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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Looking At Micron, Acadia, Amazon, Splunk, Square, Intel, AMD, Netflix
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL SHARES ACAD, NFLX
Stocks jumped today, with the S&P 500 rise by roughly 80 bps to 2,930 on Thursday, reach the target we laid out a week or so ago. But anyway, there should be no surprise that equities continue making no highs. There is no reason for them not to be at this point. Honestly, it is that simple. Low valuations, strong earnings, and a strong economy are a recipe for higher equity prices. I’m not going to sit here and try to predict every 25 points in the S&P 500. Let’s stick with a target of 3,000.
Again, the one concern I do have centers around interest rates. I know I have preached lower rates, but that doesn’t mean we shouldn’t know where rates go if they do break out. If yields break out, and the 10-year rises above 3.12%, I can see them increasing very fast to about 3.3%. Yep, and that might be a problem for equities. It is the only thing I worry about right now. Let’s hope rates do not break out and come back down some.
Micron reported better than expected fourth quarter results, and solid gross margins. Shares spiked in the after-hours following the results to roughly $48.25. But shares quickly faded after the company gave lower than expected EPS guidance of $2.95 at the mid-point, $0.10 below consensus of $3.05. Gross margins are expected to in a range of 57 to 60%, below the fourth quarter’s results.
Revenue guidance also came in worse than expected at $8.1 billion at the mid-point, versus estimates of $8.4 billion.
I don’t know if this is a disaster regarding first quarter results. It is one reason why the stock has fallen so sharply. But I also do not think there was enough there to push shares higher. I’m sticking with my view of a decline to $40.
Yesterday, I noted that it appeared the tide was turning in Acadia’s favor, and it sure did today. The stock spiked by almost 26%, when the FDA released a statement saying there were no added safety issues for the drug. Geez, what a surprise. We knew that months ago, Anyway, the next level of resistance comes around $21.50. The significant overhang is now removed, and much of the bear thesis is finally laid to rest, the shares can begin to rise again. There are plenty of catalysts for this stock over the next 2 months. Include data on its depression, which could come in October or early November.
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The trend is still lower for Amazon, it is struggling to get over resistance.
Intel looks as if it is ready to burst higher. The pattern is falling wedge, and the RSI is signaling a bottom is in place. An increase over $48, moves this stock quickly to $51.
Not the greatest of signs for AMD, with the stock retesting its uptrend, failing to rise above it, and then staying below resistance the rest of the day. Careful.
Square, had a nice little bounce today, but which way is that trend still going? Lower. Yep.
Facebook is trying so hard to get above $166.50, but it can find the strength! A rise above resistance sends the stock higher to $173. If the stock stays below resistance, the stock falls back to $159, and probably lower.
Netflix keeps grinding higher along the downtrend. Tomorrow may be the day we finally get the breakout.
Splunk is still working to fill the gap at $105.
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.
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