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May 16, 2021
STOCKS – SQ, TSLA, ROKU, HD
MACRO – QQQ, XLY, BTC
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- RTM: Relatives
- RTM Tactical Update – It May Be Time To Look For “Value” Among Growth Stocks
- Live Webcast Friday, 5/21 @ 1PM ET
- RTM Morning – Stocks Set To Bounce, Will It Hold?
- RTM Morning – Stocks Sink As Inflation Soars
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TESLA
This will be a big week for stocks, especially with the Fed minutes on Wednesday. Stocks had a volatile week, finishing lower but managing to catch a nice bounce on Thursday and Friday.
Nasdaq 100 (QQQ)
The Nasdaq 100 may be the index to watch this week, especially since it failed on Friday to move past the 50-day moving average. The 50-day moving average doesn’t seem like such a big deal to me. More concerning is the downward moving trading channel that has formed over the past week. That, coupled with two giant gaps lower, suggests that the Qs like to have a rocky week, with a retest of at the very least $319.70.
Bitcoin (BTC)
Bitcoin is melting; it fell 6% on Saturday and is down about 2% Sunday afternoon. But is worse than it seems because Bitcoin had been up by as much as 5% on Sunday before reversing course. I have been looking for 43,000 for some time, and we are really close, trading around 44,000 as of this writing. I will have to re-examine this. I think there may have further to fall.
Bitcoin is telling us the risk sentiment of the market overall is shifting, and we care about Bitcoin because we care about risk sentiment. Additionally, one sees there is a relationship between Bitcoin and the major indexes. You can see how the Russell 2000 and Bitcoin have traded together since last year.
Lumber
There also seems to be a relationship between Lumber and the S&P 500, again worth watching. Lumber started to show signs of breaking down last week.
The relationship exists, probably because of stocks like Home Depot, which has gone parabolic in recent weeks along with Lumber.
Consumer Discretionaries (XLY)
Believe it or not, both Home Depot and Lowes are consumer discretionary stocks, so think the XLY, not the material ETF XLB. Together they account for about 12% of the XLY, which is actually equal to Tesla’s weighting. So it might be a rough week for the XLY.
The XLY had been in a great trading channel going back to last summer, the RSI is trending lower, and the MACD shows you the momentum is being lost as well. A break of the trend sends the ETF back to the 200-day moving average.
Home Depot (HD)
Meanwhile, I think Home Depot will have a tough week, with the RSI now trending lower and the MACD going negative. The next level of support is around $309.
Tesla (TSLA)
Tesla finished last week on its 200-day moving average, but the way Bitcoin is acting this weekend, you have to think the stock is going to get dragged into this mess. If the 200-day moving average breaks, I fear we see a gap fill at $410.
Square (SQ)
Square was a big winner on the heels of Bitcoin, and unfortunately, now it is going to suffer. Once $200 breaks, it is likely headed to $161.
Roku (ROKU)
Unfortunately, if Square and Tesla struggle this week, the ARKK ETF will struggle, and so will all of its holdings. So that means Roku probably has a rough week with $285 acting as support.
Have a good one
-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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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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