2/19/2022

STOCKS – ROKU, FB, PYPL, SQ

MACRO – QQQ, SPY

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• RTM: LIVE Q&A SESSION – Replay
• RTM: The Fed Is Pushing The Market To The Brink
• RTM Rapid Update: Nvidia – Post Earnings
• RTM: Stocks Are Living In A Fantasy World
• RTM: Tighter Financial Condition May Push Stocks Lower
• RTM: Roblox- Post Earnings Thoughts

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL

THIS WEEKS FREE YOUTUBE VIDEO: Stocks Face The Start Of Another Move Lower

It will be a holiday-shortened trading week, but it is sure to be filled with plenty of volatility. The liquidity in the market is very thin, with a very narrow depth of book and vast spreads. This helps to create these significant moves intraday, as we saw on Friday, with sharp rallies and significant drawdowns aren’t going away. Factor in all the options dealing through the day and this market is just primed to see an elevated VIX for a while.

S&P 500 (SPY)

The S&P 500 managed to finish the week of February 18 down by 1.6%, at 4,348, and just around crucial support. Look, at this point, it isn’t going to take much of a push to get the index down to 4,250, and momentum is bearish. The RSI has been steadily trending lower for a few months now, and that trend is powerful. Even the MACD reading has turned lower recently.

NASDAQ (QQQ)

The reason why the NASDAQ has been falling is that earnings estimates for 2022 are just getting crushed. It is essential to realize that the NASDAQ will continue to fall as earnings estimates get downgraded. The S&P 500 earnings estimates have held up to this point, but it seems unlikely to me that NASDAQ earnings can drift lower and the S&P 500 to avoid lower earnings revisions.

Meta (FB)

Meta, formerly known as Facebook, has seen its earnings estimates slashed, and the stock has been crushed as a result. At this point, I still think the stock is heading for that gap fill at $195. However, there are still more gaps to fill down to $155. To say it goes lower than $195 would be getting ahead of myself, but the possibility is there.

PayPal (PYPL)

Meanwhile, PayPal is leading the way here and may provide clues for Facebook. PayPal started dropping a few days ahead of Facebook and appears to be heading to its lowest possible gap, around $92.60.

Consider that in January 2020, analysts estimated that PayPal would earn $5.19 in 2022. Now they esiamtes that PayPal will earn just $4.66 in 2022. That’s why the stock is down and going back to pre-covid levels.

Roku (ROKU)

Anyway, after today, I may never mention the name ROKU again. I’m done. The stock came within 35 cents of my support level at $102.35, and like Lemonade, FUBO, DocuSign, Teladoc, and a few others, I am hanging this jersey up and raising it to the rafters for retirement.  Goodbye and good riddance.

Block (SQ)

I can probably soon add Square to retirement, but I don’t think it is time yet. If Apple (AAPL) is coming out with a way to use the iPhone for payment processing, Square, or whatever it goes by now, is finished. There is a reason why the company is shifting and redirecting everyone’s attention to cryptocurrency because they probably feel the heat of Apple breathing down their neck. The next significant level of support now that it has fallen below $105 doesn’t come until $83.30. Square reports this week, too, should be interesting.

See you tomorrow.

Mike

Mott Capital Management, LLC is a registered investment adviser in the State of New York. 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.