Michael Kramer and the clients of Mott Capital own Netflix, Tesla, and Alphabet
Michael Kramer owns SPY Calls
The S&P 500 is now about 2% from its all-time high, and I think at this point we should enjoy our achievements. Not many were calling for this 23% rally, and it feels so good to have been proven correct, despite all the criticism taken along the way.
Recession fears, earnings worries. What happened? All we have heard from the “all-knowing’s and masters of the universe” for what felt like an eternity is to worry about economic doom and gloom. “Global Growth is slowing; a recession is coming,” the collective said over and over –so much for that! The S&P 500 has crossed 2,860, and there is not much standing in the way of an all-time high. What now? How much longer can people stay bearish? They have only missed a nearly 23% rally since December 24. Talk about being wrong?
Let’s say the latest PMI numbers continue to suggest anything but a recession is on the way, something I have said over and over, and over again. The March reading for Manufacturing came in at 55.3 versus estimates of 54.2, and up from 54.2 last month. Also, the latest GDPNow forecasts are calling for 1Q growth of 2.1%. I’m no rocket scientist, but these numbers do not scream of a recession. Where did these overblown worries come from? Talk about being wrong, twice!
Could we suddenly slip into recession, who knows, I guess anything is possible? I will tell you what though, if the first quarter is the worst quarter of this cycle, as the earnings estimate we have tracked project, and we print a 2% GDP for the first quarter, then stocks have much more room to rise. It will likely signal that GDP growth for the rest of the year will be far better than anybody expected.
S&P 500 (SPY)
The S&P 500 is trading around 2,866, and between here and 2,870 there may be some mild resistance. But after that, we are talking about a return to near an all-time level high of around 2,915.
Amazon busted out today, rising through the bull flag I mentioned in the column yesterday. The next significant level to watch for comes around $1850.
Netflix is also rising after holding support at $355, and now $378 is on the horizon.
Alphabet is also rising from support at $1,175 and is likely on its way back to $1,225.
AMD had a huge day rising over 3%, back over resistance at $25.70, and all signs are pointing to a move to $29.
Tesla is set to release its production and delivery numbers any minute. Lately, it has been on the 2nd day of the new quarter before the open of trading. Talk about the moment of truth; this stock is facing all sorts of resistance around $292 to $298. If the stock gets above those levels, then it may have much higher to climb. Bloomberg is estimating about 79,000 Model 3’s produced in the quarter, and if Tesla’s produces its usual number of around 25k model S and X then we could be looking at over 100k units in the quarter, that is my guesstimate. I guess we will find out very soon.
What else. Oh, AT&T was even up 2% today. The stock is breaking out and looks like it may be heading towards $34.25. I wrote it up on Thursday, here it is for free.
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