May 3, 2020

STOCKS – AMZN, NFLX, MSFT, AMD, NVDA

MACRO – SPY, QQQ

MIKE’S READING THE MARKET PREMIUM CONTENT 

• Volatility May Be High With Significant Downside Risk Starting This Week
• Many Signs Point To Lower Equity Prices
• Earnings Continue To Detoratiate
• A Significant Number Of Uptrends Have Broken
• Volatility Rising – Morning Commentary
• Understanding On Close Imbalances

It will be a hectic week as earnings begin to wind down, and economic data flood the headlines. ISM Non-Manufacturing data, ADP private payroll, and the BLS job report will come throughout the week, and these are as important as they come. It could very well set up the direction for the market for the next month. 

Unfortunately, I am not bullish on equities at this point, and I haven’t been since the end of March. I know, you think I missed the big rebound. I haven’t because I have still been invested; all I did was raise my cash position, and de-risk my portfolio.  So you can be bearish on the market and still be invested, it is just how you position your portfolio that matters. 

S&P 500 (SPY)

Anyway, this past week finished on a low note, and I fear we may see things grow worse, especially given how the indexes closed on Friday. The S&P 500 fell out of the rising wedge on Friday. The level around 2,800 is a considerable level based on dealer gamma positioning, with a break likely resulting in a spike in volatility. You can see on the chart that 2,800 is also a critical support level, not a coincidence.  Should the index crack 2,800, the S&P 500 could easily fall to 2,720.  Premium content – Many Signs Point To Lower Equity Prices

NASDAQ (IXIC)

Meanwhile, the NASDAQ fell below an uptrend and support level that formed off the March lows, and I fear that it is a strong bearish sign. If the index can re-take that uptrend on Monday or Tuesday, then perhaps we can continue to rise. I think it is more likely we head to 8450. 

Amazon (AMZN)

Amazon is nearing an uptrend, with a break setting up a drop to 2,095. Free story- Amazon’s Pullback May Only Be Starting

Microsoft (MSFT)

Microsoft isn’t cheap at these levels, despite having a strong future. I think the stock move lower to $161.  Free story – Microsoft’s Stock May Struggle To Rise Despite Massive Earnings Beat

Nvidia (NVDA)

Nvidia has stalled out, and I think shares move lower to $256. 

AMD (AMD)

The next level of resistance for AMD comes at $46.25. 

Netflix (NFLX)

I think Netflix continues lower as well back to $386. 

Have a good week

-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.