January 31, 2021
STOCKS – FB, AAPL, T, HON, ROKU
MACRO – SPY,
- Earnings Preview: Alibaba May Fall In The Days Following Results
- T.W.A. – S&P 500 Breaks Major Trend Lines
- 4Q’20 Qrtly Investor Letter: MCM Thematic Growth Portfolio
- Update Board 1.29.21 – Uh-Oh Don’t Look Now
- Midday: The Narrative May Have Finally Changed
- Educational Material – The Danger Of Put Buying The Most Shorted
- Earnings Analysis – Tesla’s Lack Of Guidance May Weigh Short-Term
- Earnings Analysis: Microsoft May Become A Victim Of Its Own Success
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
This week, there will be many economic data points, with the ISM manufacturing and service index Monday and Wednesday, respectively. Additionally, the BLS jobs data will come on Friday morning. This week’s bigger overlying issue will be any signs this short squeezing madness continues, as that is likely to have the biggest impact on the market overall. (Should be free to read- The Massive Short Squeeze Could Cripple The Stock Market)
S&P 500 (SPY)
The S&P 500 has already broken two key uptrends on the short-term chart, with the potential for a failed cup-and-handled pattern. However, these are bearish patterns in nature and would suggest lower prices. How much lower the index will fall will depend on what happens at 3,700 and 3,650. For now, these are the two major levels of support, with the more important level of support being at 3,650. A break of 3,700 quickly sends the index to 3,650, but a break of 3,650 opens the potential flood gates. With multiple gaps that need to be filled all the way down to around 3,250. (Paid Subscriber Video on RTM – T.W.A. – S&P 500 Breaks Major Trend Lines- First Two-Week Are Free To Try!)
Apple did break out ahead of results but has since given back nearly all of those gains. If the stock is retesting the breakout, it will need to decline to $124 and bounce at the trend line. If this something else, and a more severe pullback, the stock will fail to hold support at $124 and likely continue lower towards $119. (Should be free to read – Apple’s Blockbuster Results Hurt By Lack Of Guidance)
Facebook already has broken down and appears to have retested its breakdown over the past few weeks. If that is indeed the case, the stock will likely continue lower towards $241.
AT&T had a pretty lousy week despite announcing it has 41 million HBO and HBO Max subscribers. HBO had revenue of $1.9 billion out of total revenue of $45.6 billion. It hardly even moves the needle. If this is the great savior of the business, they have bigger issues. At this point, it seems clear to me, the deal to buy Time Warner has been pretty much a disaster given the amount of debt they took on. Interest expense in the quarter was $1.9 billion, so HBO basically covers the interest cost. Great.
A break of support at $28.40 will likely send the stock lower towards $27.60.
The big gamma squeeze in Roku appears to be over for now, and the implied volatility over the next 30-days is around 81%. As the stock price rose, the implied volatility levels were rising too, the first signs of a gamma squeeze. That resulted in call volume falling dramatically. Calls are still more expensive than puts, with a negative Skew. But until the IV starts falling, the stock is probably not going anywhere for some time. Unlike the heavily shorted stocks rising, Roku doesn’t have a big short-interest.
Once support at $350 breaks, the $52 billion market cap should start to deflate, and the stock probably heads back to $240. You can see the double top like pattern in the RSI, confirming that momentum in the name has already started to shift.
Honeywell looks like it is ready to fill the technical gap at $184.
Have a good one
Special Earnings Preview: Alibaba May Fall In The Days Following Results – First 2-Weeks Are Free To Try!
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