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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF AAPL, NFLX, GOOGL
Equity prices look primed to continue to rise in the coming days and weeks ahead. But, as I have mentioned before, there are a few indicators I continue to watch very closely that have me concerned for 2019. Again, I do not see them as an immediate risk, but items that are looming. I talk about this a lot more in today’s premium video.
S&P 500 (SPX, SP500)
The S&P 500 pullback by 25 basis points today, nothing serious. We did see a bigger pullback after the FOMC meeting, but stocks recovered into the close. The good news is that the S&P 500 fell to support around 2,795, twice and held firmly each time. Additionally, the uptrend continues to stay in place as well.
The NASDAQ also held support at 7,500, yet another positive sign for the broader equity market.
10-year rates continue to grind higher and are approaching a critical level again. Should yields rise above 3.25%, it may results an acceleration higher, and I do not mean to 3.3 or 3.4 or 3.5%. I’m thinking about a rise to 3.75%. Do you want to see the market get spooked? At 3.75% you will see the market get spooked.
The dollar continues to strengthen as well, and today it rose again over resistance at 96.60. It would suggest the dollar is likely to continue to rise and has its sights set on 98.
More bad news for commodity prices.
Apple continues to hold fairly well around $209. The stock looks well positioned to rally back to $217.
Amazon is also holding firmly at $1750, and I still believe it is on it way higher to $1840.
Netflix, managed to hit our $332 level and backed off some. The good news is the uptrend remains.
Activision was one of the hottest stocks last year, and 2018 has been very different. The company gave weak full-year guidance and declining monthly active users. $55.60 is holding as support now, and it needs to hold. Otherwise, the stock could be looking at $50.
Roku fell 21%, and it looks like it is on its way to $43. My only regret with Roku was thinking the stock could pop to $65 before the earnings. This stock is a disaster. I don’t get what people are thinking about when it comes to Roku. It is an advertising platform at best, trading at five times next-year sales. That is after today’s decline! Alphabet trades at 4.7 times next year sales. So I don’t know; Alphabet or Roku? Alphabet or Roku? I mean really! Roku should be trading a steep discount to Alphabet. Steep.
One last thing to think about. If there was serious money at play in this advertising segment Roku is living in, wouldn’t Alphabet or Amazon be all over it? I mean after all, they do have their own streaming devices? They can write software. There is a reason Netflix spun-off Roku oh so many years ago.
Qualcomm may very well be the next IBM. Seriously. Big buybacks, falling revenue. Sound familiar? Amazingly the past 5-years have been horrid for IBM and Qualcomm. It is amazing.
I think that is enough for today.
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.
stocks, apple, roku, qualcomm, activision, netflix, amazon, sp500