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Cracks Emerge In The Stock Market

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Cracks Emerge In The Stock Market

Mott Capital Management, Michael Kramer

Mott Capital’s Reading The Markets

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The stock market continues to churn, and cracks are still emerging as we noted the other day. The market is still looking weak, and some of the most prominent companies are just extremely overbought. For now, the S&P 500 is still not out of the woods, and the direction is still lower, with the potential for a shallow 3-5 percent pullback.

s&p 500 stock market

Is this start of some massive sell-off? No, it is a normal and healthy pullback after nearly a 5.5 percent rise in January.

Microsoft

The first crack came after the close, with Microsoft shares trading lower, nothing substantial but still by about 2 percent as I write this at 4:30. It doesn’t matter whether Microsoft beat or miss its numbers, because the numbers looked very good, boosted by significant gains in Azure and Office 365. But the market is taking profits on a stock that ran up too much ahead of results.

microsoft

Apple

We spoke about Apple and the importance of the stock holding support on the uptrend, and to this point that has been the case.  But the main event comes tomorrow night when we hear all about the iPhone X.

apple

But Broadcom may have spoiled the party today, when it narrowed its fiscal first revenue range, and issued above estimates second-quarter revenue guidance. But the big news was in the last meaningful paragraph when the company noted: “Looking ahead to our second fiscal quarter, strong data center demand for our wired and enterprise storage products and a seasonal pick up in broadband is expected to offset a greater than seasonal decline in wireless”.

I talk about this more in the premium member “Reading The Market” section and what the fall out for Apple may be. But the sentence may have stolen the news from Apple. But you can rent the video and watch and get a sample of how the service works.

Did Broadcom Just Side Swipe Apple from Michael Kramer on Vimeo.

Amazon

Amazon had an interesting reversal today, and it could be merely a filling the gap moment, but should the stock move below $1,440 it could be the sign of a move lower. Again the company reports results tomorrow after the close, and that will be the key. But let Microsoft serve as an example of what Amazon could do after those results get published.

amazon

Biotech Stocks

Biotech stocks fell for the second day in a row with the Nasdaq Biotech ETF down nearly 2 percent and are down about 3.3 percent over the past two days. The chart below shows how the ETF fell right to support, around $113.50. I expect that the ETF will hold support at this level, as it a steady level on the way, and it is like to act that should it try to go lower.

biotech

The drug pricing issue continues to plague the group, and we have been hearing about this now since September of 2015. Again, I continue to believe that anything that happens with regards to drug pricing will come in the form of regulation, with perhaps getting generic to market faster.

That is going to it.

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Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

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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.

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Tags: #apple #biotech #stocks #microsoft #amazon #broadcom #sp500

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