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Michael Kramer and the clients of Mott Capital own Netflix
Stocks, in general, had a pretty dull day, but there were a number of red flags from today that does have me a bit concerned for next week. It doesn’t mean that the stock market will retest the lows, however, it does mean there a risk the broader indexes retrace some of the recent gains.
We will explore this topic more over the weekend, and I start to outline some of the points below.
The S&P 500 finished the day down four basis points breaking its current winning streak. The S&P 500 has significantly struggled around the 2,600 level over the past two days. That has me wondering what Monday will bring.
Russell 2000 (RUT, IWM)
RUT Quotes by TradingView
Perhaps more importantly, the Russell 2000 continued to advance as well. It is now closing in our resistance level at 1,459. That level will be a critical point for the Russell because it is hitting resistance around the same time the S&P 500 is stalling out.Â
Housing Sector (HGX)
Even more worrisome is the housing sector HGX index hitting resistance today at 269 and failing. This is not a good sign.
It sets up a very interesting scenario for Monday. Remember, the housing sector has been a perfect guide for us over the past couple of weeks as the equity market has risen. A divergence in the housing sector and the broader S&P 500 and Russell is likely to be a negative sign for stocks. That makes what happens on Monday very important!
Additionally, the topping pattern in the housing sector is no ordinary pattern; it is a very bearish reversal pattern known as a triple top. That is not a good sign either and would suggest a steep decline to follow.Â
General Motors (GM)
Shares of GM rose sharply after the company guided FY 18 and 19 EPS above consensus estimates. Don’t get too excited this stock has done nothing since the 2016 election. Even worse look at where the stock failed today! Right at resistance around $38. Now there is a giant gap that needs to be refilled around $35. If the stock can’t get over $38, it is going back to $35.
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Netflix (NFLX)
Netflix had a great day rising nearly 4%, and with that, the stock firmly broke above resistance at $330. The stock reports results next week and is now trading around $337, the shares were $271 on January 3. Trust me, I love seeing the stock climb, but not this fast. It is means expectations are getting harder and harder to beat when they report next week.Â
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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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