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August 13 – Stock mentions: AAPL, AMD, BAC, GE, TSLA
Michael Kramer and the clients of Mott Capital own AAPL and TSLA
S&P 500 (SPY)
The stock market had a heck of a day. Entirely unexpected. Right? Well, not if you read my blog last night. But I admit, I was only thinking we’d get an increase to 2915. What was surprising was how strong resistance at 2935 was today.
We failed on multiple occasions to rise through 2935 on the S&P 500, and it has me wondering if this is one of those up days that are followed by a big day lower. I would sleep much better tonight if I knew the outcome.
My guess for tomorrow is that we fall back and test support at 2915. We will see. Unfortunately we are still in a period of heightened volatility, and for now, we should expect for the market to be choppy.
At this point, it isn’t time to worry. But we surely do not want this to turn into a bearish reversal pattern known as a triple top. So a pullback to 2,915, must be followed by an increase above 2935.
S&P 500: A Path to 3,300
Despite the short-term headwind I’m still very bullish on stocks and continue to believe we are on a path higher, perhaps to around 3,300. We have talked often about the fundamental reasons why the S&P 500 can continue to rise based on the earnings, valuation, and low-interest rates. But I also think I can support this theory using the charts. I talk about more in today’s premium video. The Path To S&P 500 3,300
But you can see in the chart below the long-term uptrend that has acted as resistance since 2012. Anyway, it can give us all something to ponder.
The spread between the 10-year and the 2-year yields continued to contract today, despite rates rising. The spread is now just one basis point.
Bank of America (BAC)
Yesterday the bank stocks were getting crushed on the tight spread. Today, the spreads were tighter, and the bank’s rally, makes tons of sense? Don’t get too excited because it looks Bank of America may only be filling the gap from yesterday’s sharp decline. I think it continues to head lower towards $25.75
AMD did not act very well today, hovering and falling below support at $32.30. $31.40 is probably the next stop.
Apple also had a huge day, but like the S&P 500 failed to rise above critical resistance. For Apple, it was around $209, and that is where it just stopped rising. Again like the S&P 500, it seems that Apple likely heads lower perhaps to about $204.
GE had an intense day, but now there is a gap down at $9 that needs to be filled. Factor in some bearish options bets and the stock could be heading below $9. Here is a free article where I lay everything out GE: Game Over
Tesla is nearing its post-earning downtrend. If it can clear $236 it puts it on a path to $255. Tomorrow will be telling.
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