Fed Fund Futures curve, which shows the first rate cut doesn’t come until May. Further strengthening the case that rates will need to remain higher for longer was the ISM services report that was better than expected and suggested the real GDP is growing at a 2.4% rate, which is not recessionary.

Fed Funds Rates
Fed Funds Rates

Amazon

Amazon (NASDAQ:AMZN) is now really close to filling the gap; it needs to get just a bit higher.

Amazon Inc, Daily Chart
Amazon Inc, Daily Chart

Shopify

Shopify (NYSE:SHOP) may have finally broken out, clearing a significant hurdle around $40.60. Now, we just have to see if it has the juice to fill the gap at $48.50.

Shopify Inc, Daily Chart
Shopify Inc, Daily Chart

DocuSign

DocuSign (NASDAQ:DOCU) has a similar setup to Shopify but a huge gap to fill up to $88.

DocuSign Inc, Daily Chart
DocuSign Inc, Daily Chart

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Stocks Rip Higher But Nearing A Peak
 

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Stocks Rip Higher But Nearing A Peak

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Comments (9)
Kris Jay
Kris Jay Aug 04, 2022 11:32AM ET
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Kramer may have called this correctly
Steve Herzog
Steve Herzog Aug 04, 2022 10:58AM ET
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Good Lord people, just look at the indices on weekly charts and tell us this is anything but a solid down trend.
Mario tragik
Mario tragik Aug 04, 2022 8:50AM ET
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When you get someone that just have one view one side of the market only, you have to watch out because he will be more that 50%+ wrong all of the time. I follow him just to get the bear side of the coin and then gather bullish data to have a complete picture. but I never lose track of ONE SIMPLE TRUTH that a one sided analysts forget, no matter how prepared they are: ANYTHING CAN HAPPEN IN THE MARKETS. They reject this truth because they do not want to accept their carrers are just based on a chance game, like sport betting or a casino. They deny this truth that is just a probability game, it is a CASINO. but you can still make money in a casino.
Kris Jay
Kris Jay Aug 04, 2022 8:50AM ET
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Both Chris Toomey and Mike Wilson of Morgan Stanley are also calling this a bull trap, no positive news coming on the horizon and only just starting the slow downs,  additional rate hike in September of 75bps, so we will get both earnings compression and P/E compression in Q3 and Q4.
Mario tragik
Mario tragik Aug 04, 2022 8:38AM ET
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omg kramer just stop, you are making a fool of yourself.
Semen Alexov
Semen Alexov Aug 04, 2022 5:21AM ET
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He was right all the way from the beg of the year. And he has the plausible arguments every time. If Hana wants him to “close the shorts” it means it is time to build the short position. When short covering crowd will stop to buy, who will continue on these levels?
Samer Diab
Samer Diab Aug 04, 2022 5:21AM ET
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what about 2021? he was bearish all year also lol. and 2020
jason xx
jason xx Aug 04, 2022 5:21AM ET
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He was wrong since 2008 and then was finally right in 2022
Tomas No
Tomas No Aug 04, 2022 5:21AM ET
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jason xx  Exactly. Every dog has its day :)
Semen Alexov
Semen Alexov Aug 04, 2022 5:21AM ET
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He was bearish for the right reason. The reason was printed money that was given to you and other people, to buy out their votes. He was early. Now the time is right. Perfectly right. No “free stuff” that you got used too anymore.
Semen Alexov
Semen Alexov Aug 04, 2022 5:17AM ET
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He is consistent and right
Paul Browning
Paul Browning Aug 04, 2022 4:53AM ET
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Good analysis. META's blast up had no other basis in reality other than short coming. Of course they don't deal in reality.
Samer Diab
Samer Diab Aug 04, 2022 4:00AM ET
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noob Michael has been bearish forever lol. no real analysis. just being a bear
Hana Shmurak
Hana Shmurak Aug 04, 2022 3:22AM ET
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Kramer, just close your shorts
 
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