Round And Round The Market Goes, Where It Stops No One Knows

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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MARCH 5, 2020

STOCKS: ROKU, BABA, SBUX, MU

MACRO: SPY

Well, that most certainly didn’t go as expected today. Ugh. I get things wrong too. Sorry, but these are crazy times.

I’ll ask the obvious question. What changed between today and yesterday? Not much from what I can tell.

Is the world coming to an end? I sure didn’t notice it when I went to Target at 4 PM. I wouldn’t say the store was packed, but it wasn’t empty, there were also plenty of supplies on the shelves. But I mean, it is only Nassau County, NY, one the most densely populated place in the country.

I know it isn’t going to make you “feel” any better for me to say this after a day when the S&P 500 fell by over 3.5%, but we are about 6% off last’s Friday’s lows. So again, we have just traded sideways this week, with this mild uptrend that is slowly taking shape.

You can see the two green trend lines that I have put in below, and to this point, at least, it is better than nothing. I’m trying my hardest to find a direction.

S&P 500, spx

One way I measure volatility in the market is with Bollinger Bandwidth, and currently, that width is the widest it has been since 2011.

bolling band

During the summer of 2011, we fell about 18%, from July 21 through August 11. The period that followed was full of volatility through October. We could be in for something similar over the next few months if that is the blueprint for this current sell-off.

2011

There was some serious stuff going in 2011 that I would say was certainly potentially a systemic risk to the world like, oh, the European debt crisis and the downgrade of the US credit rating. The threat that the EU would remain together was very much the topic of discussion at that point. It was some scary shit.

The bottom line, this volatility will remain, get used to it. My expectation is for the daily swings to begin to subside. When I don’t know, the one thing I do know is that it is not going to happen overnight.

By the way, the reason I thought we might continue higher today, as I noted last night, was because we broke the downtrend, and the market was shaking of every piece of bad news. The market closed not far off that downtrend. However, the one lousy piece of news that I have tonight is this potential double top pattern at 3,135. So a break below 2,975 would indicate a retest of the bottom.

S&P 500, spx

Starbucks (SBUX)

Starbucks pre-announced, and unless I am seeing things, the stock hasn’t even moved after hours. This is probably the most crucial stock to watch tomorrow. What it does, will tell you how much of this guidance downgrade has been priced in.

starbucks, sbux

Alibaba (BABA)

Alibaba doesn’t go down, and it leaves to think it goes higher back to $220.

baba, alibaba

Micron (MU) 

I noted in a free article today; someone was buying the Micron April $60 calls. I think that is a big bet, and the chart could be suggestings the shares do go higher back to around $60. Micron Investors Have Been Waiting For This Moment

micron, mu

Roku (ROKU) 

Someone needs to explain to me who is buying this Roku at $105 that the stock doesn’t go down. This is the case of either a lazy trader or a massive buyer because how this stock isn’t going down in this market seems insane to me. When the buyer is cleaned up, the next level of support is around $100

roku

Anyway, things will get better. 

Oh look Korea just opened.

-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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