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Amazon, Microsoft, and Netflix Showing Sign Of Fatigue

Amazon, Microsoft, and Netflix Showing Sign Of Fatigue

To follow up on the weekend commentary, Amazon, Microsoft, and Netflix are continuing to show signs of weakness. In fact, today’s trading action, despite mild gains, actually strengthen that argument as each stock failed at crucial resistance levels. Plus I take a mild victory on NXP Semiconductor

Mott Capital Management, Michael Kramer

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S&P 500

The stock market traded slightly lower today, with the S&P 500 down by about 60 bps, to 2,716, bring the S&P 500 down to our first support level around 2,713.

S&P 500

The chart above shows how the S&P 500 bounced right off, 2613, and managed to close right above it. Over the weekend, I wrote that the S&P 500 might fall to 2,691 to and I still believe that is the case, over the next couple days. Again, let me emphasize I am not saying or calling for the start of some massive sell-off, this, in my opinion, is just merely a minor pullback, in what has otherwise been a sharp and robust rebound. But if support fails and the index falls below 2,691 the story changes.

Amazon

amazon

Amazon finished the day higher by about 1.36 percent, but again Amazon continues to look extremely toppy here, and once again, the stock topped out along resistance and has yet to break above its previous highs.  To make matters worse for Amazon, we can see the stock had a relatively sharp sell-off of about 1 percent over the final hour and half of the day.

amazon

Additionally, if the stock fails to break to new highs, it could be a sign of a double-top forming on the daily chart. For now, the warning signs for Amazon, are a failure to rise to a new all-time high and a drop below $1,425. Should Amazon’s price fall below 1,425 shares likely fall sharply lower, perhaps to $1,250.

Notice volume was consistently rising for Amazon starting at the end of 2017, and it has been steadily declining even as the stock has rebound, again a bearish sign in my book.

Watch for these levels and these areas of interest. To be clear, I am NOT saying Amazon is about to enter some giant bear market, or this the all-time high’s never to be seen again! NO! I am merely suggesting that the stock may have a pullback over the next few weeks to months, and now is likely to err on the side of caution.

Microsoft

Microsoft also rallied 90 bps today, but look at that chart below, again failing right at resistance. You saw the chart from over the weekend. I don’t make these things up!

msft

If shares can clear $93.50, it is a sign that I am wrong, and the stock could continue to rally. That trendline is of critical importance to watch.

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Netflix

Netflix is the same scenario, also nearing a technical breakout/breakdown. Again, Netflix like Amazon must make a new all-time for any rally to continue to over the short-term. If shares are unable to rise above $287.50, it would suggest that the stock will fall and likely test support around $250.

netflix

NXP/Qualcomm

After a year of writing about the topic, Qualcomm has finally up its bid for NXPI to $127.50 or $44 billion.   I’m going to give myself a well-deserved pat on the back because it was in June, I said that Qualcomm would need to raise its offer $45 billion. Pretty darn close.

The most entertaining thing about the new offer? The tender closes on March 5, at 11:59 PM. Remember Broadcom is nominating people to run for Qualcomm’s board of director at the shareholder meeting. Broadcom made it quite clear they opposed Qualcomm upping its bid for NXPI. So what does Qualcomm do to fend off Broadcom, what they had too, up the bid. The best part, guess when that shareholder meeting is? You guessed it, March 6.

Talk about a kick in the teeth!

That is it! Good Luck

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Michael Kramer and the clients of Mott Capital own shares of NFLX and NXPI

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.

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Tags: #sp500 #stock #microsoft #broadcom #qualcomm #nxpi #netflix #amazon

 

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