Stocks – AMZN, AMD, ZM, DOCU, SHOP
Macro – SPY
- Mounting Evidence Supports A Market Drop – Week Ahead
- Stocks Drift, Will Nvidia Save The Day?
- Bonds Signaling Double-Dip Recession?
- 2 Long-Term Theme Ideas And Valuations
- Signs For A Drop To 3200 Mount
- More Bearish Bets Placed On The SPY
- Bonds/Dollar Not As Excited As Stocks
- On Watch For A Sharp Pullback
It will be a holiday-shortened trading week with the markets closed on Thursday and a half-day on Friday. It also means that economic news this week will be fairly light.
S&P 500 (SPY)
Overall the S&P 500 fell by almost 70 basis points for the week ending November 20. It left the index trading around 3,560. Overall, the index has been bouncing between 3,200 and 3,600 since the beginning of September.
Perhaps the one area of concern on the chart comes from the index reaching a new closing high on November 16, but notice that the RSI has not made a new high. This is a bearish divergence and suggests that the overall index’s trend shifts from a bullish trend to a bearish trend.
For this week, the big level of support for the S&P 500 comes around the 3,510 level.
Over the past few weeks, I have gone through some of these extremely overvalued bubble stocks. DocuSign is one of them. We can see the direction the RSI is trending, which is lower. It would suggest that momentum is still leaving DocuSign’s stock. The big level of support, which has been tested several times, is $188. That remains the big support level, with a break of that support sending the shares sharply lower. DocuSign’s volume has been anemic and declining as the stock rises, a sign buyers are leaving the stock. I continue to believe this is a stock heading lower. It won’t come in a straight, obviously. But the trend will remain lower. The article should be free – DocuSign’s Valuation Is Mind-Bending.
The same concept applies to Zoom, a grossly overvalued stock, which seems unlikely to meet the market’s expectations. Just like DocuSign, you see momentum, leaving the stock in the RSI. Meanwhile, the stock has dropped to resistance at a downtrend around a price of $445. Of course, there is a chance the stock fills the technical gap around $475 before moving lower. This should also be free to read – Zoom’s Boom May Be Over.
Shopify is also a stock that has a massive valuation that the market has priced beyond perfection. I actually love the business. I use it on my own website, although it hasn’t taken off, as I had hoped it might.
You can see that Shopify’s stock has many of the same characteristics as the other stock. The RSI is trending lower, suggesting momentum is leaving the stock. The big level of resistance comes at $850. Shopify: Great Business, Overvalued Stock
Amazon has also struggled some, and while the stock isn’t as overvalued as the other 3, it does valuation is at the upper end of its historical range. This past week, we saw a bearish betting in the stock, along with a bearish technical chart.
Like the other stock, it also has an RSI trending lower, suggesting momentum is leaving. Volume has also been steadily falling, and given its huge move this year, buyers are waning. I continue to think this stock is heading lower towards $2870. Amazon’s Overvalued Stock Has Significant Downside Risks
AMD is incredibly similar to all the other stocks. I think this one is heading lower and back to $75. I noted some bearish bettering this stock last week as well. AMD’s Bloated Stock Faces A Rocky Path Forward
Have a great week.
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