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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Michael Kramer and the clients of Mott Capital own Alphabet, Apple, and Netflix
S&P 500 (SPY)
Stocks advanced yet again, with the S&P 500 quietly posting a gain of 70 bps and clearing resistance around 2,720. I see very little standing in the way of the indexes advance to 2,800. The next level of resistance will be a tremendous test for the bulls. The S&P 500 already failed 3 times at that level, and I’m not sure there is such a thing as a quadruple top. It would suggest to me that the index just keeps on rising –but what do I know…
Here is a premium article on the topic today: Stocks Continue To Look Strong
The Russell 2000 continues to march higher as well and is heading right for 1,562.
Alphabet (GOOGL, GOOG)
Alphabet reported results tonight; nothing was glaring wrong with the results. Which is probably why the stock has hardly moved and is down just a touch after hours. The only thing investors –or better yet, algo’s, seem to care about is Alphabets shrinking operating margin.
When looking at these numbers R&D for the business increased 40% to $6.0 billion, while Sales & Marketing increased 19% to $5.1 billion. If R&D had remains merely constant at $4.3 billion from a year ago, operating income would have been $9.9 billion, giving the company margins of 25%. So take it for what its worth.
Here is my little spreadsheet, I put together to see.
Then there is the cost per click, that fell 29% in the fourth quarter.
The stock spiked to $1,170 right to resistance, failed and is now trading lower to $1,100. Could the stock be heading towards $1,000? I don’t think so, there is a very nice uptrend, and I think that after investors digest the results the stock will be fine and continue to trend higher.
Amazon tried to rally a bit today, but the stock gave back much of those gains, to basically finish up 50 basis points. Not a good sign. I think the stock is going to break $1,620 and fall to around $1,500.
Roku had a big day rising 5% well above our revised target of $48. The stock was up as high to $52 at one point, but had a steep sell off the last 10 minutes of the day, on some massive amounts of volume. That drop came after Comcast disputed the reports earlier in the day about Comcast using a Roku designed smart box. I have no thoughts now about the stock’s future direction. Today’s action messed up the apple cart for me.
Netflix continues to trend towards $355. That is a very big level to watch for, as a rise above $355 sends the stock higher towards $380.
Apple continues to rebound and appears to be heading back to $182. Here is a free story I wrote on Apple today: Why Apple’s Rally May Only Be Starting
On the other hand, Nvidia’s rally appears to be ending as it fails at resistance after filling the gap.
Qualcomm –someway, somehow, just continues to hold support around $49. It really is mystifying. There seems to be something magical about that price.
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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.