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Exploring Amazon, Alexion, Nvidia, JD, Baba, Shopify, and Inflation
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF ACAD
Stocks rebounded today, with the S&P rising by about 65 bps. 2,853 will be a level to watch for tomorrow if we can keep the rally going. I still see no reason why stocks can’t continue to work higher for the balance of the year. I feel like I am in repeat mode, but it is hard to find many negative headlines around that may have had a lasting impact on the broader markets. So I continue to remain bullish.
Turning More Bullish
In fact, I may even be turning more bullish than I was before. The reason? Have you seen the dollar lately? It has broken out and is now its way to 98 on the dollar index, good news for those of you worried about inflation.
Look not all stocks will benefit from a strong dollar, especially the multi-nationals that get a significant revenue and earnings boost from the weaker dollar, like McDonald’s. But it will help to contain inflation, and that is good news for interest rate, and perhaps the Fed.
Copper prices have broken down of late, nearly 20 percent off its June highs. Oil is almost 11.2 percent off its July highs. Gold is almost 11 percent off its April highs. Orange Juice, 8 percent off its July highs. Lumber has been destroyed; it is off nearly 31 percent of its April highs.
A rising dollar should help to keep inflation rates low, keep rates low, and hopefully keep the Fed from overdoing it. That is good for stocks. I talk more about today in the subscriber section showing you precisely what I’m looking at. The Dollar May Soon Wreak Havoc On Oil And Gold
I’m looking at the consumer discretionary ETF, and I’m little concerned, with that giant ascending wedge, which of course is a bearish reversal pattern. And so it would suggest to me that perhaps we might get a pullback of some sort in this space in the not too distance future.
Knowing Amazon is 25% of the XLY, I went back and looked at the chart, thinking that same pattern must be replicated, and sure enough, it is. The problem is how much of a pullback could Amazon see? That is the $900 billion question. Could it fall 10 percent to 1,740? Easily. The stock is up 64 percent. So a 10 percent drop is hardly a dent, but still.
Interestingly, Alexion just filed to sell about 8.5 million shares for holders. You know who that most likely is? You guess it the Baker’s. Yep, they owned 8.55 million shares of June 30. Then, of course, you can look at the SEC filing, and sure enough, it is. If you are invested in Incyte, Seattle Genetics, Acadia, or BioMarin, I guess you have to wonder if one of them is next? These are not the guy’s you want to see exiting your stock, especially when they are on the board.
Look at what stock poked its head above resistance, and just at the perfect time. Nvidia. The big test shall come if clears $268 if it does then it off to the $280’s I believe.
JD now appears to be on its way to $30.
Alibaba still has a bit further to fall, to get to $164.
Shopify needs to find a bounce or it has $115 heading its way.
Anyway, that’s gonna be it!
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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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