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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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN NETFLIX AND ALPHABET
If you thought last week was fun, you ain’t seen nothing yet! This week has a ton of inflation data with the PPI and CPI on Tuesday and Wednesday. I don’t know how, but expectations for y/y over PPI is +2.5%, and CPI is +2.2%. My guts say these estimates are way too high. Oil prices collapsed in November, and our handy real-time inflation gauge would suggest that CPI and PPI should fall as well.
This is PPI vs. Oil
This one is CPI vs. Oil
My hunch is inflation rates are going to fall sharply in November, and that is going to drag the rates on the ten-year even lower.
A Nail in the Coffin
Inflation, as we have said here for months and months is not on the horizon. This may be the nail in the coffin of the inflation hawks and should that happen I think the odds of a one done from the Fed in December are very high. I think it may even result in the odds of the Fed not raising rates on December 19 goes even higher.
The Fed has gone to an “every meeting be live” with the addition of every meeting having a press conference. It means the Fed’s next chance to raise rates would come of February 1. So, depending on how bad this inflation data is, which I expect to be bad, it may be best to wait and see what happens until February.
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If that wasn’t enough, we get mortgage applications on Wednesday as well.
S&P 500 (SP500, SPY)
The S&P 500 closed on a critical level of support at 2,630. But the key level may be at 2,616. A decline below 2,616 sends the index down to 2,578. Anything is possible these days, and with the inflation data not until Tuesday, the market will have limited headlines to work with on Monday.
The VIX is nearing 26, and that has been the point in the past that has proven to be the upper end of the range since early March. Let’s hope that it is a sign we are once again nearing a turn lower for the VIX and a turn higher of the S&P 500.
Despite the sell-off last week Amazon held itself together rather well, staying above crucial support at $1620. If Amazon can continue to keep the $1620 level, then the trend remains higher, and $1760 remains resistance.
Netflix also continues to hold its uptrend, and long-term support is now around $255. The stock needs to continue to stay above this support level. Resistance remains around $285 for now.
Alphabet continues to hold the $1000 level, and a clear uptrend has formed. I think Alphabet may be one to watch this week. The stock doesn’t trade with a crazy valuation, has seen limited downside earnings revisions, and doesn’t have the negative news flow like Facebook. If any stock can be a leader, this is the one. Resistance is around $1130, where a downtrend lives.
Microsoft has been another stock that has held itself together well. $102 continues to be the line the sand and like Alphabet this one stock can help to lift the markets.
Good Luck this week. We are all going to need it!
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
INFLATION, microsoft, stocks, stock market, amazon, netflix, alphabet, sp500, vix