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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MARCH 3, 2020
STOCKS: DIS, NFLX, ROKU, SQ, BABA
MACRO: SPY, RATES
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN DIS, NFLX
Reading the Markets Premium content from March 3:
- Morning Commentary 3.3.20
- FED RATE CUT UPDATE
- Midday – More On Rate Cut – Appeasement
- Thinking About The Market Post Surprise Cut
Join me and the members of Reading The Markets on March 5 at 9 PM ET for an exclusive webinar. It is live, and I will be reviewing as much I can about the current state of the market, and will have a live Q&A session. But you have to sign-up to get on the webcast. Premium content – The Revenge Of The Bears Webinar March 5, 9 PM ET
What a wild trading session. Fed rate cuts, 1% swings in the final 30 minutes. I mean this is wild, look at the last 30 minutes on this chart, in 5-second increments. From 3:30 until 3:50, the S&P fell 1.5%, then increased by 1.2% and decreased again by 1.15%. In 20 minutes! Typical? I think not.
S&P 500 (SPY)
Look, as I said at the beginning of the week, the only thing that matters is that we don’t go below 2,855—the rest of this action is non-sense at this point. Why the market didn’t rally today on the Fed rate cut doesn’t matter, I’m not getting into here, I reviewed multiple times in my premium. The market now needs to reset. That is what I believe it is now in the process of doing. The market is likely to continue slushing around the 2,900 to 3,100 region over the next few days, while it tries to find its footing. Premium content – FED RATE CUT UPDATE
The unfortunate thing is that tomorrow may be one of those days where we trade at the lower end of the range. It looks as if there is a head and shoulders pattern that has formed on the intraday charts, and it suggests over the very short-term, we trade down to around 2,950, and perhaps 2,875.
Is it possible for the S&P 500 to fall below 2,855? Sure. Will it? I haven’t a clue. I don’t think it will, but what I think doesn’t matter.
Anyway, 10-year yields fell sharply to around 92 basis points. Based on the current spread between US and German bonds, they may not even be finished falling.
Meanwhile, the spread between the 30yr and 2yr widened, and could still widen further. It also seems to suggest that 2-years yields are likely to continue to drop in the future.
So we can continue to watch and wait.
Roku was down sharply, along with everything else. The stock is trying to hold on to support around $105 – $106, but I’m not sure how much longer that level can hold. $100 is still the next level to watch for, with $94 after that.
Square has been holding up amazingly well, and today I saw some bullish options betting that indicates the stock rises to around $91 by June. I wrote it up in an article for Forbes – Square’s Stock May Rally Sharply Amid Market Turmoil
Alibaba continues to hold up very well around $211, and I have to think that it has to be a good thing.
Disney dropped today, and the good news is that it held the lows. If Disney could turn, that would be a positive sign.
Netflix continues to consolidate in this wide trading range between $363 and $386, fine by me.
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.