Most Shorted Stock Continue To Push Higher on February 1

February 1, 2021

STOCKS – COST, WMT, ACAD

MACRO – SPY,

Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL

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.

Visit the NEW Monster Market Commentary Store For Premium Content! Get Now For $1.99

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.