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.
Otherwise, enjoy the column!
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Stocks – AMD, XLNX, FB, NVDA, TWTR, T
Macro – SPY
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- Bearish Trends Mount On DocuSign, As Investors, Await ISM Report – Morning 12.3.20
- Higher Yields Will Crush The Earning Yield Narrative – Midday
- The $200 Million Options Bet – 12.2.20
- The S&P 500 Breaks Out, Uber Is A $90B Food Delivery Co, Zoom Breaks
- Zoom Goes Pop, As The Markets Rock
S&P 500 (SPY)
Stocks continued to rally this past week, closing just below the 3,710 target level. While it feels like the full bull mode is upon us with a seasonally strong time of the year, many things suggest the rally is overextended. It doesn’t mean it is about to end tomorrow, but typically these things end sooner than expected and without notice. It likely means this is a time we should be thinking about de-risking. (premium content and video – These Things Tend To End When Least Expected – Week Of December 7)
There is what appears to a rising triangle counted out, along with an RSI that has hit just about the overbought level at 70.
A larger version of the same pattern is also visible in the S&P 500 futures, with an RSI near overbought and volume levels diminishing rapidly, along with 5 of 5 wave count. Again, suggesting a topping pattern and the potential for a big reversal.
Meanwhile, last week we the most shorted stock continue to lead all of the major indexes higher. Probably not the group that should be outperforming.
AMD (AMD) and Xilinx (XLNX)
It’s not the best sign for the AMD bulls that the stock is struggling to break out at resistance with an RSI that is around overbought levels. My view hasn’t changed, which is that Xilinx’s weight will keep a lid on this stock, and AMD will get dragged lower towards $75, which will in-turn drag Xilinix down.
Nvidia hasn’t participated one bit in the SMH rally and has many of those same negative qualities as the broader markets. I still contend the stock falls to around $460.
Facebook also has a similar triangle pattern, which has formed, and likely suggests the stock pullback to around $260.
I use to enjoy going on Twitter and using it as a source to get news items. Now I can’t stand it; everyone thinks it is a place to post their political views, along with that whole what’s happening section. It isn’t, and quite honestly, I’m sick of the whole thing. I don’t follow market news columnist for them to retweet their political biases. So I unfollow them and find I myself using the platform a lot less, and I’m not even missing anything. It tells me it is a useless platform.
Hopefully, now that the gap is filled, it means the stock heads down again.
The worst thing AT&T did was buy Time Warner. I’ll admit that I thought it was a great idea at the time; it turned out to be a horrible deal. Now they are left with a bloated balance sheet due to all the debt and news networks they can’t even give away. 92% of the S&P 500 is above their 200-day moving average, and AT&T is one of the 8% that isn’t, pretty pathetic. The 200-day will continue to act as tough resistance for the stock.
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