Stock Jump Again on June 2, As The Next Big Resistance Level Approaches

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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June 2, 2020

Stocks – ZM

Macro – SPX, QQQ

 

MIKE’S READING THE MARKET PREMIUM CONTENT $35/MONTH OR $300/YR– 

It had been a very dull day, with stocks rocking between positive and negative territory. However, there was a massive $3.5 billion buy imbalance for the closing cross, which sent stock rocketing higher in the final 10 minutes. It left the S&P 500 closing at 3,081 resistance level. It is a region of resistance that we have been targeting now since the middle of May. We will have to see if the momentum can continue to carry the market higher. 

Due to changes in open interest levels, it seems that options dealers are now using the 3,050 level as a region to get a long future to hedge themselves. As long as that remains, it looks like an area that likely to continue to offer the stock market support.  Premium content – DEALERS HOLDING KEY LEVELS

S&P 500, spx

NASDAQ (QQQ)

The Nasdaq jumped above resistance on that buy imbalance too, and it managed to take the index higher above 9,573. I’m not sure if I should consider this a break out, or not, I would have preferred it not to happen due to the closing cross. Tomorrow we will give us a better assessment. Should the index continue to climb, it is likely to reach 9750.

nasdaq,

The number of stocks on the S&P 500 above their 50 moving average was at the highest level ever, or at least based on as far as my chart goes back. I don’t know if it means anything; take it to mean whatever you want. 

Zoom (ZM)

Zoom will be one stock that should be watched closely. This is one of the most significant momentum stocks around. The company reported some fantastic numbers. I’m not sure if it is enough to keep the stock up. The company noted it expects earnings in a range of $1.21 to $1.29, better than estimates of $0.45 per share. That will result in analysts boosting their estimates. That should help to bring down some of the very high multiples. But still, to justify the valuation and get the stock to say five times one-year forwards, the company would need to have revenue jump to $10 billion next year, or even $10 billion by fiscal 2023. So if the momentum trade can stay alive and well, then that means this stock just continues higher. 

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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