January 23, 2020

Stocks; SWKS, WDC, MU, MSFT, PG, AAPL, NVDA

Macro: SPY, US10Y

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SWKS, MSFT, AND AAPL

ECB Leaves Rates Unchanged

Global

Stocks are falling across the globe, with most of the pressure coming from Asia from fears around the coronavirus. Hong Kong was down over 1.5%, and Shanghai was down over 2.75%. Japan and South Korea were both down around 1%. 

Markets in Germany and the UK are down slightly, by 35 and 24 bps, respectively. 

10-Year Yield

S&P 500 futures are down 4.5 points around 8 am, while the US 10-year Treasury is moving lower and currently 1.75%. The 10-year is on a pretty critical level of support 

S&P 500 (SPY)

The S&P 500 Futures are trading through the lower end of the rising wedge now, and it would suggest the stocks are likely to move lower from here, perhaps setting up that move to around 3,250 we have been looking for. However, there is one level of support to contend with at 3,310. That is level to watch for today, a break of 3,310 gets the futures to move to 3,250.

Semis (SMH)

Semis could have a good day on the back of Texas Instruments and Terradyne. But resistance in the SMH is in the $149 to $150 region. So that will need to be watched closely for a breakdown or breakout.

Skyworks (SWKS)

Skyworks will report tonight, and Cowen is noting that buy-side estimates are for revenue guidance of $850 million versus consensus estimates of $750 million. It likely means guidance of less than $850 million could be a problem for the stock. 

It is clear from the stock’s big move higher that expectations are high. I know my hopes increased when the company moved its earnings date ahead of Apple and two weeks earlier than usual. So know we will have to wait. $112 would be support should the company disappoint. 

Western Digital (WDC)

Western Digital is rising sharply today after it was upgraded from Morgan Stanley to Overweight from Equal Weight while boosting its price target to $88 from $64. We have been tracking WDC since January 3, when first noted some bullish options betting and the potential break out. I still think the stock can climb to that $75 level of resistance.  Free article – Western Digital Is Nearing A Significant Break-Out

Micron (MU) 

Micron was also upgraded to Overweight from Equal Weight at Morgan Stanley. We have been looking for MU to rise to around $62 since January 7. Free article Micron’s Stock May Soar On Optimistic Outlook

Nvidia (NVDA) 

Nvidia’s price target was raised to $300 at UBS from $240. Again this another stock that has seen some bullish betting heading into results. I have been looking for the stock to rise to around $268. Free article – Bets Being Placed Nvidia Rises Following Results

Apple (AAPL) 

Apple’s price target was raised today by Bank of America to $340 price target up from $330. I have been a little bit lost with Apple recently. The stock’s big run-up has made it hard for me to track. The stock is trading around 21 times forward earnings now, which is in that range of full valuation based on my prior views of 20 to 23, and the company will need to post a beat a raise quarter to keep this momentum. But based on the chart, I could see the stock rising to around $330. 

Microsoft (MSFT) 

Microsoft’s price target also raised to $190 from $158 at Piper. Again this is a stock we have been looking to rise as well. I have noted in a previous article for Forbes that I see the stock rising to as high as $179. Microsoft’s Stock May Jump As Much As 9% Following Its Quarterly Results

P&G (PG)

Procter and Gamble is falling some today after reporting what looks like pretty good results, beating on earnings, but slightly lighter than expected on revenue. However, the company did raise the low-end of FY’20 guidance to growth of 4-5% from 3-5%. Still, shares are falling some, by about 2.5%. I had seen some bullish positioning around this stock going into 2020, so it will be interesting to see if these results change that view. Free article Procter & Gamble’s Stock May Have A Hot Start In 2020

The stock has been rising in a very well defined trading channel, so any break of that channel, and where the stock closes today will be critical to the future of that trend.

Have a good one!

-Mike

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