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Michael Kramer and the clients of Mott Capital own Apple
Good Morning Today is Tuesday, January 15
- S&P 500 futures are pointing to a lower opening of 2 points as of 8:00 AM
- The US 10-year rate is at 2.70%
- Dollar Index is at 95.83
- WTI Crude Oil is $51.25
- VIX: 18.61
- Critical events for today: Brexit Vote, US PPI, Draghi Speech
Recap of International Trading:
- Hong Kong Hang Seng Index + 2.02%
- Japan + 0.96%
- China Shanghai Comp. +1.36%
- UK FTSE + 0.26%
- Dax + 0.11%
Hang Seng continues to look strong rising overnight. The technical chart continues to improve, and rise to 27,350 continues to look likely. The Hang Seng serves as a barometer to global equity market health. It was one the key global index leading the way lower, and it is likely the index that leads the markets higher.
Shanghai appears to be putting in a double bottom and has finally cleared a long-term downtrend which has been in place since July. A big positive.
It surely helps that Chinese authorities are signaling more stimulus on the way for the struggling economy.
S&P 500 (SPY, SP500)
S&P futures are pointing to a slightly higher opening. Support on the S&P 500 is at 2,580. Additionally, there is an unfilled gap left from yesterday trading session. That would suggest the index could rise to around 2,595 today.
In a turn of events for Apple, a German court has thrown out Qualcomm’s patent suit. Apple, it would seem has gotten a break on many fonts in some time, this is likely a win for the company.
The chart doesn’t look good for Apple with the shares filling the gap up to $155 and have since retreated. Resistance at $155 looks strong, and it seems likely this stock could retest the lows around $142.
Qualcomm’s stock has gone nowhere for some time, and it will likely remain that way for some time. What real growth drivers does this company have? Revenue has been in steady decline with no signs of turning higher anytime soon. Shares buybacks are nice, but rarely work to boost stock prices. Just look at the banks.
JP Morgan (JPM)
Speaking of the banks, JP Morgan reported revenue and EPS that missed today. EPS came in at $1.98 versus estimates of $2.19 on revenue of $26.1 billion versus estimates $26.69 billion. Home lending for the bank fell 8% versus last year, which should not be a surprise given the rising mortgage rates and slowing housing sales during the quarter. Although those trends have changed recently as interest rates have fallen, it is likely to be a tailwind for the first quarter.
The markets and investors services unit fell 11% versus last year. Fixed income trading declined 16% versus last year, better than Citigroup, while equity trading revenue increased 15%. Overall the investment bank’s revenue fell 4% to $7.2 billion from $7.5 billion, making up a good portion of the overall revenue miss for the company.
The stock is trading lower to start the day to around $98.50. Resistance is at $102.60, and support doesn’t come until $94.72.
Wells Fargo (WFC)
Wells Fargo is trading slightly lower after it reported eps of $1.21 vs. estimates of $1.18. Revenue was short of expectations at $20.98 billion versus estimates of $21.8 billion.
Keep an eye on GM today; it is trading right around $38 in the pre-market and increase above $38 sends the stock higher to $39. But the stock has failed at $38 the two times it has tried. If it fails for the third time the stock is heading back to $35. Premium commentary: Investors Seem Skeptical On GM
Nvidia is trading above technical resistance at $151.82. It sets up a potential rise to $160.
I wrote a column for Seeking Alpha on why JD and Alibaba may be due to rise as the Renminbi weakens. JD.Com And Alibaba May Surge As Outlook Brightens
10-Year yield appear to be finding support around 2.70%. I don’t expect that too last, and I see yields falling lower. PPI later this morning may play a hand in that. I have called for lower rates since October, and so far that has been correct. I think 2.61% is in the cards.
Dollar/Yen is holding the uptrend around 108.50. But I still think the dollar weakens against the Yen, and the Euro as well.
Good Luck today!
Disclaimer: 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.