Week of March 25

Michael Kramer and the clients of Mott Captial own Alphabet

Michael Kramer owns SPY calls

The stock market will try to bounce back during the week of March 25 after the pounding it took on March 22.  Small caps were hammered with the Russell falling 3.6%. There was plenty of technical damage done to the Russell chart, which does have me wondering if there is further to drop to start the week.

Russell 2000 (IWM)

The most disturbing part about the Russell is that it broke the uptrend we had watched so closely and fallen below the March 8 lows. We can see that 1,521 is now acting as resistance which would suggest to me that the index falls first to around 1,492. It is critical that the level of support holds.

S&P 500 (SPY)

The S&P 500 is also nearing some critical support at 2,800, with the potential to fall to around 2,770. Not the end of the world should that happen.

Amazon (AMZN)

The good news is that many stocks are in far better positions than the broader index. Amazon could pull back, but I don’t see it falling very far, and the good news is that uptrend has not been damaged.  If the stock pulls back, it should find support around $1,700 before it begins moves higher.

Alphabet (GOOGL)

Alphabet could also pull back a bit further, perhaps to around $1,175. The uptrend is still trending nicely higher.

Facebook (FB)

Facebook continues to struggle at resistance around $166, and I still see the stock fall to $148.

AMD (AMD)

AMD broke out last week and support appears to be firm at $25.70. The trend is still higher, and I continue to think that the stock works its way higher towards $29.

The bank stocks are going to struggle in a falling interest rate environment. I do think it gets much worse for them. Why The Bank Stocks Are A Horrible Bet In 2019 (Video Segment)

Goldman (GS)

Goldman is on the cusp of a major break down, and if it falls below $188, it could plunge to around $180, filling the gap.

Citigroup (C)

Citigroup is also on the verge of a significant breakdown as it sits on support at $61. A break of support could result in shares falling to $55.

Bank of America (BAC)

Bank of America has some more to fall too, and support for the stock may not come until $26.

Boeing (BA)

Boeing did finally break support at $371 on Friday, and I think that spells more trouble for the stock. The uptrend in the RSI is now broken, and the stock could drop to around $330.

Spreads

We will need to watch the spread between German and US yields. It will be a significant indicator of which way the dollar goes. The pattern for the spread is beginning to resemble what appears to be a technical head and shoulders pattern, a bearish indicator. Should the spread fall below 2.46%, it would suggest that spread narrows even further and that the dollar weakens against the euro.

Have a great week!

-Mike

Photo from Flickr