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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December 12, 2019
Stocks: ROKU, AMD, NVDA, TSLA, FB
Macro: IWM, SPY
MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN TSLA
MICHAEL KRAMER OWN IWM JAN $166 CALLS
Reading The Market Premium Content from December 12
- Stocks Are Breaking Out
- Bets Suggest Freeport Continues To Surge As The Dollar Weakens
- Morning Commentary – Dollar On Watch
Stocks had a strong day with the S&P 500 rising by 85 basis point to close at an all-time high. The index broke out today, as we expected and noted last night and this morning. The index cleared the critical level of resistance at 3,150, and I think that sets up a push to 3,200.
The market got a boost on headlines of a potential phase one trade deal between the US and China and the chance that some of the tariffs get rolled back.
So while I have long said that the market has, for the most part, has stopped worrying about the trade war, which based on price action it has. What the market has not calculated is the rollback of tariffs. If tariffs that have already been put in place do get rolled back, it could be like companies getting a big tax cut, which it is, helping to boost earnings growth.
That would mean that earnings estimates for 2020 are too low, and will need to rise for the entire S&P 500. It would be an unexpected positive which in itself could act as a meaningful catalyst for stocks because it means that valuations for stocks are too low.
S&P 500 (SPY)
Based on the pennant pattern that I noted yesterday, the S&P 500 could climb to around 3,212.
Russell 2000 (IWM)
The Russell 2000 also rose above a critical level of resistance at 1,638, and that could help to push the index to its next major of resistance to 1,675.
AMD had an intense day, and blew right through resistance at $40.20 and pushed directly to its next major region of resistance at $42.59. I think, given this is a multi-year high, the stock will try to consolidate around this price point.
Nvidia surged higher, despite my negativity and bearish views, and it would seem as if I have proven wrong. It happens. That likely means this stock will continue to climb and push higher towards $236.
Roku did not have a good day, falling towards $135. The bad news is that now the RSI is falling, and volume levels are rising as the stock is falling. It probably means more declines on the way.
Facebook did not have a good day either with the stock falling on negative headlines around a potential FTC injunction. The stock looks like it finally broke with the potential for a move lower to $191.
Tesla is moving up and is challenging resistance now at $360. Should the stock push above this resistance level, it runs higher towards $378. Pretty amazing that the stock has doubled since reaching a low of $177 in June.
Have a good night.
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.