This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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And There Was Light And The Stock Market Rose
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF TSLA AND ACAD
It is Friday, and this has been a crazy week for me with the stock market and a water leak in my house due to a broken pipe which created all sorts of havoc. But at least today is Friday, and to me, it feels like a giant weight was removed from my shoulders.
Russell 2000 (IWM)
We don’t often pay enough attention to the small-cap stocks and we should. But have you seen the performance of the Russell 2000 ETF IWM? It is down 11.3% from its highs just at the start of September! That is a significant move, huge! To be honest I feel like a bit of an idiot for not seeing that divergence soon.
S&P 500 (SP500, SPY)
No sense of beating ourselves up over things in the past, next time we will be wiser. The good news is that S&P 500 bounced today by about 1.4%. Hey, it is a start. It certainly seems, for now, the market is testing and defending this support level around 2,716. Remember, as I wrote last night, the zone around 2,716 finds its origins back to April and then June. The index struggled at that level for months, and when it finally broke out at the end of June, the index retested that level again in July. This 2,716 zone is OF GREAT IMPORTANCE! If the index falls below this zone of say 2,670 to 2,725, the market would have a great deal further to drop, perhaps to as low as 2,600. That is how crucial it is that the index makes a base here. Get it? Good, now, let us never have this conversation again. 🙂
We can see in the 15-minute chart how the index gapped higher this morning, then filled the gapped testing yesterday’s lows a couple of times and accelerated higher into the close. It is exactly the type of price action you want to see if you are bull.
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Similarly, we can see that the NASDAQ is bouncing firmly off its February 2016 trend line, which is a significant level, and something I am happy to see.
Intraday the NASDAQ and the S&P 500 had a very similar price action. We can see the index gapped higher, refilled it and moved up into the close. If you want to be critical, it would be that the NASDAQ failed to rise above 7,500 on its first attempt.
Banks (XLF, BKX)
The banks look horrible, I’m sorry. I have said it for months. It just keeps getting worse for the banks. I noted yesterday the BKX looked like it was going to 97, I did not think it would almost happen today. It fell to as low as 98.60. If it weren’t for the banks lousy day with the BKX down nearly 90bps, the S&P 500 and Dow would have been much higher. (See more: Tomorrow is When The Balance Of Power May Shift For The Stock Market.)
I don’t want to say this, but if Goldman doesn’t hold this $215 support level, it seems likely it may fall to around $200. The stock has to stay at these levels to avoid further losses.
Tesla, the shorts are just playing with fire here.
I asked for Acadia to consolidate and it sure did. Now it is time for the stock to break out and rise back to $24.
That’s all folks
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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