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The Monster Week In Review: Target, Netflix, Amazon, Nvidia, AMD, Tesla and More
The market continues to rise at a torrid pace, and the S&P 500 is now up by over 4 percent for the first 9 trading days of 2018. But it is not the technology group leading the markets higher in 2018, its energy and consumer discretionary stocks, which have already surged by 7.3 and 6.4 percent.
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Energy
Energy stocks continue to outperform as Oil continues to rise, and that rise likely will not stop anytime soon. WTI Oil has already surged by nearly 7.5 percent to start the year. From the looks of the chart for Oil, it seems more likely to see $75, before we see $60 again.
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Consumer Discretionary Stocks
If Consumer Discretionary ($XLY) stocks are ripping higher, then Amazon ($AMZN) and Netflix ($NFLX) must be pulling the group up. But, it is Target ($TGT), up nearly 13.5 percent in 2018, then Netflix, and Amazon.
But shares of Target, have rallied hard and look overextended. The stock has broken out of a multi-year downtrend, but has an extremely high relative strength index (RSI) reading, higher than 70, a reading over 70 indicates overbought levels. It means the stock could be due for a pull-back or period of sideways consolidation.
Netflix
Netflix shares have gone into beast mode, and one can only imagine what the expectations are going into earnings. The technicals suggest the stock is overbought at the current price, and it has to make any investor think we get a sell the news response after results. I for one do not like seeing this type of price action going into an earnings report. It likely means expectations could be approaching unachievable levels.
Amazon
The expectations for Amazon continue to build as well, as the online retailer, moves higher, like Netflix. The long-straddle for expiration on February 16, using the $1310 strike price, only indicates a rise or fall of 7.5 percent.
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Chip Stocks
The chip stocks, despite some of the negative headlines about the Spectre virus, have been performing reasonably well in 2018, with the PHLX Semiconductor ETF ($SOXX) now up 5.5 percent, and could be on the verge of a significant breakout.
The chart above shows just how the ETF is making a run towards its earlier highs, last seen in late November before all the Apple iPhone supply issues started floating around. A rise above $183 signals a clear breakout, and given that the RSI and the price are trending higher, and the RSI is nowhere near overbought territory, I think we see that breakout. We just need a spike in volume to confirm the rise.
It should not come to anyone’s surprise that Nvidia ($NVDA) and AMD ($AMD) are the best-performing stocks in the group, up about 18 and 16 percent, respectively. It’s no surprise either that Intel is the worst performing stock in the group down nearly 6 percent.
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Nvidia
Nvidia had its monster breakout, and to this point has been able to hold that breakout, staying above $219.
AMD
Trying to predict the direction of AMD lately has been a nightmare. It feels like it can change course like the wind, and it doesn’t take much to make this stock rise or fall by 3-5 percent. But I’ll take a stab at it, and say that ADM looks like it’s set to rise. The RSI has increased, and the recent consolidation in the stock bares the resemble of a bullish pennant. I shall guess, and say we see $14.25, some time in the not to distance future.
Intel
For Intel, the long-term picture still looks solid, but in the short-term, the stock looks at risk of falling further, perhaps to as low as $41.50.
Tesla
What would the week be without some crazy call on Tesla? The stock appears to have had a significant multi-month breakout, and we can see the market tried to retest that breakout today. The stock held above the downtrend and the breakout continues to be intact. $385 seems possible, yes even from the current price.
That’s it! More tomorrow for the week ahead.
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Michael Kramer and the Clients of Mott Capital own shares of NFLX and TSLA
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.
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Tags: #chips #stocks #energy #consumer #target #amazon #netlix #intel #nvidia #amd #tesla