This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD
The week of November 29 is going to have lots of drama starting on Wednesday that is when FOMC Chairman Jay Powell will speak at noon. Thursday, we get inflation data in the morning, followed by Fed minutes at 2 pm. Then of course on Friday the highly anticipated Trump/XI meeting at the G20 summit.
It is hard to say what the most important maybe, but if I had to choose, I would say Powell on Wednesday. The market will need to hear something out of the Fed Chair that he is getting Wall Street’s message and he stands ready to change monetary policy if needed.
Although Trump/Xi is essential, and I think it could help to reduce fears, investors know that interest rate policy could sink any deal ultimately as a result of too much tightening.
The most ideal situation this week: a more dovish Powell followed by a trade deal. Get that, and the market will be on a path to rise sharply.
Rate Hikes Odds Fall
What I find most interesting is that odds for the fed fund rates to be in the 2.25 to 2.50% range by December 2019 continue to rise, while the odds of rates above 2.5% continue to fall.
Compared to the last time we checked on November 20.
Anyway, let’s move on other stuff.
Let’s start with the Hong Kong Hang Seng Index. Interesting start, right? Well, that is because Hong Kong is the cusp of either a considerable breakout or breakdown. The chart shows that the index is nearing a technical downtrend and resistance level around the level of 26,222. Should the index rise above those levels, I think it setups a clear path higher to 28,230 an increase of 9%.
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I think there is a good chance the index does break out and rise. Look at the RSI which has started to trend higher since bottoming in October.
Tencent (700 HK)
If any technology stock is the canary in a coal mine, it is 700 HK otherwise known as Tencent Holdings. This stock topped out in March and has fallen 50% since. The stock looks as if it may be set to rebound to roughly $333, an increase of 14%.
It may be a good sign if the stock market most affected by the trade wars start to turn higher. It may signal a bottom in the US stock market is near.
The DAX index in Germany is also approaching a critical long-term uptrend.
Russell 2000 (RUT)
The Russell will be one of the more critical indexes to watch this week. It touched its October lows and appears to be creating a double bottom. We cannot confirm a double bottom until we get around 1,590, 7% higher.
Five Below (FIVE)
It makes Five Below a significant stock considering it has one of the biggest weightings in the index. But the chart looks terrible. A drop below $95.90 increases the odds the stock is going to fill the gap and fall to around $81.
ETSY’s chart doesn’t like any better than Five Below. But ETSY just filled a gap, and it now may be on its way higher back towards $54. Should the stock fall below $43.40, the next support level comes at $38.75
The Biotech ETF also looks as if it is trying to bottom, a rise above $78.75, could result in a 6% surge to about $83.
The XBI will not rise if Acadia doesn’t lead the way, yes you read that right. Acadia is the most significant part in the ETF with a 3% weighting. The stock fell to and tested support at $18.40. It suggests a rise to $21.50. I think the stock has even further to climb after that. The year long-term downtrend is now broken, and the RSI continues to rise nicely too.
Tesaro is the second largest stock in the ETF, and that too is nearing a break out should it rise above $45.25. It may result in the stock rising to $50 from its current price around $43.
Exelixis is also nearing a breakout should it rise above $19.
Finally, Amazon. There is not much to say at this point. The stock is stuck between $1450 and $1620.
That is gonna be it! 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.
SP500, Fed, Rates, Amazon, ETSY, ACADIA, EXELIXIS, IONIS, FIVE BELOW,