Michael Kramer and the clients of Mott Capital Own Apple and Netflix
The Week of November 19
The good news is that it is a very short trading week. Markets are closed on Thursday for Thanksgiving and Friday is a half trading day closing at 1 pm. It will give some of us a much-needed break to enjoy time with our families.
The economic calendar is non-existent, which is another positive.
Investors will become increasingly more focused over the next two weeks over the highly anticipated meeting at the G20 summit between Pres. Trump and China’s Pres. Xi Jinping. Rumors already started at the end of last week, and we got a noticeable lift in stocks on those days with positive stories.
The sectors that would benefit the most from a deal would likely be the chip stock and the industrials and heavy machinery stocks, like Caterpillar and Boeing.
S&P 500 (SPX, SP500)
The S&P 500 started trending higher once again after bottoming out around October 29. It doesn’t mean we can’t see a pullback which may be possible in a short trading week. If we should pullback support remains around 2,715 to 2,720.
Last week I had thought Amazon could continue to rally to $1,850, but my view changed mid-week, realizing I may have been wrong. My reason for the change is because the stock was no longer able to maintain support at $1620 and fell below. Now $1620 becomes resistance and Amazon continues to struggle to get above that price. $1620 is the critical level here, and if the stock can rise above resistance then yes the stock can rise towards $1700. But if it can not rise above $1,620, then I believe the stock has further downside risk towards its lows.
Look I’m giving you two outcome here because I want people to understand that I can’t forecast which way the stock will go because it hinges on the ability to rise or fall above the 1620 level. That is the best I can do at the moment!
Netflix is another stock that is on the cusp of a significant rise or plunge. But Netflix’s chart suggests an increase is on the way. The stock is starting to trend higher and is at a battleground at $285. As long as the stock stays above $285, then I think it can run higher back to $300, that is where resistance is.
Apple is nearing a break out should it rise above $195. It likely has room to grow back towards $209.
Intel is nearing a breakout and should it rise above $49; then the stock has room to run to $52. Intel will now have to be the leader in the Chip sector. By the way, Bob Swan has done an excellent job as the CEO of the company since stepping in, and I hope he becomes the permanent CEO. He has navigated the company through a troubling time, where most chip companies have failed. I think he has earned it.
Nvidia is an example of a management team that dropped the ball and could have done a better job of telegraphing trouble ahead. Now I think the stock still falls further. A drop below $160 means a decline to $139.
The gap for AMD is filled, and now a double top appears to be forming, and that means the stock has further to fall. A drop below $20 indicates a decline to $16.
Alibaba is starting to trend higher, and perhaps that means the rally can continue. The stock has room to run back to $166. More on China below.
It is looking more and more likely that 10-year yields have now topped, and a drop below 3.06% will confirm a bearish double top formation. Should that happen, rates may fall to around 2.95%, a huge weight lifted on the stock market.
The Shanghai composite is suggesting a trade deal may be on the way between the US and China. The index is well off the lows and is trending higher. It has risen above resistance at 2,650 and may be on its way to 2,825.
Good luck this week!
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
amazon, sp500, netflix, amazon, amd, nvidia, intel, yields, shanghai, apple