December 13, 2019
Stocks: ROKU, AAPL, MA
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN MA, AAPL
The market was looking for something more when it came to a trade deal with China. Something is better than nothing. How long the trade truce will last is anyone’s guess. I’m thinking until December 2020.
But regardless, it is enough for the market to move forward with a clear mind and one less thing to fret over. Now, throw in a potential Brexit deal by the end of January, and suddenly things are looking a little less gloomy.
I know it is not fashionable to be an optimist or to think the market can continue to rise. I’m sorry. I need to find more gloom and doom angles. I read a lot on Twitter and gloom and doom websites about how the Fed is pumping its balance sheet up, creating a bubble, and how the balance sheet, expansion is a secret QE4 operation, and secertly buying Treasury. Perhaps the Fed simply overtightened and drained too much liquidity from the system. Or perhaps the Fed is reinvesting all those maturing mortgage-backed securities into Treasury to keep the balance sheet from shrinking, which it said it would do.
Nah, it can’t be (sarcasm). It has to be a secret, deep state, operation, to keep the economy from collapsing, while the plunge protection team props up stocks.
Where is the rulebook that says the Fed’s balance should only be X? Is there a rule? The market is telling us there isn’t enough liquidity out there; otherwise, the Fed wouldn’t need to intervene in the Repo market or need to let the balance sheet expand.
But better yet, some gloom and doom people tend to think the balance sheet should resemble what it was in 2008. I’m all for that, but then we should talk about getting ride of Frank Dodd, and all those Basel agreements. Allow the banks to take on risk, and reduce all the reserve requirements back to pre-2008 levels.
My message is this; it is actually different today than it was in the pre-2008 era. The amount of regulations and compliance is a much a greater weight on the system than in 2008. If you think it is the same, you are only fooling yourself, and as a result, you have likely missed out on what has been one of the greatest bull runs in our lifetime.
Anyway, enough with that.
It was not a good day for Roku. As I have been saying, this is a stock that wants to go lower. The stock closed near the lows of the day, volume levels continue to rise, and the RSI is moving lower. Watch for $122 next week.
I noted in the mid-day commentary that Mastercard broke out and is likely heading higher. The stock cleared resistance, and the RSI has broken the downtrend. I mentioned this a few weeks back, wish I could remember when.
Apple hit my target of $275. I have to figure out what happens next. Trying to project price targets with nothing to work with is not easy.
Anyway, its Friday. That enough for now.
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