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November 3, 2020
Stocks – PYPL, SQ, DOCU, ZM
Macro – EWG, SPY
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Stocks are rising to start the day on November 3, with the SPY ETF up 1.15% and the NASDAQ 100 ETF up around 50 bps. The strength seems to be coming out of Europe, with the German DAX index up nearly 1.8%. But it seems that the DAX is merely filling a gap from last week, rising to around 12,000. Now that the gap is filled, it should revert to the previous lower trend.
Germany (EWG)
This price action suggests the rally we have seen the last two days appears to be more of a bounce instead of the start of a rally.
At this point, the S&P 500 (SPY) is rising above $332, which serves as resistance, and is now starting the refilling process of a gap from October 27. We will have to see if the entire gap gets filled or not, but at this point, a move up to $338 would not seem unreasonable. If that is the case, then we should expect that the S&P 500 to then reverse and begin to follow its previous trend, which is lower.
PayPal (PYPL)
PayPal is trading lower today after providing earnings guidance that came in below consensus, and that is never a good sign for a stock that trades with a big multiple. It usually results in a lower stock price, which is exactly what is happening with shares falling about 5%. As long as it stays above $172, it should be fine. If it falls below $172, then real problems start because a decline below $165 confirms a double top pattern, which will lead to a drawdown in the shares.
Square (SQ)
Square is falling a little following PayPal’s results and will report later this week. The stock has managed to hold on to support at $150. A break below $150 sets up a drop to around $133.
DocuSign (DOCU)
DocuSign continues to trend lower with key support at $188. I still think this one is heading even lower and will break support at $188.
Zoom (ZM)
Finally, Zoom has been in decline as well, with the stock likely to continue to trend lower towards $408.
Have a good day
-Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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