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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February 1, 2020
STOCKS: AMZN, NFLX, DIS, FB, MSFT, JD, BABA
MACRO – SPY
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN NFLX, DIS, AND MSFT
It should be an exciting week when trading begins again on Monday. After all, the Chinese markets will open for the first time in a week, and they are likely to be down a lot. The S&P 500 is down about 3.5% since January 24, while the South Korea Kospi is down over 6%, and the HK Hang Seng is down about 6% too. So could Shanghai be down 7,8,9, or even 10% on Monday, it certainly seems possible.
Regardless the beginning of the week is not likely to be good for the markets. Then layer in the ISM manufacturing data on Monday, the ADP Job Report, ISM- Non, and the BLS job report, and there plenty of things that could pile up quickly.
The number of S&P 500 stocks above their 50 day moving average is still around 47%, and my hunch is that it still has to fall further, probably to about 25%. Premium content – The Week Ahead – Corona, Economics, And Earnings In Focus
S&P 500 (SPY)
For now, 3,150 seems reasonable for the S&P 500 to fall too. It is about 5.5% off the all-time highs and appears to have decent support in that region.
It is only about 2.5% from Friday’s close, so we could see that level by lunchtime on Monday, especially with the speeds these markets move.
I’d be careful with Amazon, the stock now has a giant gap to fill, and it is clear as day the market wants $2,060 to be resistance. Watch for a move lower to $1966.
Now that nobody is going outside anymore, it seems like a perfect time to sign-up for Netflix and binge some of our favorite shows like Stranger Things or finish off the Irishman. The stock appears to be acting pretty well. The stock hardly budge this last week, I think it will continue to hold $340, but I already told you that. Premium content – Why Netflix Stock May Have Bottomed
The same thing may apply to Disney with its streaming service. Then again, they do have those theme parks. But actually, they have a minority interest in Disney Shanghai and Hong Kong, did you know that? Anyway, I noted some bullish option betting in Disney last week, and I saw it again this week. The stock held up pretty well on Friday despite the selling in the market. Probably bodes well for the post-earnings report, with shares rising back to $150. Premium content- DISNEY STILL SEEING BULLISH BETTING
It is not likely a good week for Alibaba, just because it will likely serve as a proxy for China. A break below $201 probably moves this one lower to $187.
The same can probably be said for JD.com, with shares likely heading back to $36.40.
Facebook fell through support at $203, and I think that sets up that drop to $191.
Microsoft has come a long way in recent weeks, and I think the stock could fall back to around $165.
Have a great Sunday!
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.