7 Monster Stock Market Predictions For The Week of May 18

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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May 16, 2020

Stocks – AAPL, AMZN, GOOGL, FB, MSFT

Macro – SPY, QQQ

Short-Term Trends – Cautious

Long-Term Trends – Bearish

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN MSFT, AAPL, GOOGL

MICHAEL KRAMER OWNS XLK PUTS

The week of May 18 will be slower from an economic standpoint, but Jay Powell will speak on Tuesday and Thursday, as well as the release of the Fed minutes on Wednesday, there will be plenty of things that could move the markets.  Premium content – The 3 Keys To The Week Of May 18

S&P 500 (SPY)

The S&P 500 could see some more downward pressure based on the technical charts. There is a downtrend that developed last week after the index peaked on May 11. There is also a potentially bear flag that formed on the intraday chart. 

S&P 500, spx

The daily chart shows that the index appears to have fallen outside of a rising wedge, indicating that S&P could be heading lower from here. Should the index drop below 2730, it could set up for a much steeper decline towards 2,500. Also, notice that the advance/decline line and the RSI have started turning lower, a potential shift in trend.  A more precipitous decline to 2,500 would take, let’s hope, a couple of weeks to play out.

S&P 500, spx

Keep an eye on the number of stocks in the S&P 500 that are above their 100-day moving average. That measure appears to be losing momentum, as does the number of stocks above their 50-day moving average. 

moving avearge

NASDAQ 100 (QQQ)

The Qs also found itself resting on an uptrend, which seems likely a somewhat significant uptrend. The RSI has turned lower, and if that is a sign of things to come, than it probably means the Nasdaq 100 is heading lower, with the Qs moving to $203 to start. 

qqq

Meanwhile, the number of stocks in the Nasdaq 100 above their 50-day moving reached near record-high levels. It, too, has started turning lower, yet another sign that momentum may be shifting. 

nadaq 100

You know what is super scary is that the top 10 stocks in the Nasdaq have a 56% weighting in the Nasdaq 100. Even worse, those same stocks have a 25% weighting in the S&P 500. Meanwhile, 5 of those stocks have a 45% weighting in the Nasdaq 100 and a 21% weighting in the S&P 500. So where these next five stocks go, the markets will go. 

Microsoft (MSFT)

Microsoft is one of those stocks, and shares have been resting on an uptrend, while its RSI has started turning lower. A break of that uptrend gets shares moving lower towards $161, which would also push the stock below its 50-day moving average. 

Apple (AAPL)

Apple has already fallen below its uptrend, and all it will take is a drop below $295 to see the stocks move lower towards $265. Its RSI has also started to turn lower as well. 

apple, aapl

Amazon (AMZN)

Amazon has already broken its uptrend, and the RSI is already flashing a bearish divergence suggesting the stock falls back to $2,100. 

amazon, amzn

Alphabet (GOOGL)

Alphabet has been rising in a perfect channel higher, but news late Friday about an antitrust suit could spoil the trend. A break of the uptrend creates the potential for a drop back to $1150.

alphabet, googl

Facebook (FB)

Facebook has been rising in a similar channel as Alphabet, and RSI reached overbought levels at 70 and that RSI is also changing trend, and that means Facebook may facing a decline to around $191. 

facebook, fb

Anyway, have a great Sunday!

-Mike

Mott Capital Management, LLC is a registered investment adviser. 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. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

 

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