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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STOCKS: AMD, ROKU, NVDA, NFLX, SPLK
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN NETFLIX AND SPLUNK
S&P 500 (SPY)
Stocks continue to drip lower, with really no sense of urgency, regardless of the headlines. One would never know from the markets moves that an impeachment inquiry into President Trump was taking place, or that the on-again-off-again US/China Trade deal was hitting some questionable roadblocks. The market seems not to care. Whether it is because the market is choosing to ignore these topics or because there is a fundamental shift beneath the surface, churning is the real question.
What I find more interesting is that both negative and positive headlines on trade have seemingly had hardly any reaction at all, and if there has been a reaction, it fades somewhat quickly. The market, I believe, has moved past trade. Instead, choosing to focus on what is expected to be a return to earnings growth in 2020.
Based on the chart, we shall find out the direction of the next move tomorrow or Monday. The chart clearly shows that the uptrend is still in place, but the only way for that uptrend to hold is for the S&P 500 to move sideways or up. The market will need to stay above 3,100 to avoid a breach of the uptrend.
Also, the number of stocks above their 50-day moving average has started to moderate, falling to roughly 64.4% today. I spoke about this and more today, in the midday commentary. – Stocks Continue To Shrug Off Negative Trade Headlines
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AMD did not have a good day, and as we have been discussing in midday updates nearly every day, the stock was overbought. That is showing with the stock falling by roughly 3.5% today. The scary thing is, it is still overbought, with an RSI over 70. The last time the stock was this overbought was in September 2018, and that didn’t end well with the stock plunging to $16.30 from a high of 32.50, in just a few weeks. Now clearly, the macro environment was very different back then. Just be mindful, that’s all, interpret this how you wish.
Nvidia continues to fail at $212, and the more it fails at $212, the more likely it is that stock goes lower to $198, as I said this afternoon in the mid-day commentary.
Roku is another stock that continues to fail at resistance, this time at $161. The RSI is clearly showing a downtrend, as the volume level slowly decline, a sign the number of buyers may be slowing fading out. A break below $150 sends it back to $135.
Splunk is rising tonight after reporting better than expected results and raising its forward guidance. The stock is rising above resistance at $132, and should that level hold tomorrow, the next significant level of resistance doesn’t come until $141.
Finally, Netflix is coming back to life during a time when the market is not particularly strong. The next level I’m watching for is $320. Additionally, the RSI has finally broken out, and the downward momentum we have witnessed in the stock since January 2018 appears to be broken too. It could signal that a significant bullish shift in Netflix stock is now taking place.
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.