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Stocks Take Cover

By Michael KramerStock MarketsNov 30, 2022 04:02AM ET
www.investing.com/analysis/stocks-take-cover-200632927
Stocks Take Cover
By Michael Kramer   |  Nov 30, 2022 04:02AM ET
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US500
-1.04%
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AAPL
+2.44%
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TIP
-0.93%
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SPYV
-1.43%
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VIX
0.00%
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SPYG
-0.68%
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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 Reserve Chair, Powell’s appearance today.

Volatility

But looks can be deceiving because we live in a world where the S&P 500 has an expiration date every day of the week. So why buy puts 30 days from now when you can purchase hedges for today and worry about what comes next later? So with that type of mentality, you can understand why implied volatility for today’s S&P 500 expiration date is rising sharply and why the VIX is down. If Powell has a Jackson Hole tone, which I think he will, then that entire volatility curve should rise sharply today and the VIX with it.

SPX Index
SPX Index

US Dollar

The dollar seems to influence the S&P 500 more than anything else these days. The dollar has snapped back the past two days, which has me again saying I think the dollar has bottomed. Maybe I am stubbornly bullish on the dollar, but I know Powell needs financial conditions to tighten, and the dollar plays a significant role in financial conditions tightening. So if Powell delivers that hawkish message today, the dollar should rise. I’d like to see the DXY get back to 110 or so.

USD Index Daily Chart
USD Index Daily Chart

S&P 500

If the dollar makes it back to 110, it will inflict much pain on the equity market and probably result in that gap filling at 3,750. Nothing new from me, as I have been looking for a gap fill to 3,750 since the November options expiration date.

S&P 500 Hourly Chart
S&P 500 Hourly Chart

TIP ETF

We also saw a good move higher in rates yesterday, which helped push the (NYSE:TIP EPS lower. The TIP ETF has not been a factor now for some time and has been trading sideways. The TIP traded sideways, heading into Jackson Hole for about two months. The TIP ETF has traded sideways for about two months, heading into the Powell Q&A session tomorrow. Maybe the TIP ETF will wake up today. Again, real rates need to rise to tighten financial conditions.

TIP ETF Daily Chart
TIP ETF Daily Chart

Growth To Value (SPYG to SPYV)

The SPYG to SPYV ratio has already started to fill the gap from the Nov. 10 CPI reading.

SPYG To SPYV Ratio Chart
SPYG To SPYV Ratio Chart

Apple

Apple (NASDAQ:AAPL) is on the cusp of breaking down and filling the gap from Nov. 10.

Apple Inc Chart
Apple Inc Chart

ARKK ETF

The {959230|ARKK}} ETF also looks like it has started to fill the gap.

ARKK Chart
ARKK Chart

If Powell does his job of tightening financial conditions today, volatility should rise, rates should increase, the dollar should strengthen, and the S&P 500 should fall and move lower towards 3,750.

Original Post

Stocks Take Cover
 

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Comments (16)
bob lacey
bob lacey Dec 01, 2022 2:27AM ET
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I guess Powell didn't do his job🤔
John Berry
John Berry Nov 30, 2022 5:45PM ET
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🤣🤣🤣🤣🤣🤣 F SMOKED
John Berry
John Berry Nov 30, 2022 5:45PM ET
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🤣🤣🤣🤣🤣🤣 F SMOKED
Mario tragik
Mario tragik Nov 30, 2022 4:47PM ET
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OH MY GOD Kramer.  This is one of the factors that you and your followers need to understand: It does not matter how much time you put into your analysis if money goes the other way.  There are no "investors" anymore, there is big money speculators and machine algos.  It is pure speculation; it has been that way since tulip mania.  In this one I am with you, nothing absolutely nothing that Powell said was new.  1) .50 in dec, we knew.  2) slow pacing but higher rates, we knew.  3) results today: ADP and GDP mixed.  If we all were reasonable human traders, the market would not have ripped %3+ But here we are.  That is why analysis is not enough to say the market is going to do this, or it should do this or that like you do.  Market is only likely to do something, also have in mind that no matter the sentiment the market can rally.  Now lets see we are on our way to OPEX, I as an investor would be very weary of buying here unless Its short term.
Logan CALDER
Logan CALDER Nov 30, 2022 4:47PM ET
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Well said
Antonio Rivolta
Antonio Rivolta Nov 30, 2022 4:38PM ET
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Well, the move behind paywall couldn't come at worst timing after two big miss like these I doubt many will be keen to pay for advices that although understandably are now too often wrong, sorry Mike, will not join
Logan CALDER
Logan CALDER Nov 30, 2022 3:14PM ET
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Yeah.....that was a mile off, sorry Michael, that one has to make you re evaluate I would think
Joseph Levy
Joseph Levy Nov 30, 2022 3:04PM ET
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Michael is like the rabid sports fan who spouts on a daily basis why his team is so good but hardly mentions why they lose so much.
taylor jason
taylor jason Nov 30, 2022 2:29PM ET
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Michael Kramer blown out once again. this is the same guy that doubled down on his short call at 3500
John Berry
John Berry Nov 30, 2022 2:04PM ET
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another L for you
Petet Larkar
Petet Larkar Nov 30, 2022 8:39AM ET
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good job Mike
John Berry
John Berry Nov 30, 2022 8:39AM ET
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Good job? Guy hasn't been right yet
 
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