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 19, 2020
STOCKS – AAPL, NVDA, C
MACRO – SPY, QQQ, VIX
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
Stocks were up, and then they were down after some professionals doubted Moderna’s vaccine results. There wasn’t much data in the release, and it took me reading it about five times to understand that they only had eight patients produce a response to this point. It certainly didn’t equate to the $750 billion or so increase in the S&P 500 yesterday, that is for sure. So we went from up to down like that. But, really, it just speaks to a couple of critical points, the market is trading on hopes and dreams and not reality.
Additionally, it signals that conviction in the market is null, and liquidity is beyond horrible. But even more critical is that S&P 500 has now failed at the 61.8% fib retracement level 2 times and that my friends, is not a good sign. You could also make an argument and say three-time because we got 2,945 or so last week. I’m not just pulling up numbers from something I read on some random board; I study this topic for a very long-time, many many many years ago.
So in a best-case scenario, you have a potential double top pattern, in a worst-case scenario, you have a triple top, and in a horrible situation, you have a triple top and a rising wedge pattern all at the same time. Not good. Even worse than that is that the S&P 500 has successfully retested the rising wedge break down by not moving back into the pattern. The bottom line, lower prices may be in the very very near future.
Of course, one does not need to tell the bulls this info because they are all-knowing and see nothing that can keep this market down. Not even the flattening of momentum, as noted by the RSI or the Advance-Decline line, all they see are good things ahead. Because the market is looking out to in the future, but that future may only reside in an alternate universe
Nasdaq 100 (QQQ)
It matters not the Nasdaq 100 quietly, and at long last, filled the final gap on the chart from February 21, and was quickly and utterly rejected.
It also matters not that the VIX is slowly and surely and possibly forming what could be a very interesting change in direction, from down to up.
Anyway, that was fun. But seriously, not the most magnificent ending to a very bizarre afternoon.
Nvidia just can’t be stopped. The stock has only doubled since March 18. These guys are going to either report the greatest quarter ever along with the most beautiful, terrific, and fantastic guidance, or investors are going to be utterly disappointed. I haven’t the faintest idea which it will be.
Apple is still hanging around the uptrend, and the RSI is now rolling over. It does suggest that the stock is getting closer to its tipping and a move to $266.
Citigroup got back to resistance at the uptrend and failed. Not a good sign, and likely means the stock fills the gap back to $42.
Anyway, that will be all.
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.