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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STOCKS – AMD, GOOGL, NFLX, JPM
MACRO – QQQ, TIP
- RTM Tactical Update: The Fed Will Drain The Stock Market Of Excess Liquidity
- RTM Exclusive: Betting JPMorgan’s Decline Aren’t Over [Short-Term Options Idea]
- RTM Exclusive: Walmart Shares May Pullback Amid Weak Consumer (Short-Term Option Idea)
- RTM: Real Yields Still The Driving Force
- RTM: Yield Curve Steepens (Daily Update)
- RTM: Netflix Faces Further Declines Following Results [Short-Term Options Idea]
- RTM: Real Rates Weigh On Stocks
- RTM – ADBE [Internals Notes]
- RTM – AMD [Internals Notes]
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN GOOGL
The stock market sold off hard on Thursday afternoon as we went into the long weekend. The S&P 500 index dropped by 1.2%, while the QQQ ETF fell by more than 2%. The declines on Friday resulted in the gains from Thursday disappearing entirely.
The NASDAQ futures may give the best representation of where things stand in the market, currently sitting on support at 13,890. A break of that support level sets up a more significant drop in the market, with the potential to decline to 13,470 in the days ahead.
But this is a tricky period for the market because post options expiration, the market tends to see follow through the first two days of the week and then reverse by mid-week. That would indicate that the market moves lower to start the week and then reverses by the week’s end.
I suspect that the market tries to test that 13,470 level early in the week and then moves back up to resistance at 13,890 by the week’s end.
Real Yields (TIP)
The other problem for the NASDAQ is that the TIP ETF keeps dropping, and as long as the TIP ETF drops, it means real yields are rising, which is terrible news for the NASDAQ and many of the technology stocks in it. The next level I am looking at is $120, but we did see some big options bets about two weeks that suggest it goes back to $117, which indicates positive real rates on the 10-Yr TIP. (The first two weeks of my SA Marketplace service are FREE to try; cancel if you hate it – RTM: Betting Real Yields Go Much Higher [Short Term Options Idea])
AMD was very weak again on Friday, making a new closing low. The chart looks very weak, and the shares are getting to a point where we have to start wondering if the market sees an earnings downgrade cycle coming. The PE ratio at 19.5 is at its lowest level in some time, and that can only make one believe that investors are getting worried about current earnings estimates being too high and the potential for them to drop. The next logical place for the stock to find a bounce comes around $89.5.
Alphabet is at a critical spot, as it sits on support at around $2,500. The stock has tested this level multiple times, but I’m not sure it can hold much longer, with this being its 6th such attempt. If it breaks this time, it starts a drop to $2,430, and probably further to $2,260.
Netflix will report results on Tuesday after the close of trading. I noted during the week in a write-up for subscribers to my SA Marketplace service that expectations for results have dropped significantly for the first quarter. With the second quarter’s historical the weakest quarter for Netflix, the chances are rising that Netflix may see lower prices following results. The chart is not bullish, and the shares are approaching their lows, last seen in mid-March. A drop below $330 sends the shares to $300. (The first two weeks of my SA Marketplace service are FREE to try; cancel if you hate it – RTM: Netflix Faces Further Declines Following Results [Short-Term Options Idea])
JPMorgan was very weak following disappointing results. Big bearish bets were placed on the stock that suggests further downside risk, and the chart shows there is no support until it gets to $122. (The first two weeks of my SA Marketplace service are FREE to try; cancel if you hate it – RTM Exclusive: Betting JPMorgan’s Decline Aren’t Over [Short-Term Options Idea])
I hope you are having a great 3-day weekend; see you tomorrow.
Mott Capital Management, LLC is a registered investment adviser in the State of New York. The 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. Please remember that past performance may not be indicative of future results.