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Banks, Bets, Breakouts, and Blame – Freaky Friday
It was another exciting day in the stock market. Nah not really, it was mostly uneventful. Technicals continue to dominate trading, with the S&P 500 testing resistance at 2,672, and testing support at 2,647, at the end of the day, we closed at 2,656.
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Taking A Look The Banks, And Prepping For Earnings Season
Banks
As of right now, it would seem that the financials will not be the group to lead stocks higher. JP Morgan, Citigroup, and Wells Fargo reported results and all three were down despite posting good results. It could be a combination of things at play, expectations were for better, all the good news has been baked in, or investors are concerned about slowing earnings growth. It doesn’t matter what the reason was, but what seems to be crystal clear to me at least, is that the banks will not be the group to lead this market higher.
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Yields
I think for the most part the treasury yields on the long-end of the curve are not giving in and are refusing to rise, and again I think that is a function of the low yield environment globally. The Fed can control the short-end of the curve, but the Fed has no control over the longer-end the yield curve. As long as the free market controls the long-end of the curve, I think the yield curve may continue to flatten, and that is very bad for the banks and interest income.
The spread between German and US bond is fairly steep at over 2.3 percent, and that is likely a problem
In fact, I continue to believe the 10-year is going back to 2.6 percent.
Amazon
Amazon failed to stay above 1,440. Again, bad!
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Nvidia
So now, Citron is betting Jim Cramer $230k that Nvidia’s stock will be below $230 in 12 months.
All I can say to Citron is that Nvidia is a tough stock to bet against. I have never once traded a share of Nvidia long or short. But I have sure written plenty on it, and I for some time I was extremely negative on it, probably from around $100 to $200, :). Every time I thought Nvidia would crack, or revenue and earnings would slow, they didn’t. To this point, it still may be easy to bet shares of Nvidia continue to rise than to bet they shall fall. Good luck to those two, I’ll remain an onlooker.
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Netflix
Netflix shares broke out today, and it managed to close above the downtrend. That is a positive, considering the stock is heading into results Monday after the close. The stock got a couple more upgrades today as well. I will put a pre-earnings look on Sunday, again.
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Tesla
Elon Musk was busy on Twitter today, first challenging the economist and claiming Tesla will be cash flow positive in third and fourth quarters, and then taking the blame for excessive automation causing problems in production.
I have no idea if Tesla will be cash flow positive or not by the third quarter. Lets first see how the first and second quarters go.
The one thing I do know is that that stock can’t get over $303.
Oil continues to rise and is getting closer to our $75 target.
That’s it, see you Sunday! No commentary tomorrow, I’m taking the day off!
-Mike
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Tags: #stockmarket #sp500 #amazon #tesla #nvidia #netflix #jpmorgan #banks