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Could Netflix Move Into Music? The Daily Rundown - MCM Market Recap

Could Netflix Move Into Music? The Daily Rundown – MCM Market Recap



Could Netflix Move Into Music? The Daily Rundown

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF nFLX AND TSLA

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Netflix

I thought Netflix may have broken out early in the day but was unable to hold the gains.  It has a solid uptrend in place, and the RSI certainly looks like it too is ready to breakout.

Into Music

I have been thinking a little bit about Netflix and wondering if it makes sense for them to get into a music service. They have 125 million subscribers, and maybe for an extra $5 a month they can bundle in a streaming music service. The Netflix app is already on my phone, making it easy to likely get conversions.

Yes, the streaming music space is getting crowded, but how many people would gladly pay $20 a month for music and content.  I’m sure a lot.

Doing some back of the envelope math, even if you consider the 55 million US subscribers, and a conversion rate of 30 percent, it could easily add about $250 million in extra revenue a quarter, and just further solidify the company’s dominance, in streaming media.

netflix


Broader Market

It was a pretty quiet day all around, stocks couldn’t build any positive momentum all day long, and the sellers just came in at the end of the day.  When it comes down to it, the S&P 500 was only down about 30 bps, certainly nothing to fret over, and refilling some of the gap created yesterday.

sp500

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Industrials

Industrials had a great day yesterday, and today we gave back a portion of that significant gain.  Again, some investors blame trade tension; I blame the Algo’s playing a game of fill the gap.

xli


Boeing

The same thing happened with Boeing.

boeing

Chips

The setup in the chip stocks still looks strong.

chips

Micron

Micron has a lot to do with the chips being strong; the stock jumped by about 6.5 percent today.  But, be mindful of that gap, just like the other charts above show us.  A fall back to $56 or even $54 is entirely possible.

micron

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Tesla

Tesla certainly has an unusual setup, with the stock sitting at support around $272, while the RSI continues to trend lower.  It is the stock that everyone loves to hate. It needs to find a bounce off this support level. Otherwise, things might get difficult for the longs. The short interest as of April 30 was at the highest level ever in the stock’s history at 39 million.

tesla


Now on to some boring, but very important stuff

Dollar Index

The dollar index has stopped rising for now, and where the dollar goes can have ramification on other parts of the market. For now, it struggles around $94, and should it break above $94, then is going to be a significant problem for commodities and multinational stocks. Should it managed to reverse and head lower, that is going to help fuel Oil rise even higher.


Eurodollar Rates

The Eurodollar deposit rate is perhaps telling us that demand for dollars abroad may be easing, and that may be a sign that the recent rise in the dollar is nearing an end. Back on March 20, I speculated that the rising Eurodollar rates were a sign the US dollar would begin to surge, and indeed since that time, the dollar index has climbed from 90.50 to a high of 94 yesterday, a climb of about 3.8 percent. So indeed, we should pay attention to the cost to borrow dollars aboard.eurodollar

Libor

Additionally, 3-month libor rates are stalling out, and perhaps that is a sign that expectations for future Fed rate hikes are cooling. It would surely be nice if that were the case.

 

For the most to think we are in a low inflation environment with strong earnings growth and a robust economy. Hard for me to bearish in this type of situation, I continue to see more and more signs of sectors breaking out, and individual stocks as well.  Outside of some unforeseen geopolitical event, I think the most significant risk to the economy and the markets is an over aggressive Fed. Nothing would make me happier than the Fed to leave things alone at this point.

That is it for today.

-Mike


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JPMorgan’s Stock May Rebound to New Record High

3 Stocks Poised to Lead as S&P 500 Breaks Out

Alibaba’s Stock Seen Rising by 18% on Strong Growth

Micron Stock Seen Rising 14% on Raised Forecasts

Big Warning Signs for Starbucks Stock

P&G’s Battered Stock Ready for 10% Rebound

GE’s Breakout May Send Shares 15% Higher

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #netflix #music #tesla #sp500 #industrials #boeing #dollar #eurodollar #libor

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4 Stocks and 3 Sectors To Watch For May 22 - Mott Capital

4 Stocks and 3 Sectors To Watch For May 22



4 Stocks and 3 Sectors To Watch For May 22

michael Kramer and the clients of Mott capital own shares of visa

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It was a solid day for the S&P 500, with the broader index up about 75 bps, closing at 2,733. Meanwhile, Industrials were the clear winners rising by about 1.6 percent, followed by chips, and more general technology, and financials.

The setup looks very strong in the broader market, and it looks there are still more gains to come. I have written over and over about the strong fundamentals, and now the technicals are coming into alignment.


Small Caps

The strength in the small caps is confirming the positive tone, which is now at all-time highs.

russell


Boeing

Boeing was the big winner today with shares jumping by nearly 4 percent. I wrote on Sunday that the stock was likely heading back to $370. Well, today it finished up at $364. Should it get to $372, it will be a big test for the stock, because that is resistance from the previous high set back on February 28.

boeing

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Industrial ETF

The setup in the industrial ETF (XLI) doesn’t appear to be all that different. That ETF is looking very strong too.

boeing


Technology

The setup in the technology ETF XLK looks like it is just ready to bust out, and continue its previous rise.

xlk


Visa

Visa also looks set to breakout to new record highs.

visa

Micron

Micron was a clear leader in the chip sector today, and it too looks set to go higher. The company pre-release better than expected quarterly guidance prior to their investors day. Tonight, after the close, the company announced at $10 billion shares repurchase.

mu

Chips

The setup in the broader SOXX also looks very positive. I think we may see $197 in the not to distance future.chips

JP Morgan

JP Morgan is also nearing a potentially massive breakout.

jpmorgan

That is it for today.

-Mike


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Alibaba’s Stock Seen Rising by 18% on Strong Growth

Micron Stock Seen Rising 14% on Raised Forecasts

Big Warning Signs for Starbucks Stock

P&G’s Battered Stock Ready for 10% Rebound

GE’s Breakout May Send Shares 15% Higher

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #boeing #jpmorgan #visa #industrials #chips #micron

8 Stocks To Watch For The Week of May 21 - Mott Capital

8 Stocks To Watch For The Week of May 21 – Mott Capital



8 Stocks To Watch For The Week of May 21

michael kramer and the clients of mott capital own shares of Aapl, googl, and Netflix

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I have been writing the past few days about the moves in semis, biotech, and the small caps, but I thought today we could focus on the large caps, because eventually for the S&P 500 to continue its rise, the large caps are going to have to get involved.


Apple

It would seem relatively easy to say that Apple has been hands down the best performer in May rising by nearly 13 percent, followed by Facebook, up half as much, increasing by about 6.5 percent. Alphabet is up about 5 percent, while Netflix and Intel are both up about 3.5 percent.

AAPL Chart

AAPL data by YCharts

How much higher can Apple rise, hard to say based on the charts. I never like to try to predict how high a stock can rise when it has broken to new highs; it becomes a guessing game for the most part.

aapl

But it is among the cheapest of the large-cap stocks based on a one-year forward PE earnings multiple around 14.1, while the group has an average of a one-year forward pe ratio of roughly 18.5, with a median of 16.5.

AAPL PE Ratio (Forward 1y) Chart

AAPL PE Ratio (Forward 1y) data by YCharts

Shares are also trading at the upper end of its historical earnings multiple range, so it would suggest there is likely further room for Apple stock to rise. However, that rise may be limited from here over the next quarter until we start getting details on the upcoming iPhone launch or better visibility into next year’s estimates.

Fundamental Chart Chart

Fundamental Chart data by YCharts


Amazon

Amazon’s stock has been stuck right below its previous highs and has thus far been denied what could be a massive breakout. I thought it would have happened this past week, but the market had its thoughts on the matter. But it is quite clear that the RSI is still trending lower, and the volume has been tailing off in the recent days.  So, does the declining volume mean the sellers are waning, or the buyers? Tough to tell with no clear stock price direction in place. If the stock doesn’t break out this week, then I’m beginning to think we retrace to around pre-earning levels of $1500, and it is clear the buyers are the ones that are fading.

amazon

Analysts have gotten more bullish on Amazon as well, upping their earnings estimates for the year by a stunning 48.3 percent to $12.83 per share over the past month. But everyone knows when it comes to EPS, those numbers are BS because Amazon does what it wants when it comes to profitability. Revenue estimates have only climbed by 1.57 percent to an amazing $237.26 billion, a growth rate, of get this, 33.4 percent! That is absolutely a fantastic amount of growth given the size of the revenue base.

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Alphabet

Alphabet has a rising RSI, and that is a positive sign momentum is still building in the stock. In fact, even Friday’s price action is a positive for the future direction. Volume has also remained relatively consistent. I still see this one rising to $1175. Plus, analysts have upped their earnings and revenue estimates for the balance of the year, by 4.5 percent and 1 percent respectively. So again, it suggests positive investor and analyst’s momentum.

GOOGL EPS Estimates for Current Fiscal Year Chart

GOOGL EPS Estimates for Current Fiscal Year data by YCharts


Intel

Intel continues to grind higher, and momentum appears to be higher as well.

intel

Analysts have upped their eps estimates by about 7.6 percent to $3.85 per share while raising revenue estimates by 3.9 percent to $67.6 billion.  The setup and the momentum continue to be strong.


JP Morgan

It had looked like JP Morgan shares broke out, and while it may merely be the way I drew out the trendline, but it appears the breakout is in jeopardy.  Volume levels have been steadily dropping, but the RSI is trending higher, and if the stock can find a bounce early in the week than perhaps momentum can continue higher.

jp morgan

Boeing

Boeing shares appear to have broken out and can increase back to $370 could be in order.

boeing

Microsoft

Microsoft has broken out as well and appears headed higher.

microsoft

Netflix

Finally, Netflix looks like it may be getting to breakout.

netflix

Good Luck this week

Mike


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Bank of America May Rise to Highest Level in 10 Years

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AMD’s Stock May Rebound by 12% on Better Outlook

Qualcomm Shares Seen Rising 9% on NXP Deal

Apple Traders Bet Stock Will Rise 9% to New Record

Citigroup’s Stock May Rebound by 10%

Micron May Break Out Leading to a 15% Rise

4 Biotech Stocks Set to Rise By 14% or More

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #may21 #largecap #apple #microsoft #alphabet #microsoft #boeing #jpmorgan #netflix #amazon 

 

Stock Market Sentiment Is Turning More Bullish – For The Week of May 21



Stock Market Sentiment Is Turning More Bullish – For The Week of May 21

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Michael kramer and the clients of mott capital own shares of Swks

The bull run in stocks was put on hold last week, but the current run is likely not over. In fact, there appears to be a clear separation that has taken place since the start of May. We find that Biotech and Semis are the leaders this month, with each up by over 7.5 percent. Followed by a group of Technology, Energy, the Small Cap Russell 2000, and Materials all up about 5 percent. Meanwhile, the S&P 500, Financials, Health Care, and Discretionary are all up about 1 to 2 percent. Finally, Utilities and Staples are down on the year.

XLK Chart

XLK data by YCharts


What Is The Market Telling Us

It tells us how the market is feeling on a couple of topics. The underperformance of the utilities and the staples is an apparent concern by investors regarding the more interest rate sensitive portions of the equity market. As interest rates rise, dividend yields must increase, and that puts downward pressure on the stock prices in the group. Additionally, it would also suggest a rotation out of the defensive part of the market.

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Risk On Back

Meanwhile, the risk-on parts of the market, Biotech, and Semis are in favor and that would suggest that investors are feeling more comfortable moving back into the riskier more volatile parts of the market. It would indicate to me that if these two sectors continue to perform well, the market will continue to rise.

Even the second tier of leaders, in Technology, Energy, Small caps, and Materials are another layer of risk, and again it too supports the continued rise in the broader S&P 500.


Looking at The Semis

When we look at the semiconductors, AMD has been the best performing stock this month rising by about 20 percent, followed by Qorvo, Micron, Teradyne, and Skyworks.

Teradyne

Teradyne’s significant gains in May are more of a bounce back, because even with the 15 percent rise thus far in May, shares are still down by nearly 25 percent from their peak earlier this year. The poor company guidance led to be a big gap down in the technical chart. It seems like the stock wants to fill that gap back to around $40, but one must worry that once filled, the stock may continue that trend lower.

Qorvo

Qorvo has been a stock stuck in a trading pattern of up and down since the start of 2017. After a significant gain; shares could be heading back the other way.

qrvo

Micron

Micron gave us the big breakout, but to this point, resistance at $54 has proved challenging.  But what I take as a positive is that that stock has been rising on more volume, and the trend, for now, continues to be higher. I still think we reach around $61.50.


Waiting On Qualcomm/NXP

It will be interesting to see given the setup in these stocks if there shall be a rotation into other parts of the semiconductor space. Remember, we are still awaiting word on the Qualcomm/NXP deal from the regulators in China, regarding a potential approval. If that should happen, I think the sector will get an extra jolt, in a sign that that trade tensions has been easing between the US and China.

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Staying Hot

For the most part, we need to continue to see the risk on the part of the market stay hot, and investors continue to move back into these parts of the markets.

Perceptions and Mood

At this point, much of where stock prices go will be driven by sentiment, mood, and perception more than anything else. Fundamentals are solid, with GDP for the second quarter tracking at 4.1 percent, according to GDPNow, through the mid-way point of the quarter. Meanwhile, earnings season for the first quarter of the year were very strong.


 

Strong Fundamentals

According to Dow Jones S&P Indices of the 91 percent of the companies in the S&P 500 to have reported results 77.25 percent beat estimates, while sales grew by about 9.5 percent versus a year ago. The S&P 500 is trading at just 16.7 times 2019 earnings estimates of $163.33 per share.

It is a robust fundamental setup, while the bulls appear to be coming back.

Mike

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Snap’s Stock Seen Plunging 16% to New Record Low

Bank of America May Rise to Highest Level in 10 Years

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Apple Traders Bet Stock Will Rise 9% to New Record

Citigroup’s Stock May Rebound by 10%

Micron May Break Out Leading to a 15% Rise

4 Biotech Stocks Set to Rise By 14% or More

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #may21 #bull #senitment #biotech #technology #semiconductors #chips #stocks 

Semiconductors, Small Caps, and Biotech’s In Focus



Semiconductors, Small Caps, and Biotech’s In Focus

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Semiconductor stocks were the weakest group today, with the SOXX ETF dropping by roughly 1.5 percent. The big loser in the group was Applied Materials (AMAT), dropping by about 7 percent. The company reported slightly lower than expected revenue guidance for next quarter. But let’s face it does it come as a surprise? It shouldn’t at this point. Many of the biggest chipmakers have disappointed, going all the way to the first significant report out of Taiwan Semi back in the middle of April. AMAT noted smartphone sales have been weak, and below expectations. Well, there is a shocker! Haven’t we heard that one before?

Despite the pullback, the group is on fire in the month, rising by nearly 7 percent even after today. So, you can’t complain too much, and the outlook for the group still looks solid on many fronts.


AMD

Can you believe AMD shares are up nearly 40 percent just since the start of April? Wow. That relative strength index is well into overbought levels, with a reading of around 73. But this one could be overdue for a modest pullback back to $12.50ish.

amd


Small Caps

Despite the S&P 500 stalling out, the Russell 2000 continues to reach new record highs, and the breakout continues.

russell 2000


GrubHub

With stocks like GrubHub in the index, it would seem there are more gains likely to be had. The chart on GrubHub looks powerful and ready to breakout.

grub

Proofpoint is another example:

proofpoint

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Biotech

Well, Biotech stocks as measured by the XBI, are up over 5 percent just since May 10, maybe it has something to do with the speech last week on drug prices? I’m not sure about that; I’m looking through some of the big movers, like Loxo Oncology, popping over 30 percent after positive phase 1 data presentation at ASCO.
XBI Chart

XBI data by YCharts

We will see what the next week or so brings, and which stocks continue to perform the best in the group. The leadership in that sector is still not coming for the most part from the big players.

Overall it was a solid week in which to build for the broader market, and I will discuss more in further detail over the weekend

That’s it!

-Mike

Photo credit via Flickr

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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

#smallcaps #semiconductors #biotech #proofpoint #grubhub #amd

Why A Strong Dollar Will Kill Oil's Monster Rally - Mott Capital

Why A Strong Dollar Will Kill Oil’s Monster Rally



Why A Strong Dollar Will Kill Oil’s Monster Rally

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It was a pretty dull day, and to be honest, not a whole happened that seems overly exciting. But I have been thinking a bit about what a stronger dollar means to Oil, and how a stronger dollar could stop Oil’s rise in its track.  In fact, since 1986 the correlation between the two is -0.76, a very strong inverse correlated, with an R^2 of 0.57.

The Dollar Impact

Just how much power does the dollar hold over the future direction of Oil? A lot! In fact, From May 1, 2002, through July 1, 2008, the price of Oil rose from by nearly five times from around $28 per barrel to $140, while the dollar index fell by almost 37 percent.

WTI Crude Oil Spot Price Chart

WTI Crude Oil Spot Price data by YCharts

From April of 2014 until the end of 2016, the dollar climbed by nearly 28 percent, while the price of oil fell by almost 46 percent.

WTI Crude Oil Spot Price Chart

WTI Crude Oil Spot Price data by YCharts

If not for the financial crisis in 2008, the correlation would probably even be higher.

WTI Crude Oil Spot Price Chart

WTI Crude Oil Spot Price data by YCharts


Dollar Index

As of right now, the dollar index has one more hurdle to clear around 94 to 95, before it has it goes on a clear path back towards the 100 level.

dollar

The dollar impact can go far beyond the price of oil, it is a drag on companies doing business abroad. First, it makes our products more expensive, and then the conversion back from local currency back to dollars has a negative impact.

Right now, tracking the dollar is going to be very important, to figure out where the price of Oil goes.

Night!

Mike

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Apple Traders Bet Stock Will Rise 9% to New Record

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #dollar #oil

The Stock Market Is Moving Back To A Risk-On Mentality



The Stock Market Is Moving Back To A Risk-On Mentality

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The risk-on asset classes had good days, with Biotechs (XBI) up 1.4 percent, Chips (SOXX) up 1.3 percent, and materials (XLB) up about 1.2 percent. Risk-on is what one wants to see start to happen more because it tells us that investors are looking to move into more aggressive parts of the market, and that bodes well for a rise higher.

S&P 500

The S&P pieced together a decent day, rising about 40 bps, recovering about 2/3 of yesterday’s decline. It seems the past three days have been a game of back and forth filling the gaps from the previous day. The good news is that today, there was no gap up or down, and that should hopefully mean tomorrow we continue higher.

S&P 500


Sectors

The XBI continues higher and appears to be heading back to the previous highs.

xbi

The setup in Chips also continues to be very strong.

ch

What is ironic is just how much alike the two charts look. I guess the chips and biotechs are part of the same risk-on algo running.

Materials are also breaking out, and that, of course, is a positive as well.

materials


Russell

Not only that, but the Russell 2000 is breaking out as we talked about the other day.

russell 2000


Stocks

Nektar broke out today, after bouncing off our support level around $70.

nektar

Intercept looks close to breakout too.

icpt

Micron broke out and appears to be heading back to $61 now.

micron

Lam Research also appears to be breaking out and could be heading back to around $224.

lrcx

Texas Instruments back to $120.

txn

The suspense in Amazon is just killing me! BREAKOUT ALREADY!

amazon

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Dollar

It looks like the dollar finally broke out, and it seems clear which way it is going.

dollar

Night!

Mike

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The Setup In Stocks Continues To Improve

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Bank of America May Rise to Highest Level in 10 Years

P&G’s Battered Stock Ready for 10% Rebound

AMD’s Stock May Rebound by 12% on Better Outlook

Qualcomm Shares Seen Rising 9% on NXP Deal

Apple Traders Bet Stock Will Rise 9% to New Record

Citigroup’s Stock May Rebound by 10%

Micron May Break Out Leading to a 15% Rise

4 Biotech Stocks Set to Rise By 14% or More

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #biotech #materials #chips #nektar #amazon #micron #lam #texas 

 

Inflation Runs Rampant Only In The Imagination of Investors

Inflation Runs Rampant Only In The Imagination of Investors



Inflation Runs Rampant Only In The Imagination of Investors

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The S&P 500 finished the day lower by about 70 bps, off the lows, when it was down about 1%. Nothing earth shaking but enough to get everyone talking about how rising rates are going to kill the market, and inflation once again is rearing its ugly head. So just how much inflation is there? I can think of one commodity that is going up, and that is apparent Oil. Which, I have shown you time and time again,  how it tight the correlation with the CPI and PPI is.

Yes, No, Maybe So?


Copper

Some critical industrial metals like copper, have gone nowhere over the past year. To, to be honest, the chart doesn’t look so hot and looks like it may be heading lower. Not so good for Freeport (FCX)

copper

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Iron Ore

Iron ore is a critical ingreident in steel.  Again, not so inflationary, either. But that setup looks nice, for a rise at some point, if the dollar doesn’t get too strong. Maybe a positive for Vale, Rio, and BHP.

iron ore


Gold

Then off course there is gold.

gold

Coffee

Must be coffee? That has to be a good sign for SBUX, right?

coffee


Sugar

What about Sugar? Definetly not.

sugar


OJ

Orange Juice? Oh there is a little bit, is Orange Juice to blame for the rapid inflation? Does Coca-Cola (KO) still own Tropicana?

oj

Lumber

Lumber now that is going up.  Not good for the homebuilders like PHM.

lumber


Cotton

Cotton has a little bit of inflation. Yeah not so good for Haines, (HBI)

cotton

PCE

Of course, there is the PCE which is at 2.6 percent! Strange thing here, is that it hasn’t change since the first quarter of 2016.

Wages

Hourly wages haven’t accerlated since 2016!

 

Even housing costs have remained relatively stable.

I mean do any of these charts speak of rampant inflationary forces taking place in the economy? No, and in some cases, things are getting cheaper! Maybe, I need to do that thing; you know where you remove the scale, and then zoom all the way in and get real close, to make a ten bps rise look monstrous. But, no. That is no what we aim to do here.

So when you find some inflation someone please let me know!

Night!

Mike

 

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Tags: #sp500 #oil #inflation #yields #copper #ironore #steel #sugar #coffee

Oil and Yield's Rise May Soon Fade, Sparking The S&P 500 Rise To 3,000

Oil and Yield’s Rise May Soon Fade, Sparking The S&P 500 Rise To 3,000



Oil and Yield’s Rise May Soon Fade, Sparking The S&P 500 Rise To 3,000

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Stocks finished mostly flat, ending the day on the S&P 500 up by roughly ten bps.  The morning rally faded by mid-afternoon wiping out the gap higher that started the day. Not an unusual occurrence since we see this type of price action on a regular basis.  Support continues to rest around 2,716, but I have added a trend line in green, for the sake of adding one, to see what happens to it tomorrow. It is too early in the game to name a new trend line, so we will wait and see.  I still think the S&P 500 has a clear path on to 2800, before hitting choppy waters again.

spx

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The technology sector (XLK) also stalled out today, but like the S&P 500, it appears to be more of gap fill than anything.

technology

The setup in the Russell 2000 also looks very bullish, with that rising triangle, and it seems like a breakout might happen soon.

russell

Consumer stocks managed to break out strangely, basically trading sideways through the pattern. Not exactly a sign of strength, but it sure is better than it going down.

consumer stocks

Amazon still hasn’t broken out; I’m surprised it has taken this long. But volume has been light, and the RSI is still trending lower. Maybe tomorrow.

amazon


Treasury Yields

Treasury yields on the 10-year are still hovering just below 3.03 percent, with no breakout yet. It seems like every analyst or commentator is sure yields are going higher. But, I keep thinking yields are done rising. Right now, I am in the minority camp on this topic. Then again, I was in the minority when I was calling yields to breakout.  I have my reasons for thinking yields will not continue to rise. I believe inflation rates will start coming down, once the price of Oil starts leveling off.

oil


Oil

Oil is another thing people have gotten overly bullish on, and again I find myself in the minority thinking oil prices may be about finished rising. I feel like every day we have someone predicting oil to rise to $80 or higher. Where were all these guys when oil was $50 or even, $60? Nowhere to be found.

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Dollar

We must remember something when it comes to Oil; it has had the benefit of a weakening dollar over the past year or so to rise. Now, the dollar appears to be going the other way, and I suspect that it will continue to rise. Not for the apparent reasons, but because Draghi had so much success stoking the European economy with a cheap Euro, and let’s face it, the Euro’s advance is what is killing the Euro region, which is why it suddenly has seen moderating growth.  Just like the BOJ doesn’t want a strong Yen, which has also strengthened materially over the last year. So, if the Fed is intent on raising rates, then the ECB and BOJ’s best interest might be to continue their current programs of easy money to weaken those currencies once again, while they can. The chart for the dollar index has not officially broken out, but it is pretty close.

dollar

Deposit rates on Eurodollar’s, dollars held abroad, are still high, and that would suggest to me that dollars are in demand outside of the US.

eurodollar


3,000 Still On Table

With many of my predictions for 2018, such as rising oil, 3 percent on 10-year Treasury yields, rising inflation already being hit this year, I’m beginning to go in another direction, because I’m seeing changes occurring at a faster pace than I expected. I think for the most part this is all a positive for equity prices, keeping intact my prediction for 3,000 on the S&P 500.

That is it.

Mike

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Tags: #sp500 #oil #inflation #yields #euro #yen #dollar 

Stocks and Sectors Breaking Out For The Week of May 14

Stocks and Sectors Breaking Out For The Week of May 14



Stocks and Sectors Breaking Out For The Week of May 14

Michael kramer and the clients of mott capital own shares of acad, dis, and googl

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The week of May 14 will try to continue to build on last week’s strong performance. With earnings pretty much behind us now, investors can continue to digest the strong earnings seasons. Meanwhile, the latest inflation and wage data should also calm nerves over runaway inflation or a Fed that will need to be over aggressively, and allow for stocks to continue to rally this week.

sp500

The S&P 500 broke out last week, and the relative strength index also broke out, and I think we should continue to see the broader market continue to trend higher this week. I’m still looking for a rise to about 2,800 on the S&P 500 over the next couple of weeks.

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Consumer Stocks

We have seen Technology names breakout over the past week, and I think we see the consumer stocks finally breakout this week.

The XLY ETF is very close to breaking out, and the RSI also appears set to breakout, I think that happens this week.

consumers


Amazon

As I have written previously, Amazon is close to breaking out, and I think that breakout can happen this week, as it sits right below resistance.

amazon


Home Depot

Home Depot is another one that already has broken out, and is reporting results on May 15. Analysts are looking for earnings for $2.05, on revenue of $25.2 billion.  A return to $210 may be reach for later this week.

home depot


Disney

Disney is also likely heading higher, potentially back to $111.

disney

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Nvidia

Technology stocks have already broken out, and we are going to want to see a strong continuation this week. Nvidia is going to be the one to watch here. It has broken out, and the earnings results served as a retest of the breakout, and it held. Now we to see a follow-through higher.

nvidia


Micron

Micron also broke out, and I think a rise to about $54 is in the works.

micron


Alphabet

Alphabet is has been on a tear, I think that one continues, on towards $1150.

alphabet


AMD

AMD has also broken out and a rise to $13.70 could be coming shortly.  amd

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Biotech

Another group I will be watching are the biotechs, to see if they can build on Friday’s strength.  The XBI appears to have broken out, and the RSI did as well.  We could see a rise back to the highs around $96.

biotech


Nektar

Nektar shares bounced right off support around $70, the key this week is if the stock can get back over $83.

nktr


Acadia

Acadia may also be close to breaking out and a push back to $27 would sure be nice.

acadia stock

 

Mike

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Tags: #amazon #consumer #technology #biotech #homedepot #acadia #nektar #disney #nvidia #amd #micron

FANG Stocks Are Still Cheap, More Gains To Come In 2018

FANG’s Stocks Are Still Cheap, More Gains To Come In 2018



FANG Stocks Are Still Cheap, More Gains To Come In 2018

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With earnings season pretty much finished, analysts have been steadily adjusting estimates, and as a result, valuations have been re-weighted. It leaves me to believe that the FAANG’s will continue to have a strong run, and likely continue to be the market leaders.


Amazon

Amazon’s earnings estimates for 2018 have increased by 44 percent, and the street now sees the company earning $12.38 per shares, year over year growth of nearly 172 percent, while revenue is forecast to rise by almost 34 percent to $237.26 billion.
One must remember though that Amazon is not valued on a PE or earnings basis.

Amazon always has, and likely always will be evaluated on a sales basis. I’d hate to say it because I know many will not be happy to hear, but the stock based on its historical sales basis is not cheap, trading at currently 2.7 times next year’s sales estimates. The chart below shows that it is the highest multiple in over the past three years.

Fundamental Chart Chart

Fundamental Chart data by YCharts

Now, I realize that the dynamic of Amazon Web Services adds another layer of growth, that wasn’t there three years ago, we must assume a premium to historical trends is warranted, but one should be aware.

Amazon is a key to this market. I’m not saying I think Amazon is about to plunge, I’m just saying that the stock’s outperformance from this point forward for the balance of this year may be limited.


Facebook

Facebook’s estimates have also been tweaked higher, not nearly as much as Amazon. Forecasts over the past 30 days have climbed by 2.6 percent, and analysts now see Facebook’s earnings at $7.48 per share in 2018, a growth rate of 21.5 percent versus last year, while revenue is seen climbing nearly 39.25 percent to $56.61 billion.

Unlike Amazon, Facebook is trading at the cheapest earnings multiple in over the past three years. In fact, the last time shares were this cheap was in January of 2017, and we all know how good the year 2017 was for Facebook.

Fundamental Chart Chart

Fundamental Chart data by YCharts


Alphabet

Alphabet is another stock that is expected to have significant growth in 2018. Earnings estimates have been adjusted higher by about 5 percent since reporting results and are now seen climbing by 35 percent in 2018 to $43.26 per share. Meanwhile, revenue is expected to rise by 22.36 percent to $135.65 billion.

Alphabet is trading at 22.7 times 2019 earnings estimates, and while shares are not at their cheapest levels, they are not at their most expensive, trading at just 22.7 times 2019 estimates. It puts Alphabet in a strong position to continue climbing.

Fundamental Chart Chart

Fundamental Chart data by YCharts

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Netflix

Netflix is a subscriber growth story, which makes it more of a sales growth story, than an earnings growth story. Earnings for Netflix have been adjusted higher by 5.78 percent to $2.88 per share, while revenue has been upped to $16.10 billion in 2018, representing growth of 130 percent and 37.7 percent, respectively.

I created my crazy way to value Netflix, based on what I understand the story to be. I take the Market Cap and divide it by the number of Subscribers. I do this to get a sense of how the market values each subscriber. It looks like this:

Then I multiply it by ARPU. I do this because as subscribers grow, it creates more revenue, and as the ARPU also increases it also generates more revenue. Essentially each new subscriber added is worth more than the previous subscriber added. It looks like this:

We can see the market valuing subscribers at a much higher level than in the past. My thought process is that value will only continue to climb, because ARPU is now on a steady path higher.

While Netflix is not cheap today, it may be reasonable when considering that ARPU will continue to climb, as price increases continue to take hold, and subscribers continue to rise.


Apple

Finally, Apple’s estimates are unchanged for this year, at $11.55 per shares, and revenue of $261.12 billion, growing at 25.45 percent and 13.9 percent, respectively.

But the big thing for Apple, I believe will be a re-rating of the stock, as service revenue becomes the driving growth factor. Apple has never had a premium valuation because of the cyclical nature of the iPhone sales. But as service grows and becomes a more significant portion of total revenue, I believe the market will begin to give Apple a higher valuation. Will it ever be Netflix like, probably not.

But could it trade with more of a market like multiple? Sure. At 18 times 2019 earnings of $13.18 per share, Apple’s stock suddenly is worth about $240. I think if Apple can get another one or two-quarters of strong service revenue, I think that multiple becomes a reality.

That is it for today!

-Mike

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Tags: #fang #faang #alpahbet #google #amazon #netflix #apple #netflix

Biotech's Stock May Have Finally Been Unleashed

Biotech Stocks May Have Finally Been Unleashed

Biotech Stocks May Have Finally Been Unleashed

Michael Kramer and the Clients of Mott Capital Own CELG

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Stocks continued to move higher, led by the Biotech’s, which were up by about 3 percent. There’s something we haven’t said in a long time. The highly anticipated speech regarding drug prices by the President didn’t seem to be as bad as many had feared. Increasing competition, deregulation, cutting out the middlemen, is at the core of the proposals, based on my interpretation.

The drug pricing overhang had plagued this sector since September 2015, when Hillary Clinton made it a political point in the race for President. If this is the worst of it, I think the group might have much further to rise. Companies like Celgene, Gilead, Biogen, and Amgen are all trading at some of their lowest earnings multiples in years. Albeit for good reasons in some cases, but some of the valuations seem excessively low.

The details aren’t fully known yet, and what ends up getting put into law may be very different. But just knowing the blueprint for how they plan to tackle drug pricing might unleash the sector from the shackles of the past three years.

I think the group is likely heading higher.
biotech


S&P 500

The S&P 500 continues to rally, and finished near the highs at 2727, up about 2.5 percent. The setup continues to look strong.

sp500

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Amazon

Technology stocks continue to look strong as well and so do consumer stocks, even though Amazon still didn’t break out.  $1620 is proving, for now, to be tough for Amazon. Now that I’m calling for it to rise, it will probably go down! Ugh. We shall see.

amazon

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Nvidia

I’m surprised Nvidia was down today. But I also do not think today’s price actions mean the stock is going lower. Shares held firmly above support around $253. The results were stunning, and this probably keeps working higher.

nvda


Amgen

Amgen shares continue to look strong as well, with a well-defined double bottom, and what looks like a solid path towards $178 to $180 range.

amgen

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Gilead

Gilead also looks as if it could see a rise to about $72.

gilead


Biogen

Biogen also looks like it is on the cusp of a big breakout.

biogen

That is going to be it for today.

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Tags: #biotech #amgen #gilead #biogen #technology #amazon #sp500

Nvidia Crushes It, Amazon Nears Breakout, As Roku Fades

Nvidia Crushes It, Amazon Nears Breakout, As Roku Fades

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We got the follow through I was speaking of last night, with another strong day in the broader S&P 500 which managed to finish higher by about 1 percent. The key thing, we closed at 2723, and that took us above the highs from mid-April of 2715. Not to get too granular, but the next region of resistance is around 2750, then 2800.  I still think we are well on our way to 2,800.

spx

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The Setup In Stocks Continues To Improve

Technology

Once again, we got another strong day out of the Technology ETF with the XLK rising to just about $70. I’m wondering now if we aren’t on a path to around $75 on the XLK. Some of the larger technology stocks in the ETF are cheap enough to push the price up to those levels.  Apple, Facebook, and Alphabet, to name three off the top of my head.

technology


Microsoft

It looks like Microsoft did breakout today.  It probably has room to rise to around $101.

microsoft


Amazon

The one stock that hasn’t participated much in the recent rally has been Amazon; it has been stuck at resistance now for a few days. I have a feeling that is about to change in the coming days, maybe even tomorrow.

amazon


Discretionaries

The reason I say that? Just look at the consumer ETF XLY, if that chart doesn’t scream of a potential breakout, then I don’t know what does. The ETF is going nowhere without Amazon, with its massive 22 percent weighting.

consumers

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Energy

This chart in the energy XLE ETF is the strangest thing I have ever seen, and I can’t make heads or tails of what it means. The problem with the XLE ETF is that Exxon has a 22 percent weight, and Chevron is at 17.25 percent. There are probably better ways to play the energy sector.

energy


Financials

Financials are also finding a nice bounce here.

fianncials

Roku

The excitement in Roku quickly faded by mid-day, and you can see the stock got to resistance and caved in. Look, I told you what I thought of Roku’s numbers last night. I don’t think they were as strong as everyone first thought. I’m sorry, show me that ARPU in 6 months, when it is coming off that tiny base of active accounts.

roku

Nvidia

Nvidia posted some fantastic results. I really would like to know how they do it! Revenue growth of 66 percent since last year. Data center growth up 70 percent to $701 million! These were huge numbers.  Guidance was better than expected, margin improvement. I didn’t hear the call but read the notes, and I can’t find anything wrong at this point. I’d be shocked if the stock is down tomorrow.

That’s It!

-Mike

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Tags: #micorsoft #technology #nvidia #amazon #roku

 

Stocks Really Breakout, A Look At Roku, Where Does Oil Go

Stocks Really Breakout, A Look At Roku, Where Does Oil Go

Stocks Really Breakout, A Look At Roku, Where Does Oil Go

Michael Kramer and the clients of Mott Capital own shares of TSLA, GOOGL, NFLX

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The S&P 500 was in rally mode, and it was a strong day across the board. Biotech, Tech, Financials, along with Energy.  The setup in the S&P 500 continues to remain very strong, and I think we may have just broken out.

sp500

In fact, the relative strength index is also showing signs of breaking out, and it would take a rise to about 60 on the RSI to confirm the bullish move.I’d like to see another strong trading day tomorrow, to prove today’s rise was real and give the index some breathing room. But the underlying sector charts are looking reasonably healthy as well.


Technology

We can see the same setup in the chart of the technology ETF (XLK), along with a strong setup in the RSI.

xlk

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Google

Alphabet shares appear to be breaking out, and I noted in an article earlier today on Investopedia, I think it might rise to around $1150.

alphabet


Netflix

Netflix appears to be on its way towards $340.

netflix

Microsoft too.

microsoft


Micron

It isn’t much different in some of the semis either. It was Monday I wrote that Micron was in the final phases of a descending wedge, and sure enough it broke out today, $54 appears to be next.

micron

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Tesla

Tesla is on the doorsteps of a significant breakout as well, currently trading around $310, which could send shares higher on towards $330.  In case you missed it, California voted to have all new houses equipped with rooftop solar panels.


Biotech

Biotechs are also looking relatively strong as well, and I still think that the group can continue to work higher. I know there is nervousness about this drug pricing speech that is now coming on Friday. But I have been saying since 2016, that I think any policy on drug pricing comes in the form of a quicker approval process, to increase competition.  I don’t see it happening through price controls.

biotech


Oil

Well, Oil is within 4 points of my $75 target, which by the way I called late last year. I have been thinking about where it goes from here.  I do not see it going much higher in the short-term. In fact, if I were a betting man, I’d say we see $60 before we see $80.

oil

I hope everyone realizes once Oil stops rising the whole inflation narrative will disappear too? Right? I’m talking to myself; Of course, they don’t.


Roku

So, I have to say that the Roku’s numbers look solid on the surface, two things stand out as concerns to me. Player revenue fell 3 percent from last year, and I guess that revenue will continue to decline. Which means the revenue numbers you are left to truly rely on to drive that future growth is just the platform.

Also, I’m curious as to why platform revenue fell sequentially, to $75 million from $85 million? Interesting. Platform gross profit margins also fell both from last year and sequentially, to 71.1 percent from 77.1 and 74.6 percent, respectively.
Additionally, the rate of net additions fell in the quarter.

The ARPU numbers are reported in a weird way, I’m not all that familiar with the style. The company takes the average number of users in the 1Q’18 and 1Q’17 and then sums up total revenue for Q2, Q3, Q4, and Q1’18. They then divide that revenue total, by the average number of subscribers to get ARPU. By the way, I had to look in the IPO prospectus to figure that out! But the number of subscribers in the 1Q’17 was only 14.2 million, so it makes the average way too low. It gives an average of 17.5 million accounts, on total platform revenue of $264 million, giving you an ARPU of $15.09, some rounding in there.

But do just a straight ARPU calculation of (Revenue/Users)/3 months, and you get $1.20 in the quarter, down from $1.47 the previous quarter. I dunno. You be the judge.

Anyway, the stock is trading pretty much where I predicted it would at $37. So where it goes from here is anyone’s guess.

roku

That is enough.

-Night

-Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #micorsoft #technology #semis #tesla #roku #nvidia #micron 

 

Technology and Semis Are Leading The Stock Market Higher

Technology and Semis Are Leading The Stock Market Higher

Technology and Semis Are Leading The Stock Market Higher

Michael Kramer and the Clients of Mott Capital own shares of TSLA

The S&P 500 had a solid day, rising by 35 bps, closing at 2,672. We gave back some of the gains late in the day around the time of the Iran headlines, but it may have been more of a gap fill. The chart shows that the S&P 500 is very close to the upper bound of the trading range so that the next few days will be telling as for whether we breakout and continue our rise, or we retrace back to the 2615 region.

spx

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Technology

Technology shares continued their advance, and the setup in the group continues to look positive. We’ll need to monitor and see if the XLK ETF continues to stay within the channel. The most important thing we are watching is that we continue a pattern of higher lows.

technology


Semis

It looks like the iShares PHLX Semiconductor ETF (SOXX) may have also broken out, another positive. I’d like to see a strong follow-through tomorrow to confirm. I bought some calls for the SMH ETF on Friday anticipating a breakout in my trading account. Not something I often do, but sometimes old habits die hard. Hopefully, I will prove right on this one.


Microsoft

Microsoft has this sizeable ascending triangle forming, and that may mean shares set for a big breakout.

msft

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Amazon

Amazon shares continue to hover just below resistance around $1,620. The next day or so will likely be telling for that stocks future direction.

amazon


Nvidia

I wrote the other day, I saw Nvidia getting back to $250 after results, well it almost got there today! Does that mean we are going even higher? I’m not ready to change the call yet.

nvidia

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Roku

Roku had a solid rise of 5 percent today, with the stock hitting some resistance around $34. Implied vol is at almost 119% for the options set to expire in 11 days, according to Trade Alert. That is crazy.

roku


Tesla

Tesla shares got a boost after reports Elon Musk bought 33,000 shares of stock. The stock has now recovered all of its losses following the quarterly results.

Tesla registered another 5,009 VINS for the Model 3 today with the NHTSA. From April 23 through May 6, Tesla registered about 6,000 VINS. That would indicate they may be producing about 3,000 cars per week. We’ll see when the next batch of VINS are recorded, and the spacing between dates.

I have now seen three Model 3’s where I live on Long Island over the past week, so they are around, and I will continue to keep track.


Micron

The last time I wrote on Micron, I noted it looks like shares broke out. Well, I was embarrassed because the stock went down. I haven’t been wrong on Micron much in the past, and this time I was. But now the setup in the chart is becoming more evident, and a breakout appears to be coming. Look at that falling wedge in the chart, along with a solid uptrend. It means a reversal is bound to happen, and that means shares are getting ready to.

micron

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #micorsoft #technology #semis #tesla #roku #nvidia #micron 

The Best Earnings Season In Years Makes Stocks Cheap

With earnings starting to wind down, it is becoming quite clear that this has been one of the best earnings seasons in years! With nearly 81 percent of companies in the S&P 500 reporting results through May 3, almost 77.5 percent have beat earnings estimates, while almost 17 percent have missed, and 5.6 percent have met. I compiled the chart from data from Dow Jones S&P Indices, and it shows that to this point, this has been by far the best quarter when it comes to companies beating expectations since 2012.

Data From S&P Dow Jones Indices

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Cheap To Earnings

According to Dow Jones S&P, 303 of the 405 companies reported so far, have beat on sales estimates as well. Sales in the first quarter are estimated to have risen by nearly 10 percent as well, making this quarter more than just about the bottom line.

Earnings for the full year in 2018 are forecast to rise to $153.06, and $170.48 in 2019. It leaves the S&P 500 trading at 17.4 times 2018 estimates and only 15.6 times 2019 earnings estimates.


Cheap To Rates

Even with the rising interest rate scenario investors have become concerned with, the ratio of the 10-year Treasury yield to the S&P 500 yield, is only at 1.56. Explained,  it means that the 10-year yield at 2.95 on April 30 is 1.56 times more than the S&P 500 yield of 1.89 percent. The average ratio since 1962 is 2.19 with a standard deviation of 0.86, a range of 1.32 to 3.05. So the S&P 500 is still on the cheap side of the historical average, and the historical norm. The chart below shows us just that.

Stocks Are Cheap

It is clear from the chart above that in late 1990’s and early 2000’s, which saw the ratio explode as the stocks soared, in the bubble years, just how overvalued the market was to bonds at the time. So at this point, yields would have to rise a lot further. It would take yields on the ten-year to reach 4 percent to get to the historical average, before stocks would start looking for expensive to bonds.

For, now it continues to be tough to say that stocks are overvalued to earnings or bond yields.


GDP Growth

I have become increasingly more bullish over the past few weeks, and I expected to remain optimistic for some time to come. In fact, I think the recent slow down in the US economy is also going to start picking up rather nicely. In fact, over the past ten years, earnings growth has been a leading indicator to US GDP growth, as the chart below shows. That would suggest over the next two quarter we should see a significant ramp up in GDP growth.

S&P 500 Earnings Per Share TTM Chart

S&P 500 Earnings Per Share TTM data by YCharts

It also continues to support my thesis that we will see an acceleration in job creation.

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Low Inflation

But I still believe inflation levels will remain low, and that will keep a lid on Treasury rates from rising too much. Counter-intuitive, yes, but we need to remember also we are living in a very different time, where automation and companies like Amazon are continuing to make things cheaper for the consumer.


The Fed

Additionally, the Fed will not want to be responsible for killing the party and inverting the yield curve. With two year yields at 2.5 percent and the ten-year at just under 3 percent, the spread is now only 50 bps. One more rate hike gets the two-year to probably around 2.75, and that is all the Fed will be able to in terms of rate hikes in 2018. I still we get only one more.

-Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #stocks #yields #rates #earnings 

 

 

Nvidia, Disney, Roku Earnings Preview For the Week of May 7

Nvidia, Disney, Roku Earnings Preview For the Week of May 7

Nvidia, Disney, Roku Earnings Preview For the Week of May 7

Michael Kramer and the clients of Mott Capital own shares of DIS, GOOGL, AAPL, MA, and TSLA

Earnings Scorecard for this blog :

Week of April 23: 1 Right (MSFT), 4 Wrong (GOOGL, FB, AMD, AMZN)

Week of April 30: 1 Right (MA), 3 Wrong (AAPL, SQ, TSLA)


The scores above are for the blog only, because for some reason my calls on Investopedia have been much better. I couldn’t tell you why, but that is just the way it goes. So I’m sure there are plenty of people that will make comments, and laugh at my miserable results. But that is ok, I’m a big boy, and I have been doing this long enough to know even the best have a slump.

Batter Up!

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Earnings this

Earnings continue this week with Nvidia, Disney, and Roku slated to report results. Disney reporting Tuesday, followed by Roku on Wednesday, and Nvidia on Thursday.  This will be the final week of earnings predictions.


Nvidia

Nvidia has put together another solid year rather quietly, perhaps because most of the significant gains occurred through the middle of March. But the stock is higher by over 23 percent on the year, much better than the broader S&P 500’s flat returns.

NVDA Chart

NVDA data by YCharts

Analyst Estimates

Analysts are looking for revenue to have grown by 48.63 percent during the fiscal first-quart of 2019 to $2.88 billion. Meanwhile, earnings are expected to have risen by 94 percent to $1.65 per share, monster growth numbers for a company that’s growth rate never seem to slow.  But more importantly will be how the company guides the coming quarter because analysts are looking for total revenue of $2.946 billion, a rise of 50 percent, while earnings are seen climbing by nearly 63 percent to 1.64 per share. Massive growth rates, for this company especially given the monster growth rates of the past. Pay close attention to data center growth that may be key.

Earnings History

The company has not missed on the top or bottom line since April of 2016 and has beaten analysts earnings estimates by an average of 20 percent, with a standard deviation of 10 percent. Meanwhile, revenue has beaten estimates by an average of 8 percent with a standard deviation of 6 percent. Pretty good odds that Nvidia once again crushes those estimates.

NVDA Quarterly Actual EPS Chart

NVDA Quarterly Actual EPS data by YCharts

Being A Bear Doesn’t Pay

Over the past year and a half, I have been relatively bearish on Nvidia, and wrong. Although I have from a trading standpoint, I have gone back and forth. But overall, I have been very impressed by the companies ability to grow into its valuation.  The market usually over-optimistic and tends to overvalue story such as Nvidia, but in this case, Nvidia has been able to deliver.

Technicals

The stock tricked me about a week ago, when it fell below support at $217, but bounced back quickly. It has now convincingly broken out, rising above its downtrend on the stock price, and the relative strength index. Climbing back to the highs around $253 seems possible after results.

nvidia

Options

The options market has an implied volatility of 65 percent for the options set to expire in 7 days, and that equates to a range of 9 percent up or down, a big move.

nvidia

Surprisingly or not the options set to expire May 18 have the most significant open interest at the $235 strike price, with 34,000 open calls to 33,000 open puts. That means it is anyone’s guess which way Nvidia goes after results.

Overall, it seems like a rise back to around $250 following what should be strong results, would not be surprising.

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Disney

Disney is expected to report that fiscal second-quarter earnings climbed by 13.25 percent to $1.70, while revenue is seen rising by 5.8 percent to $14.11 billion. Disney’s history on reporting results, is not nearly as consistent as Nvidia, with Disney beating earnings by an average of only 2 percent, with a standard deviation of 7 percent, while revenue misses estimates on average by 2 percent with a standard deviation of 1 percent, Yikes! That does not bode well for the upcoming results this week

DIS Quarterly Revenue Estimates Chart

DIS Quarterly Revenue Estimates data by YCharts

Options

The options set for expiration in a week have an implied volatility of about 35 percent, and that suggests a rise or fall of about 4.85 percent, following results.

The options with the most significant open interest are the May $100 strike price, with roughly 31,000 open puts to 26,000 open calls, suggesting a slightly bearish bias after results.

Technicals

Disney’s has gone nowhere since the August of 2015, but the setup in the chart is one of the most bullish long-term structures around, and when Disney does breakout finally it will be a massive ride higher in the stock, likely easily surpassing the $120 level. I think for the stock it might simply be a matter of when.

In the interim, I think Disney could revert to the upper end of the range after results to about $110.

dis


Roku

Finally, we will finish with Roku. The company is newly listed so there isn’t a whole lot of data to go off on this one. Analysts are looking for the company to report a loss of $0.15 per share, while revenue is seen at $127.55 million.

Options

Implied volatility is through the roof at 144 percent, meaning over the next seven days the stock could rise or fall by 20 percent! Huge!

The most significant levels of open are for expiration on June 15, and they are the $34 and $35 strike prices, with nearly 5,300 open calls at $34, and almost 3,000 open calls at $35. The $35 puts have about 2,900 open contracts. This one appears to be way more bullish than bearish and would suggest a rise above  $37 following results.

Technicals

The chart is relatively bullish too, with a firm bottom in place around $30, and rising RSI. The next significant level of resistance comes around $37.75 on the chart.

roku

The options and the chart suggest shares rise following results, but there isn’t enough to go on regarding earnings. So for this one, I think we do see a rise post results back to around $37.

 

That is all

Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #nvidia #disney #roku #earnings

 

 

Stocks Are Getting Ready For A Big Breakout, Plus A Look At Apple

Stocks Are Getting Ready For A Big Breakout, Plus A Look At Apple

Stocks Are Getting Ready For A Big Breakout, Plus A Look At Apple

Michael Kramer and the Clients of Mott Capital own shares of AAPL, NFLX

Another positive day on Wall Street with the S&P 500 climbing by nearly 1.3 percent closing at 2,663. I still happen to think the setup in the S&P 500 is positive, and rise to 2,800 is at work. I spoke about it the other day, and I continue to think that is very much case. The more I look through companies earnings and trends; the more positives keep emerging, over the negatives.   

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Technology

When looking at sectors the same positives trends keep showing up for the most part. In fact, it would appear the technology sector broke out today, and that is a very positive sign. In fact, a rise back towards $69 is maybe on the way.  The relative strength index broke out today as well.

xlk

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Getting Long Apple

A Rise Back To 2,800 On The S&P 500

Biotech

Biotech stocks have been stubborn and have been able to hold support at $100 nice. I think it sets the group for a rise of about 10 percent back to $110.

biotech

Consumer

We can see a similar pattern forming in the consumer discretionary stocks as well.

xly

The same with the chip sector.

soxx


Microsoft

Microsoft has a rising-triangle formation in, and that suggest may about to rise.

microsoft


Netflix

Netflix appears headed towards $340.

netflix


Not All Equal

But that doesn’t mean all stock is about to rise because Facebook, Amazon, and Broadcom have struggled to move higher, and I think it may continue to stay that way. Well, see though. I just find it interesting that Amazon and Facebook reported monster results, and the market hasn’t rewarded them in a big way.

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Apple

I teased this idea on the blog the other night about Apple and a Netflix like valuation. No, I do think Apple will trade at a 60 earnings multiple, but I think in time as investor begin to realize services are becoming a more significant part of the revenue, the market will give the company a higher earnings multiple, as the stock moves away from being primarily an iPhone business.

More and more of our lives are moving to mobile devices, and I think Apple will now start to provide even more services on top of the hardware to make substantial growth the future. Well see, but I like the idea enough, that I bought it today.

That is it for a Friday.

Mike

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A Review Of Netflix, IBM And Earnings Outlook

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Why S&P 500 Stocks May Rebound 6% Short Term

Chipmakers May Soon Rebound to New Highs

Biotech Stocks Set to Breakout

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Eli Lilly Shares Seen Rising 18% as Profits Surge

Biotech: Nektar’s Stock May Fall 15% Further

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #apple #netflix #amazon #technology #bitoech #microsoft #sp500