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August 22, 2021
STOCKS – NVDA, AMZN, AAPL, PYPL, TSLA, FB
MACRO – SPY, QQQ
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Fed Tapering May Fuel The Dollar’s Rise, Trigger A Risk-Off Event
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- RTM – Will The Fed Taper At The Wrong Time?
- RTM Video – Is This The End Of The Rally?
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL AND TSLA
Stocks managed to bounce back on Friday, with the S&P 500 climbing by around 80 bps and the NASDAQ Qs rising by just over 1%. Not much changed in our model, with the recent highs serving as a potential candidate for a correction zone for both the S&P 500 and the NASDAQ, based on the Elliott Wave and Fibonacci counts.
S&P 500 (SPY)
The overall trends still appear weak, with the advance/decline line still well below its recent highs and really having traded flat over the past couple of months, a notable divergence from the index.
NASDAQ
But the more concerning look is the advance/decline for the Nasdaq Composite. That line has really broken down and diverged from the index. Something similar happened in the fall of 2018 and the winter of 2020, but the divergence was not this wide even then. Additionally, there is a major difference; notice how the advance-decline of the composite made a lower high in July and then made a lower low in August, compared to the indexes higher high and higher low. A very notable divergence. This is a pattern that will be reflected in the stocks mentioned lower in this post.
Also, notice how the number of stocks making new highs in the NASDAQ composite is trending lower after peaked in February and March.
But what seems to be the most interesting is when you start looking at individual stocks and begin to see some very similar trends.
Nvidia (NVDA)
Nvidia, for example, has been trading in a range since the beginning of July with no new high. This week will be key for Nvidia because the company reported results, but questions remain around the purchase of ARM Holdings. But more important is that the price of $210 is tough resistance, and the trends in momentum are not bullish. So the stock really needs to push above $210 this week to avoid a reversal and a potential triple top pattern.
PayPal (PYPL)
Notice how PayPal was unable to make a new high too, has really struggled recently and is sitting on support at $271. A break of support sets up a drop to $257 and probably $230.
Amazon (AMZN)
Amazon has been very weak and has moved down sharply since reporting results. The stock fell through $3,300 and pushed down to $3,200. We will have to see here, but there is a strong chance this is heading lower still, to around $3,000.
Apple (AAPL)
I know Apple technically made a new high recently, but really this stock has done nothing since January. Additionally, the RSI is trending lower, and the MACD is still very negative. So I continue to think this stock will move lower again, back towards $130.
Tesla (TSLA)
Also, since January, Tesla hasn’t made a new high and is now flirting with the $700 region, which will be the key dividing line going forward.
Facebook (FB)
Facebook hasn’t made a new high since July, although the chart looks much better than a few others, and at least it has a positive trend. But still, it has not been part of this recent move up in the S&P 500 or Nasdaq.
Now, I mentioned these 6 stocks because they are among the top 10 holdings of the Nasdaq Composite and Nasdaq 100, and if they can’t push higher and make higher highs from here, then there is a problem. Because we know the broader breadth based on the advance-decline line is weak and weakening, then the number of stocks left to lift the indexes will shrink further, calling into question just how much further the indexes can really climb.
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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