Stocks Catch Late Day Bid As Tesla Soars

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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July 10, 2020

STOCKS – V, MA, PYPL, SQ, TSLA

MACRO – SPY, QQQ

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TSLA, V, MA

Stocks had a pretty blah week with the S&P 500, mostly finishing flat. It was a strange day because there wasn’t much going on around lunchtime, and the market caught an end of day bid. Perhaps there was some short-covering going into the close, maybe. Indeed not the usual trend. I noticed the market caught fire around the time that Tesla broke out this afternoon, and perhaps that ignited the risk-on momentum algos and ETFs. There was no reason for the rally otherwise. 

There were a few positive remdesivir comments this morning. But the market doesn’t care about the coronavirus anymore anyway. 

S&P 500 (SPY)

I find myself confused at the moment regarding the S&P 500 and what happens next. There is a downtrend in place, and that has limited the market’s advance since the beginning of June. But there is a pattern that resembles a bullish flag pattern. If that is the case, then the market will rally sharply to around 3,240. Unfortunately, the way the market went out today it leaves me guessing as to what happens next.  It could very well be that the next short-term move for the S&P 500 is higher.

QQQ

The NASDAQ has gone parabolic versus the S&P 500, and it is now valued at its highest level versus the SPY, ever! 

Financial (XLF)

The financials ran up today, ahead of some significant earnings next week. If the S&P 500 can get the bank’s stocks working in its favor, then the next level to watch for could very well be around that 3,230 level. The XLF got back to $23.60, which has been a problematic level since the middle of June.

Tesla (TSLA)

Believe it or not, Tesla may have been responsible for dragging the entire market up today. The stock has a 2.5% weighting in the QQQ’s, and it was up 10% on the day.  You can see that as Tesla broke out, it eventually led to the Qs moving up. Once, the Qs started moving up, it took everything else with it, because that how ETF’s work. 

PayPal (PYPL)

PayPal has seen its RSI just go nowhere despite a stock that has been rising. Man, I wouldn’t want to be near this thing when that gap gets filled. 

Visa/Mastercard (V, MA)

Again, I can’t understand why we haven’t seen the same optimism for Visa and Mastercard that we have seen for PayPal or Square, makes zero sense.  

Mastercard (MA)

The chart for Mastercard doesn’t even look that strong, which is just bizarre. Since everyone is buying stuff on Amazon, shouldn’t Mastercard be performing much better? It looks like it about to go to $272.

Visa (V)

Meanwhile, Visa could easily slip to $181.

What do I know…

 

 

 

Have a good weekend.

Mike

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.

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