Stocks Jump On January 7 As The S&P 500 Eyes 3,950

Stocks increased on January 7 by around 1.5% on the S&P 500. The index closed over 3,800 for the first time. The index continues to melt higher, and while technology was out of favor yesterday, today it was in favor, along with everything else.

As it does every day, the index gapped higher from the overnight option-related hedging. It got an extra nudge higher after the better than expected ISM data at 10 am. That was pretty much it. It stopped at 3800, and that was pretty much it.

Clearly, the market is excited about the stimulus that it is now expecting. The only question is how long the bond market will allow this game to continue. Rates on the 10-year rose to around 1.08% today, their highest level since March 20. I continue to think the 10-year will rise and head towards 1.4%. That would be 90 bps higher than where the rate was in August. It certainly should have a negative result on the equity risk premium. I guess we will wait and see.

S&P 500 (SPY)

Anyway, if the index can rise and confirm today’s move higher tomorrow, I would project a rally to around 3,950.

VIX

Meanwhile, the VIX refuses to go down. The S&P 500 has risen 100 points since the year has begun, but the VIX is in the same spot. It absolutely makes no sense.

Tesla (TSLA)

Tesla rose again today, another breakout. I guess it could rise to $855 if you project out the last move.

Apple (AAPL)

Apple got pretty close to my call for $124, dropping to around $126.40. If it can clear $131, then it likely goes back to its highs at $138. It fails, it probably falls below $124.

Amazon (AMZN)

Amazon can’t decide which way to go; it is just stuck in the middle, around $3,200. The momentum suggests it goes lower. But in this crazy market, who knows.

Facebook (FB)

Facebook also fell to $260 yesterday, and momentum also suggests it goes lower, but again, I have no idea in this market.

Lemonade (LMND)

In a market where Lemonade can go up 27% because the Motley Fool published a bullish article, anything can happen.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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