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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May 20 – Stock Mentions: Apple, Qualcomm, Alibaba, IQiyi, Nvidia
Michael Kramer and the clients of Mott Capital own Apple
Stocks had a decent day on May 20; it could have been much worse, that is for sure. Trade talks continue to be a significant risk to the market while all the stocks with China exposure continue to get hit pretty hard.
This morning Lumentum (LITE) came and cut its guidance for next quarter due to the Huawei ban. I hope other companies come out and do the same, and soon. It would be the best thing that could happen in some cases because investors could then assess the potential damage. In some cases, I think there is a genuine chance many of these semis have been oversold already.
S&P 500 (SPY)
The S&P 500 was all over the place on May 20, but the key was support at 2,836, which managed to hold, despite a late afternoon sell-off.
My only concern at this point is that the S&P 500 is now trading below the trend line I had drawn in. My hope had been for a new uptrend to have started. It would have taken a close above 2,850 for that to have happened, which it did not.
I’d admire how Stocks Are Resilient these past few days.
Russell 2000 (IWM)
However, the Russell chart suggests there may be more pain ahead for small caps, with perhaps the index falling to around 1,492.
The chart below shows how the Russell broke the then February downtrend in mid-April, and now it looks like the index wants to retest that breakout. It would suggest the index declines to 1,492 for that to happen retest to happen and be confirmed.
Relax, it only 2% lower from its current level of 1,524 that is like a half day’s worth of work for the market. We could hit that tomorrow morning and by lunchtime be on the way to the next leg higher. Of course, I’m joking –to some degree, but the market really can move that fast at times.
Apple continues to get pummeled, and with about 20% of its revenue coming from China, its no wonder. Then layer on the uncertainty and potential of tariffs on iPhone imports, and you can understand why the stock is falling so hard. For now, $182 is support, and it is currently holding, but if that breaks, Apple’s stock has room to fall to around $175. Additionally, I have seen some bearish options bets in recent days as well. I talked about it more in a premium article today. Apple May Still Fall Further
Qualcomm is now trading around $76.60, and that is a big level of support. It looks like the stock wants to refill the gap at $70.
Alibaba fell through support at $166 and is now hanging around $160, but it isn’t done falling just yet. $151 is likely still on the way.
IQiyi fell below support today at $18.70, and that means that $16.50 may be around the corner.
Nvidia has reached about $150 today. It may be about to get worse. Yeah. Like $139 worse. It needs to hold $150, or watch out! Yikes!
Have a good one!!!
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. May 20