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.
Otherwise, enjoy the column!
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Michael Kramer and the clients of Mott Capital own Netflix, Tesla
S&P 500 (SP500, SPY)
Stocks fell today as we expected, filling the gap around 2,630 and retesting support at the 2,620 to 2,630 region. The pull-back although sharp is not a surprise, given the steep rise we have seen in equity prices over the past week. I expect this type of volatility to only continue as headlines about trade, earnings, and growth roll out.
Could the sell-off continue tomorrow? Well, it seems entirely possible, especially given some of the charts below. Does it mean we are about to retest the lows of December? No.
Could we retrace to 2,580, it is possible.
Am I changing my bullish views that stocks are still likely to rise? No, I am not changing my viewpoints, not based on one day of trading.
Russell 2000 (IWM)
The Russell 2000 did fail today at its downtrend, admittedly not a great sign. Is this a change in trend? At this point, I can’t say that it is a change in the overall direction. We do want to see the index rise above that downtrend soon, but for now be on the lookout for a drop to 1,433, which is the next level of support for the index.
The housing sector is also failing at a key resistance level again after it appeared the index might break free.
Another negative sign for stocks is that semiconductor SMH also failed at its downtrend.
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IBM is trading higher following its fourth quarter result, why it is trading higher is beyond me?! Sure it “beat” its estimates but listen to these numbers:
Cognitive Solution was flat y/y with zero growth. Technology services and cloud platforms fell 3%.
These are supposed to be IBM’s growth engines. How could cloud fall 3%? How can Cognitive Solutions have no growth?
Amazon fell sharply today, back to support at $1620. A break below $1,620 likely sends the stock to roughly $1525.
Netflix also fell sharply below $330, and now it needs to hold the $310 to $320 support level to avoid a steeper loss back to $290.
Square fell hard today, and the stock needs to hold $65 to keep the trend moving higher, and any hopes of a break out above $74.
AMD is looking weak, and a decline below $19 is starting to look more and more likely.
Alibaba is testing support at $151. It is a big level of support that the stock needs to hold to keep its uptrend in place.
Tesla continues to hold to support around $300. It is a significant level of support for the stock too.
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.