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Biotech and Tech Stocks Are Approaching Make Or Break Moments
The stock market picked right up from where it left off last week, with the S&P 500 continuing to surging to 2,721 up about 1.1 percent today. Based on the charts, it seems like we have a pretty good shot of continuing to rise to somewhere between 2,740 and 2,760 before we see a significant region of resistance again.
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Yields
I still think 10-year treasury rates continue to decline, and I still believe we see a push down back towards 2.6 percent. The chart has turned, and it seems a new trend lower has formed.
Inflation Watch
The inflation number to watch this week will be average hourly wages released during the Job report on Friday morning. According to Bloomberg, estimates are calling for y/y hourly wage growth of 2.9 percent, and consensus is in a range of 2.8 to 3.0 percent.
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Biotech Sector
The NASDAQ Biotech ETF IBBÂ has an unusual setup in the chart, with resistance at $111.50. The formation doesn’t look the greatest. In fact, should it the ETF fail again to rise above $111.50 I would grow very concerned about the future direction of the group.
The same setup is confirmed in the XBI as well. what had once been a promising year is beginning to look worrisome.
It is always important to watch how stocks “act” in a big up day, especially when there is buying across all the sectors. But look at what stocks hardly budge. Celgene, Biogen, and Gilead. Only Amgen performed well of the big biotech names, and that seems concerning. It likely means all the sellers have not been shaken out of the group yet.
Biogen shares are trying their hardest to bottom. The relative strength index (RSI) is near oversold levels at roughly 33. There is a slight hint of the RSI starting to trend higher while the stock price continues to test the lows, which could be a bullish divergence. But it may be a bit to early to say for certain.
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Technology
The technology ETFÂ (XLK) has the making of what appears to be a double top. It makes the $69.25 level of critical importance. The RSI has been trending lower for sometime with a series of lower highs, and lower lowers. Again, we need to see the XLK continue to rise, in the near-term, and rise above $69.25.
Apple
Apple has the making of a similar double top, although it is not nearly as pronounced as the XLK.
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[youtube-feed feed=7]Microsoft
Microsoft is another example, with the same double top setup. It makes the $95.25 level extremely important for the stock. Notice how the RSI has been trending lower, while volume has been steadily declining. To confirm a breakout at $95.25 we need to see a meaningful surge in volume. On the other side, should MSFT fall below $85, it would likely be confirmation of the double top pattern.
NASDAQ 100
The biggest problem is that NASDAQ 100 is exhibiting the same pattern.
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Micron
One stock that has broken out is Micron. I noted over the weekend the importance of $50, and it easily broke out today, surging by nearly 6 percent. Notice how volume surged and has been steadily increasing since early February, along with a rising RSI. As we have noted it before, the stocks next stop could be around $58.
Netflix
Netflix is also in breakout mode, with its shares climbing today as well, and are now at $315, up nearly 4.5 percent. Notice again increasing levels of volume, and an RSI trending higher. The stock got another price target upgrade today, this time it was Macquarie. The firm raised it price target to $330 from $276.
I hope I was able to show the subtle difference in the charts, and why I have some level of concern and will be keeping a very close eye on things.
That’s it!
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Michael Kramer and the clients of Mott Capital owns shares of NFLX and CELG
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Tags: #sp500 #micron #microsoft #biotech #celgene #biogen #gilead #amgen #netflix #micron #technology #yield
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.