Micron Preview, Acadia, Amazon, Tesla, Netflix, Square and Facebook
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN NFLX, aCAD, TSLA
I must admit; I am a bit frustrated by what is happening on the long-end of the Treasury curve. Yields on the 10-year Treasury have increased to 3.08%, as inflationary data as measured by the CPI and PPI in August were worse than expected. So rates are rising? The move higher has more do with global rates climbing than the inflation data. It is aggravating for me to be about inflationary pressures easing, only to see rates rise. One of the reasons why rates in the US are increasing is because they are rising in Europe.
The 10-year German Bund has risen by 13 basis point since the beginning of the month. It doesn’t sound like much of a rise but considering that rates were at 35 basis point at the beginning of the month, and now they are 48 bps. That is a massive move higher in a short period. Even the rates in Japan are increasing, rising from 10 bps to 13 bps, therefore, if global yields are rising than our yields will climb.
The big question, is if rates will continue to rise? The currency market has a muted response. The dollar has weakened versus the euro and pound since the start of the month, but it is not an overwhelming amount.
For now, I’m going to stick with the call that yields will not continue to rise over the longer-term. However, as usually should I see a sign suggesting a change to this belief, then my viewpoint will change.
The group that benefits the most from the rising yields is the banks. The technical charts have not much changed very much at this point, so I’m not going to run through all the bank charts. However, should the yield curve continue to steepen the banks will benefit. The whole premise of not likely the banks was based on longer-term rates would not rise.
Amazon continues its trend lower towards $1,840. Can Amazon rise to $1960 over the next couple of days. Yes; it can. However, that does not mean the downtrend has changed. AMZN must rise above the downtrend to reverse the trend. Otherwise, the direction for the stock is lower.
Netflix rose above $375 this morning, on news the service would be available on Sky in the UK. But shares fell hard shortly afterwards. $375 is proving to be a challenging place for the stock. It immediately sold-off falling back to its uptrend. It looks like rising above $375 will have to wait for another day.
Tesla managed to bounce back after yesterday’s steep sell-off. Again $301 is critical for this stock. Should the stock rise above $301, then it has room to around $325.
Facebook is battling to stay above $160, and so far it has held support. Should shares rise, they have room to climb back to $166. But until the stock gets over $173 the trend is still lower.
Micron’s big earnings day is tomorrow, and shares are slipping below support at $45.11. Where will Micron go? The trends have turned against Micron. So, I’m sticking with the call shares fall to around $40.
Here is a screenshot from BusinessQuant on DRAM pricing. Now I’m no rocket scientist, but those pricing trends seem to be going the wrong way.
AMD has fallen below its uptrend, and I think it spells bad news. Sorry guys. $29.40 is the next stop. Volume is dropping too.
Square got close to our uptrend. Is it close enough? That is the question. I still have concerns; volume didn’t jump. The best thing that could happen to this stock for the longer-term is a drop back to $70. However, now, I’m on the fence. Let ‘s see where it goes tomorrow before we make any bold calls.
Here is the last one for today. The thorn in my side Acadia. From hope to a disaster. However, shares rose by 6 percent on no news that I am aware. I know Merrill had a positive note out yesterday on Nuplazid sales trending higher. Remember the depression data comes out for pimavanserin in the fourth quarter. However, what may be more critical is that momentum in the stock is shifting to a more bullish stance. The stock broke above a significant level of technical resistance at $15 today. Now there is one more downtrend to rise above around $16.
Even better, is that the RSI is now turning positive, and is breaking a year-long downtrend. The RSI turned negative last October and had trended lower since. The stock fell from $40 to, well, where it is now. If the RSI is turning positive, that could be a significant signal the stock price will follow suit. Fingers crossed.
Volume levels have risen over the past five days as well.
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.
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