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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MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN AAPL, NFLX, TSLA, SWKS
But on the economic side for the US, ADP job data was strong with more than 271,000 versus estimates of 178,000 jobs created. Tomorrow we will get the BLS Job report with estimates of 177,000 jobs created.
The stock market did not like the ISM Manufacturing number which came in at 54.9, which was below the estimates of 58. Certainly slower in the past but still suggesting economic strength.
Again, overall economic numbers are healthy.
S&P 500 (SP500, SPY)
The S&P 500 managed to close the day above technical support at 2,440. Certainly a good sign and something potentially to build on tomorrow. The S&P 500 is still about 4% above its lows, but the uptrend that which had been forming is now broken, that is the bad news.
The Russell fell today, but not as severely as the S&P 500. For now the Russell is managing to hold on to technical support around 1,330. The next level lower is around 1,310.
Apple was the heavyweight leading everything lower today. The good news, if there can be such a thing today, Apple held support at $142. The bad news, the stock closed on that support level.
Look I don’t know if Apple is finished as the market is saying it is. I also do not believe that Apple is the next Blackberry. Blackberry’s dominance was a result of its inability to adapt to a changing landscape, and frankly making inferior touchscreen products. As far I can tell, the smartphone landscape has been relatively static for many years.
I do believe the sell-off is overdone at this point. The stock is trading at 11 times 2019 earnings estimates of about $12.17 per share. I guess you if think this the next IBM or Gilead than perhaps the valuation is fair, but I don’t see Apple going into a long-term decline at this point.
Of course, that doesn’t mean the stock can’t go lower, because it falls below $142 then the stock likely fills the gap back to $122.
Obviously the chip stocks got smoked today, with the SMH falling 6%! The SOXX fell 5.8%. The Apple, suppliers like Broadcom, Skyworks, Qorvo got smoked. Broadcom is probably the best positioned to weather the storm out of the others. For now, $227 is the next level of technical support for Broadcom
Netflix shares rose today, by over 1%. Surprising in such a weak tape. The stock managed to rise above resistance at $271. If it can hold these levels, then the next region of resistance comes around $285.
Bristol Myers (BMY)
Bristol Myers stock fell very hard today by 13.5% after it announced it would buy Celgene, in a surprise transaction. Bristol Myers stock has the risk of falling to around $41.25.
Microsoft fell sharply today after failing at resistance around $102; support doesn’t come until $96.
Tesla was under pressure again, on China worries. Anyway, the stock continues to hang on to support at $300.
Nvidia continues to decline, and a retest of the lows around $121 seem likely.
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 results.
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