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February 1, 2021
STOCKS – COST, WMT, ACAD
MACRO – SPY,
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Earnings Preview: Amazon
- Midday Note: An Uncertain Path Still Lies Ahead
- Morning Note: Volatility Appears To Be Spreading
- Earnings Preview: Alibaba May Fall In The Days Following Results
- T.W.A. – S&P 500 Breaks Major Trend Lines
- 4Q’20 Qrtly Investor Letter: MCM Thematic Growth Portfolio
- Educational Material – The Danger Of Put Buying The Most Shorted
- Earnings Analysis – Tesla’s Lack Of Guidance May Weigh Short-Term
- Earnings Analysis: Microsoft May Become A Victim Of Its Own Success
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD
Stocks jumped on February 1, with the S&P 500 rising by around 1.6%, recovering from Friday’s losses. It managed to close at 3,775. It’s hard to know what today was about. Was it a relief that we survived the weekend with “bad” news, the short-squeeze slowed, or just a flat out technical gap fill? At this point, I’m leaning toward the technical gap fill.
If that is the case, that resistance around 3,775 should continue to hold, and we should see lower prices tomorrow. If that is the wrong call, well, then you will know if the market rallies further.
Most Shorted Index
The most shorted index actually increased by 2.25%, so it wasn’t as if the group just stopped rising. Remember that short-interest has about a two-week lag, so while the number of shares short for Game Stop fell to 122%, that is from January 15. The January 29 number won’t come until around February 15.
Yields
The rally seemed a little surprising because the ISM manufacturing report was worse than expected, and prices paid were much higher than expected. Maybe one month isn’t enough to make people worry. It is an inflationary signal and the highest reading since 2011. But still, bonds and equities cared not.
Acadia (ACAD)
Acadia has really been getting beaten up the last few trading session, and I’m not sure why. They always take a long time to report the first quarter number, generally because they give full guidance. But I also know that the stock typically trades ahead of the news, which makes me worry that someone knows something. Dementia-related psychosis approval news doesn’t come until April.
I thought there was a cup and handle pattern, but that is shattered at this point. Right now, we have to hope $44.50 and holds.
Walmart (WMT)
Walmart continues to struggle, and as I noted several weeks back, I think the stock will continue to have a tough time moving higher. It just isn’t a cheap stock, and the technicals look horrible, with $137 still on target. (Should be free to read – Walmart’s Overvalued Stock Is Likely To Struggle Going Forward)
Costco (COST)
Costco may have formed a head and shoulders reversal pattern, and it appears to be confirmed with a break of the neckline at $359. If that is the case, than a drop back to $334 seems possible.
That’s all for today.
-mike
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.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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