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It’s Not Easy Being A Chip Stock These Day – Trading Day in Review
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF SWKS, NFLX, TSLA
An exciting day to say the least in stocks. You would never know it from looking at the S&P 500 which finished the day flat at 2,888. But the NASDAQ was down by about 1 percent at one point on Wednesday. It managed to come back by days end to finish down only 20 bps. The NASDAQ appears to be following right along the uptrend that has been in place since April.
But man, those chip stocks continue to take a beating. Micron fell another 4 percent today dropping to $41.75. We talked on Monday about how support at $45.25 was so critical, and how it looked like the bears would crack the stock. They sure did. Now we see a repeat of that around $42. I think the same thing may happen again, and that means a drop to $40 may be in the cards. I’m sorry, but when it comes to these high beta names, that carry a lot of emotions, the money can exit very quickly. That is what we are seeing here. Investors sentiment has turned bearish in a hurry. But for now, the path of least resistance is still lower.
I talk more about why the chip stocks may have fallen too far in my latest subscriber video: Chips May Have Fallen Too Far
Skyworks also saw a lot of selling pressure today. It would seem the stock is attempting to fill the gap. Lets hope it flushes the sellers out too.
One sign of encouragement though is the SOXX semiconductor ETF found support at the uptrend. Also, the RSI appears to be changing direction, to one that is more bullish. Perhaps a bottom is near.
Netflix rose by 4 percent, and the stock is back to $370. Again, I think we make our way to $400.
Tesla also had a solid day and appears on its way to $300.
Facebook is nearly $159, and that is a significant level for the stock. A drop below $159 sends shares lower to $148. Until this company reports results and can give investors something positive I don’t see this stock going anywhere but lower. Too many question marks currently.
Twitter is another social media company likely going down. Perhaps to $27.
Nvidia is now in motion and shares seem to be heading lower to the uptrend around $250ish.
Watch out guys the banks got crushed today falling over 1.5 percent on the BKX index. It has broken down and looks as if the BKX is heading to 104.
Inflation data tomorrow may be critical for the banks. PPI was weaker than consensus estimates and up 2.8 percent y/y. The third month a row it was lower. I think CPI will be weaker tomorrow too. Watch that yield curve if you own these banks.
The Shanghai composite closed right on technical support at 2,654. If it falls below that things could get ugly for this part of the world. Could be looking at a drop to 2,520.
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.
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.