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FEBRUARY 20, 2020
STOCKS: AAPL, AMD, SPCE, SHOP
MACRO: SPY, OIL, DOLLAR, YIELDS
MICHAEL KRAMER AND THE CLIENTS OWN AAPL
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Stocks are off to a pretty dull start with S&P 500 futures down slightly, and most major markets around the world pretty around the flatline. China was the one market up sharply rising by around 1.84%, as the country continues to stimulate.
Dollar
The dollar is soaring and continues to push higher; the move in the dollar index is pretty amazing. Breaking above resistance around 100, and probably on its way $101.50. My earlier prediction to start 2020, for a weaker dollar is not playing out.Â
Gold (GLD)
Surprisingly Gold prices continue to rise as well and appear to be on their way to $1,699. Something you don’t usually see is the dollar and gold both rising at the same time, which would suggest that it is perhaps something else at play. It will require me to do something more thinking. But my natural reaction is there still a fear trade taking place, which is ultimately the opposite of what the equity market is suggesting.
10-Year
With yields sitting at 1.54%, and on critical support, this does confirm the fear trade narrative.
VIX
Also interestingly, the VIX is still hovering around 14.5, which seems “high” despite the S&P 500 trading at an all-time high. Typically we have seen the Vix fall to around 12, with markets at highs, again suggesting some fear in the market persists.
So let’s continue to stay on top of this, and it could nearly be because of the coronavirus, or something more profound. I don’t know yet.
S&P 500 (SPY)
Futures on the S&P 500 are falling today, but holding support at 3,379. Remember, trends in the market are higher and remains unchanged. Futures are only falling 20 basis points. Nothing has changed at this point. A drop below 3,379 means the next support level comes at 3,357
AMD (AMD)
Wells Fargo downgraded AMD to Equal Weight from Overweight but increased its price target to $64 from $55. Again, no change here from me, with the potential for shares to drop to around $52.90.
Apple (AAPL)
Apple filled the gap yesterday, now what? Does that we go back to $311? It is possible. Be prepared.
Shopify (SHOP)
Shopify has been a fantastic stock, and I got to do some more work on it. The business is unique, but the valuation seems, well, insane. The stock trades for 21 times one-year forward SALES and has a $63 billion valuation. I don’t know that revenue growth is going to have to ramp up in a big way to justify that valuation. Be careful of the gap fill at $500. I get it is a bet on the future, and the business is cool, but what doesn’t stop Amazon from just moving into the same arena?
Virgin Galactic (SPCE)
Virgin Galactic has already traded over 1 million shares today and has been as high as $41 and as low as $35.75. Yeah, try not to get your head handed to you with this one. I’ll pass.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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