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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14 Stocks That May Drop By The End of The Year
Yesterday I highlighted 17 stocks that I thought might have a strong last four months of the year. Today we will run through the stocks that are likely not to have a good finish to the year.
I have written for some time that I believe rates on the long end of the curve are heading lower, and that will be bad news for the banks. The ten-year minus the two-year yield curve is now less than 25 bps apart. That could spell trouble for stocks such as JP Morgan, Wells Fargo, Citigroup, and Bank of America. Each of the banks has bounced nicely off their lows, but have struggled since hitting resistance levels.
The dollar has strengthened, and that is likely to continue as the ECB and Bank of Japan keep up a low-interest rate policy. Additionally, concerns around Brexit have sent the British pound lower. That is bad news for the metal and miners, and the energy complex, and likely to hurt stocks BHP, Freeport-McMoran, Cleveland Cliffs, Rio Tinto, Exxon, Chevron, and British Petroleum.
Micron is one stock I follow with great interest, but I am on unsure of and could go either way. The market is sending a clear message the current gross margins aren’t likely to last, with the stock trading at just five times 2020 earnings estimates. This next earnings report will be massive for the stock, as it will mark the end of fiscal 2018, and that means investors get fiscal 2019 forward guidance. The stock has tried to break out and has unsuccessful to this point. But I think the stock will get its usual run-up before results.
AMD on the other hand I think is going lower. I think the run above $20 had to do more with a massive short squeeze than anything else. So I do believe the stock is likely to drop to $20.
First Data Corp., someone on StockTwits, asked me to check out, and the chart appears a little suspect to me. I do not know much about the company so take it with a grain of salt. But the technical look weak. The RSI is trending lower, while the stock price is rising, and that signals a bearish divergence and reversal of the stock price.
I think that is going to be it. Good luck!
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.
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.
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