September 18 – Stock mentions: SPY, ROKU, NFLX, AAPL, JD, BABA

Michael Kramer and the clients of Mott Capital own AAPL, and NFLX

MACRO

Well, after some uncertainty around whether they would or wouldn’t, the Fed did cut rates by 25 bps. But the confusion once again mounts as to whether the Fed would act again, based on its forecasts. But those forecasts may not mean all that much. The chart below shows that projections in June for 2020 were at 2.1%, and here we are below 2%.

Regardless of what the forecast or dot plots show Powell made it pretty clear, he was going to be there to help the economy along should it sputter. At one point, I thought I heard things when he even mentioned the Fed might have to start to increase the balance sheet again. But he did say it. 

I think that should give investors confidence that the Fed isn’t about to let the economy go off the rails. Premium content Get the first two weeks for free Fed Decision Break Down

You can see the sharp u-turn in the S&P 500 during the meeting.

S&P 500 (SPY)

It is never easy to predict where the market is going, but it isn’t harder following a Fed meeting. You can’t deny that the trend for the S&P 500 is still higher.

10-Year Yield

Rates did rise following the announcement, but given the steep increase and decline we have seen in recent weeks today’s move higher may not last.

STOCKS

Roku (ROKU)

Anyway, moving on. Roku collapsed today on news that Comcast would offer it subscribers a competing product for free.  Geez, all of a sudden Roku is a streaming box. I guess everyone forgot that were a lot of competitors in this space? Well, $122 is now looking possible, and $100 is too.

Netflix (NFLX)

Netflix went down today too, I think in sympathy with Roku, but I’m not sure why? I hear people talking about Roku in the same breathe as Netflix and Disney, but it just isn’t that simple, and you should not kid yourself into believing it is. Netflix and Disney are content creators; Roku is a device that is trying to work ad revenue into their model. Very different business models. If anything, the news should be viewed as positive for Netflix, because now the Comcast streaming device will give access to people that didn’t have it before.

Anyway, the falling wedge breakout held and I think the stock still moves higher.

Apple (AAPL)

Apple continues to trend higher and is once again nearing resistance at $223, with a break out helping to push the stock towards $235.

JD.com (JD)

JD.com is on the uptrend, volume levels are dropping, and the RSI is consolidating. It now or never for JD. It needs to break out, or else it is finished.

Alibaba (BABA)

Alibaba is no different; it is like there one massive seller just sitting out there with a limit order on the stock. I mean, a decent trader would at least try to work the stock higher, and trying to get some higher prices. Geez… They have algo’s that can do that.

-Mike