Stocks – ZM, AAPL, NFLX, AMD, JPM
Macro – SPY
- Themes Heading Into Options Expiration
- Can We Expect Volatility Into Opex Next Week
- Friday The 13th Doesn’t So Scary
- Amazon’s Pricey Stock Attracts A Bearish Bet
- Stocks Move Lower As It Continues To Wait For Stimulus
- Softbank May Have Closed Options Positions Out
- Mother Of All Options Trades?
- Tech Tries To Bounce
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
While it is has become impossible to predict how the market will respond on any given Monday, what we do know is that after Monday, gains, for the most part, have been minimal most of the time. Additionally, this week is likely to be dependant upon options expiration on Friday.
I’m not privy to news that may suddenly come across the wires on Monday morning, but we are still waiting for readouts for several vaccines against COVID. I think that every piece of positive data is likely to have a diminishing return, meaning we will see less of a positive effect.
S&P 500 (SPY)
The S&P 500 consolidated nicely just below 3,600 all week, and that is clearly a level of resistance from a technical standpoint and an options expiration standpoint. I think it will take a break above 3,600 early this week to drive the index meaningful up. Otherwise, the weight of options expiration on Friday may keep a lid on things, with the index still set up to refill gaps lower towards 3,200.
I think Zoom may be heading lower after options expiration because there is a historically higher number of open puts and calls. Once we pass expiration, there will be many options that will expire, and those will need to be unhedged by dealers. It essentially means, selling pressure may evolve around that date.
The pattern appears to be a head-and-shoulders pattern, and it seems the pattern is now confirmed, with resistance around $410. There is a gap at around $475, which needs to be filled. With that, would I be surprised to see the stock reach $475 this week and then move lower thereafter? Absolutely not. Would I be surprised if the stock continued lower this week, no? Either way, the stock is likely heading lower; it is just whether it first makes a trip to $475 or not along the way.
AMD continues to be a weak stock, and I think the Xilinx deal’s overhang is clearly weighing on the stock. I expect that this one will continue to head lower over the next several weeks, eventually breaking support at $75 and heading towards $69.
I got my new Apple iPhone 12 Pro Max on Friday. My 5G was moving around double to triple what my 4G connection used to be. Certainly, not the 10x it was hyped at one point to be. Still, it is a solid 100 Mbps, and I think that will likely improve over time. I can still get 500 Mbps on my FiOS router; it is supposed to be 1GB. So at this point, I don’t think 5G is a threat to any cable providers, but the new phone is certainly worth the upgrade over the 11, which will likely drive growth for Apple over the next few years.
Still, I think most of that growth has already been priced in, at least for fiscal 2021. The momentum trends signal lower prices still lie ahead, with resistance around $125.
After beating up on the bank stocks for all of 2018, and most of 2019. I think the banks may actually be in a favorable position at this point. These clearly aren’t great growth stocks any longer, but I view them more as a proxy on the economy’s direction and rates. For now, rates are clearly improving, and that is going to benefit JPMorgan and the likes.
JPMorgan is likely to thrive, and although it has a gap to fill around $104. As long as it doesn’t fall below $104, I think it can continue to work higher over time.
Netflix has managed to hold support around $470 for a while now. But momentum has clearly faded, and although I continue to like the business long-term, the stock likely needs to consolidate at lower prices. It hasn’t hit oversold levels yet; a break at $470 will get the stock moving towards $405.
Have a great week!
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