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Amazon and Apple May Rise; Nvidia, Alibaba, JD, Banks May Fall
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF APPLE, NETFLIX, VISA, AND MASTERCARD
S&P 500 (SP500, SPX)
The stock market fell slightly on Monday with the S&P 500 dropping by about 60 basis points. The index has had some difficulty rising above the 2,772 level on several occasions over the past two days. But if we are to looking for a silver lining, it is that we did not retest Friday or Thursday’s lows and that the S&P 500 is slowly trending higher.
Yields on the US 10-year are stubbornly staying elevated and hovering around its uptrend. We must continue to watch this.
The dollar index continues to decline and is not confirming the move in higher in yields. It would suggest that yields are likely to fall.
Gold is sometime a hedge against risk. It has moved slightly higher in recent days, but some of that may also be related to the weaker dollar. It may continue to rise a bit further to around $1,270.
If turn to leadership in the stock market, we can start with Amazon, because it shares were hit early in the day but recovered nicely. The excellent news is that Amazon has now tested support two times at the $1,740 level, on Friday and today. Most important is that the support level held firm. As long as Amazon can keep its price above that support level, then the bull case continues to grow stronger, and an increase back to $1,900 could be in the cards.
Apple also fell hard today by more than 2%, but again the good news here is that stock continues to hold support at $217 a big positive. It would seem there is a big buyer there. I wonder who it could be :). I do not know. But could it be Berkshire? I have no clue, but the stock has been firm at that level. Since the end of August, it has only momentarily dipped below that support.
Mastercard got fell and had some difficulty getting above resistance at $203. Staying above the previous lows is critical.
Visa’s chart looks like that of Mastercard. Looking at this chart more closely would suggest that the stock could fall back to around $136. But again, that is still higher than the previous lows.
Netflix is due to report results tomorrow, and the stock is also holding firm at its support around $333. What happens with the results? I do not know. My guesstimate based on my gut and analysis of Google Trends suggests that the company beats its guidance of 5 million new subscribers easily. I looked the option again, and I really do not see any sign of a big bet either way. Additionally, the chart doesn’t help much to predict fundamental results.
Nvidia is fighting to hold its lows of last Thursday around $235. If it can’t those lows then it likely falls to around $217.
The way that RSI is trending, I think $217 is better than a 70% chance.
Banks (BKX, XLF)
I was going to review the banks. But what am I suppose to say? They are going lower. I have been saying it for weeks. I’m sorry, but this hasn’t changed. They are still going lower.
JD.com is nearing its downtrend. The RSI is just grinding lower and would suggest that the stock fall to around $20.
Same for Alibaba.
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