May 8, 2020
Stocks – AAPL, AMZN, ROKU, UBER
Macro – SPY, XLF, Yields
Michael Kramer and the clients of Mott Capital own Tesla and Apple
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For the month of April, we saw 20.5 million jobs lost with the unemployment rate rising to 14.7%. Analysts were looking for jobs lost of 21.5 million, and unemployment rate of 16.4%. These were both better than expected results and for now, the market is jostling around, but not giving back much of its early gains.
Stocks are rising again, in what seems to be the new pattern. Futures jack higher every morning on seemingly no news. It will be interesting to see where the index closes today, as the last few days have resulted in a late-day fade.
S&P 500 (SPY)
With that said, we find the S&P 500 SPY is now trading at the resistance zone at $291.50. After that, the next significant level of resistance would come at $295.83. We can see the uptrend in the index, which is certainly flattering and a different trend then the rally off the March lows. It suggests to me, at least that the index continues to lose some of that upward momentum it initially saw. Does that mean the index is due to pull back right away? No. It just means that the rally is maturing and is likely getting closer to its end. So when I say upward momentum is fading, I am not trying to say the market is due for an immediate pullback; I am merely stating the rally is losing steam and is slowing. We have to wait to see how it develops at this point.
I will have to be more careful in how I do these write-up, as some “readers” misinterpret my abilities, and take things like hoping as an actual call, which it is not. To hope is to wish, or to want something to happen. That is not the same as saying I think it will happen. So to be clear, $296 is the next significant level of resistance, IF the index rises ABOVE $292. Do I think it can rise above $292, I do not know, as the market is in a period of not being logical, and I do not know how it will view the jobs data today.
Bond yields continue to drop with the 10-year now trading around 60 basis points. Again, the significant level I am watching for yields comes at approximately 50 basis points. A drop below that level would trigger what I think would be a sell signal for the stock market. So I care very much about what happens here.
The financial XLF is also signaling the same worries as the 10-year. Again, in this case, I am watching the $21.10 level. We need the ETF to fall below $21.10 to confirm a double top pattern, a potential further decline. To be evident, if the ETF doesn’t fall below $21.10, then there is no confirmation, and thus NO double top pattern.
Apple looks like it is forming a rising wedge, but I again, I am not sure. To confirm the rising wedge pattern, we need to see Apple fall below $300.
Amazon has been trending along with the uptrend, but still faces a stiff level of resistance around $2440.
Roku must not have gotten the memo about telling invests they saw signs of stabilization at the end of April. If they had, the stock would be rising, but Roku is falling. The good news is at least it holding support at $123. A drop below $123 sets up support at $116.
UBER, on the other hand, did “see stabilization,” and therefore, the stock is rising, despite losing more money in one quarter than I have ever seen. That is saying something since I have owned Tesla since 2015. Just flat out stupid.
Have a good one!
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