OCTOBER 26, 2020

STOCKS – AAPL, SQ, JPM

MACRO – SPY, QQQ, SMH

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL

Stocks are falling today, with international markets dragging things lower. Most of the pain is coming from Europe, with Germany down almost 2.4% as the coronavirus is surging in that region. That is adding a lot of pressure to our own markets, which are trading lower by about 1% on the S&P 500 ETF. 

It certainly doesn’t help that we are no closer to a stimulus deal, and the blue wave sweep narrative is melting. The problem here is that the break-out attempt from Friday is failing at the moment, and the market will need to reverse higher after Europe closes. I’m willing to bet that both the Republicans and the Democrats will both do their best to give the market hope of a stimulus deal at some point during the day, but I’m beginning to believe the market is no longer buying the hope. 

The odds of a stimulus deal get tougher after the election, without a blue wave sweep. Right now, everyone wants to get positive headlines. After the election, there is no political gain in rushing a deal, and depending on how things work out with the election, a deal could be considerably smaller than the current options. 

S&P 500 (SPY)

The window for new highs is closing, and it will take a sharp reversal today, to keep those hopes alive. Clearly, a close below 3,425 would be a negative for the market, so as long as that level holds, we can continue to hope for a move higher; after that, I fear reality may begin to set in. 

NASDAQ 100 (QQQ)

The same scenario holds for the NASDAQ 100 ETF, which must remain above $282 on a closing basis. 

Semis (SMH)

The SMH is drifting lower again and approaching support at $182, with a break of that price sending it to $174.

JPMorgan (JPM)

Without stimulus, the banks will be a group that continues to suffer, with JPM down 1.5% this morning and a good chance it heads back to $97.65.

Apple (AAPL)

Apple is falling this morning, but as long as stay in the $112.50 to $113 region, I think it should be ok, setting up a move higher after results. 

Square (SQ) 

Square is trading lower, and for now, it should find some strong support around $162, which is likely where it is heading before earnings. 

Have a good one

-Mike

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 results.