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JANUARY 29, 2020
STOCKS: FB, MSFT, TSLA, AMD, GE
MACRO: SPY, FED
MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN TSLA AND MSFT
Stocks seemed confused at the end of the day regarding the latest Fed commentary, and to be honest listening to the press conference, it was easy to get confused. Ample reserve exceeding excess reserves, and what is considered to be ample, versus which is ample enough to sustain the excess reserve. I’m just rambling here, but that might have well been what Chairman Powell said, and if you weren’t listening with a great deal of concentration, it was impossible to grasp. My main takeaways, which I discuss in a premium update, was this: the current pace of the balance sheet expansion isn’t going to last, and is likely to end at some point in the second quarter. However, it will likely continue, just a slower pace, more in line with the demands of the economy and monetary base. Premium content – Some Thoughts On Fed Meeting
Additionally, they made some minor changes to language:
from
The Fed wants to make it clear that inflation below 2% is something that is not acceptable and is looking for a return above 2%. It would tell me that the outlook for interest rates policy is likely to be lower for even longer.
It should provide a smooth path for the equity market longer-term and higher one.
S&P 500 (SPY)Â
The chart shows that the S&P 500 got to resistance in that 3,290 region and just gave back all the gains to finish flat to finish at 3,272. This 3,272 region has become a level of support for the S&P 500 and should provide a place for stocks to rise from. Again, the S&P 500 seems placed well above the uptrend at the moment.
Facebook (FB)Â
Facebook is dropping after reporting better than expected earnings and inline revenue. The revenue guidance I think it is not very pleasant, with the company looking for decelerating growth, and no relief from thier rising costs. Earnings growth flat out sucks, and it doesn’t look as if it will be getting better anytime soon. We will see what comes out of the earnings call. It seems like $203 is the next level to watch for. Looks like the options traders, and myself got this one wrong. Free article on Forbes – Strong Quarterly Results May Push Facebook’s Stock Even Higher
Microsoft (MSFT)Â
Meanwhile, Microsoft posted some strong results, with a big beat on the top and bottom. Azure continues to have fantastic growth, climbing 62% in the quarter. The options traders saw this one rising to around $176 following results, and it seems to be on the way there, currently at $175.50. I had mapped out an increase to about $179. It looks revenue guidance for the second quarter is better than expected at the mid-point as wellÂ
Free article on I wrote Forbes – Microsoft’s Stock May Jump As Much As 9% Following Its Quarterly Results
Tesla (TSLA)Â
Tesla is up too after blowing out earnings and guiding to more than 500,000 deliveries in 2020. The stock is currently trading at $650 in the after hours, and this likely a case where analysts are going to have to raise their earnings and revenue estimates significantly following these results. So I’m going to need a few days to figure out a fundamental valuation. For now, I marked $662 as resistance because that its the highest price on the day. My subscribers likely remember this video I did on Tesla on May 23 – Does Tesla Really Have A Demand Problem? Let me answer that: Apparently Not! 😛
GE (GE)Â
GE had a huge move higher today, rising above resistance and is likely on its way to $13.30.
AMD (AMD)Â
AMD fell sharply today, but as I noted multiple times today that $46.80 was the line in the sand and as long as that level held, it would be a win. Well, it held, so I think we see a gap fill back up to $51. I give those updates on StockTwits and SA Marketplace rooms throughout the day
-Mike
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. Â
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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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