Home » 4 Stocks That Are Winning and 3 Stocks That Are Losing, While Draghi Wins Yet Again

4 Stocks That Are Winning and 3 Stocks That Are Losing, While Draghi Wins Yet Again



4 Stocks That Are Winning and 3 Stocks That Are Losing, While Draghi Wins Again

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX AND TSLA
© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Join our 901 Daily Subscribers And Get This FREE Commentary In Your E-Mail! 

 

There is no doubting that Draghi may be the ultimate trader, with an ECB meeting the day after the Fed, and saying thank you very much. The Fed wants to raise rates two more times in 2018, the ECB wants a cheaper currency in 2018, and it achieved just that. The ECB is using the Fed as a tool to push the Euro lower. All Draghi did, was sound a bit more dovish, as I expected, and bought himself some more time about ending QE, and left it open-ended, by saying it is data dependent. The result…the euro action today. (See The Member Area for Full Coverage: Draghi Is The Smartest One In The Room, And Banks Are In Trouble)

The chart of the Euro is breathtaking. The Euro plunged from roughly 1.1820 to 1.1580 versus the dollar in one session. That is a tremendous move, and that is what it looks like when the entire market is wrong.

Euro

The equity market is sending a very clear message as well, the risk is on and the banks are toast.
XLK Price Chart

XLK Price data by YCharts

The spread on the 10-2-year treasuries hit fresh new lows today, at just 35 bps, as the 5-2’s fell to only 24bps. As I said yesterday, this is terrible news for the bank stocks, and they sure were down today, nearly 75 bps. Meanwhile, Technology and Consumer stocks were up by 75 bps and 1 percent. Look at the chart of the consumer stocks, XLY.

Is it getting overdone for the consumer stocks? Probably.

consumer

Around the Horn

I had no idea that Netflix would rise this quickly to $390, to some extent it seems a bit crazy. Mind you I own the stock. But I would rather not see a rocket ride like this.

nflx

Amazon has been soaring as well; it still has a while before it hits $1840.

amazon

Tesla broke out and is nearing a significant resistance level at $362.

tesla

Broadcom looks set to rise back to $273.

broadcom

JP Morgan looks like a retest to $106.50 is coming.

JP Morgan

Bank of America is on the cusp of a major break down, at $29.20

bank of America

and Citigroup appears to be just barely hanging on at $65.90.

citigroup

Dollar

The dollar index had a significant rise right back to resistance at $94.90, and if the dollar breaks out, we will see a significant increase, I think potentially again to 100 on the index, and that will be bad for commodities and inflation.

dollar

Inflation Watch

Copper got smashed today.

copper

and of course, Oil, backed off its highs but is respecting the trend line.

oil

Remember stocks do not trade in a vacuum, the entire market complex dictates stock price direction to some extent.

Of course, I could be entirely wrong, about all of this, right? I mean I could be reading the long-end of the curve all wrong. I mean geez it could be about to rise because surely no European bond buyer would want to own our debt at well over 250 bps higher than their own.  The whole flattening of the yield curve may be about to suddenly work itself out, after months of contracting.  And once those banks get pass those stress test next week all will be well. Right.

Markets get things wrong from time to time, but when the whole market is sending a clear and strong message you best pay attention.

Draghi most definitely won this round.

Night.

-Mike

PHOTO CREDIT VIA FLICKR

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.