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Disney, Costco, Sage, and Nvidia-Plus The Monster Week In Review

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This past week saw the S&P 500 continue to rally and reach new record highs, with the index up by nearly 1 percent. Technology led the charge higher with the Technology ETF ($XLK) up by about 1.5 percent, while the interest rate sensitive Utilities fell by 1.5 percent.

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^SPX data by YCharts

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The S&P 500 was led higher by shares of AT&T ($T), which surged by over 4 percent for the week, while Microsoft ($MSFT) and Apple ($AAPL) put in a solid performance finishing higher 3.2 percent, and 2.72 percent, respectively.

AAPL Price data by YCharts

Of the top 12 companies in Technology ETF, AT&T ($T) performed the best followed by Microsoft ($MSFT), and Verizon ($VZ) up just over 3 percent. Meanwhile, Oracle ($ORCL) shares sank over 2.6 percent after the company gave weak guidance for its cloud business, while Nvidia ($NVDA) was the second worse performing name for the week, finishing flat.

AAPL Price data by YCharts

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It would seem for the most part the market is beginning to re-rotate, after previous weeks saw a significant movement into shares of Banks, Industrials, and out of Technology. It would seem for the most part money is now moving back into Technology.

There is a good reason for this re-rotation. Despite Banks, Industrials and Consumer Discretionaries being the clear corporate tax cut beneficiaries, technology stocks are still the growth engine of the economy. Technology stocks over the longer-term will be the companies that deliver consistent year-over-year growth as a group. While the banks, industrials, and discretionaries will likely only get a one time benefit and then return to their longer-term growth rates.

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Biotech

Shifting gears, Biotechs have still not been able to clear the $107 hurdle on the IBB, and the group will not be able to mount a move higher until that happens.

Sage

Sage Therapeutics ($SAGE) has recently been thrust into the top 25 holding in the IBB ETF after two rounds of exciting data. Over the past three months shares of the stock have risen by nearly 160 percent. The company has two exciting drugs in development, one for post-partum depression, and another for Major Depressive Disorder. The impressive part for the two drugs is the speed in which the drug bring relief to patients. The market for Depression is quite larger, around 15 million people per year in just the US. I have followed Sage for some time, and it is exciting to see them finally see success. My only wish is that I bought shares of the stock instead of only following. But that opportunity may come, the market always gives opportunities.

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Nvidia

Nvidia shares have trade horribly of late, and the once high fly stock has failed to show any meaningful bounce. The one specific area I have noticed in Nvidia is the potential for a double bottom being put into place around $185. It is worth noting the stock has failed to rally above $193.50 on several occasions, but if Nvidia is to rally into year-end, it would seem shares are set up to do so presently. If the double bottom does not materialize it is a bad sign for the stock.

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Costco

Costco ($COST) saw a big rally at the end of the week, after reporting better than expected results. It is worth noting that shares of the wholesale club retailer may have gotten slightly ahead of themselves. The chart below shows the long-term trading channel for the stock and shares have now risen above it. It could be a sign that the stock may have a short-term pullback in store.

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Disney

Disney had the biggest news of the week announcing it will acquire assets from FOX for over $50 billion, bringing, even more, content to Disney’s already massive library, while merging two of the most prominent movie studios. With a controlling interest in Hulu, Disney will be able to rival Netflix in streaming content. Disney shares look primed to break out of a multiple-year symmetrical triangle, which could see the stock rally to all-time highs in the not to distance future.

That’s it.

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Michael Kramer and the Clients of Mott Capital own shares of $DIS $NFLX $GOOGL $VZ

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.

Tags: #technology #biotech #nvidia #sage #costco #disney #sp500