False Alarm, Stocks Midday Plunge Prove To Be Just A Mild Overreaction

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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FEBRUARY 20, 2020

STOCKS: AMD, ACAD, BABA, AMZN

MACRO: SPY

Michael Kramer still owns SPY Calls

Michael Kramer and the clients of Mott Capital own ACAD

Join me on February 27 at 12 PM ET for a FREE webinar hosted by Interactive Brokers.  I will cover why I think the S&P 500 is rising to 3,600. Sign up

Markets in turmoil, the next correction is coming, the end of days are upon us. The markets plunged by a whole 1% briefly around lunchtime, and the media was in full hysteria mode. My goodness. What a joke. It’s the “coronavirus reality setting in,” “no, its the stretch valuations that are finally cracking,” “oh-wait, pick-me, I know, I know, its the end of the momentum train.” Holy Shit! You know what I did it – yeah, I turned it off. 

The charts don’t lie, and when you look at the intraday charts of nearly every signal sector ETF, they seem to tell the same story. A story of a giant sell program that hit the market, with a massive basket of stocks to sell. Today’s sell-off was so severe 😛 that the S&P 500 managed to finish the day down a whole 38 basis points. Do stocks go down, yes. Is every brief 1% dip the start of the next correction, or the air hissing out of the bubble, no. 

Members were given an epic rant by me this afternoon, of what a joke some of this has become.  Premium content – RED ALERT- STOCKS CAN ACTUALLY GO DOWN

You can see that the S&P 500 and Nasdaq 100, and a whole bunch of sectors went down in nearly perfect unison. It wasn’t a slow, steady push lower, with one industry leading the way, they all went down simultaneous as if a giant basket of stocks hit the market. 

Not to mention there was no solid piece of news to even tie the move lower to.

basket

It didn’t have the marking of reversal of trend or anything because, by the end of the day, most stocks rebounded, closing mildly lower. 

S&P 500 (SPY)

We can see the S&P 500 held the uptrend nicely; nothing has changed in my opinion, nothing. Today I laid my new target for the S&P 500 for members: The Road To S&P 500 3,700, Yes I’ve Increased My Target

S&p 500, spx

AMD (AMD)

AMD fell today, and I think it still has further to drop. Although, I did identify a mild level of support at $54.61.

amd

Acadia (ACAD)

Acadia was down sharply but found support at $43.40, and it held. The trend remains higher.

acad

Amazon (AMZN)

Amazon held support, and that is all that matter, nothing changes here I think the stock still goes up.

amazon, amzn

Alibaba (BABA)

I have several concerns about Alibaba now. The stock broke support at $220 and fell below the uptrend. The stock needs to snap back and fast; otherwise, down it goes.

baba, alibaba

Anyway, have a great night, and don’t let the bed bugs bite!

-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.   

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