Stocks Jump But Trends Now Point To Lower Prices

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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June 16, 2020

STOCKS – FB, ZOOM, SQ, ORCL, PYPL

MACRO – SPY, QQQ

Mike Reading The Markets Premium Content – $35/Month or $300/Year

S&P 500 (SPY)

Stocks advance by about 1.9%, but it was a very volatile trading session, with shares up as much as 3% at one point, then falling back to nearly flat, then surging higher, and finished near the middle. Bullish or bearish? So if I had to choose, I’d say bearish, and I will tell you why, as I noted in the midday commentary.

There now appears to be a downtrend that has formed in the index and the SPY ETF, and the gap around $317 has been filled. 

On the Qs, you can also see that we managed to get back to and retest the breakdown of the rising wedge. 

qqq

Those could be two fairly significant developments for the two indexes, so I’m curious to see how the future traders trade this tonight. Regardless the trend is bearish for now.

Retail sales were better than expected, but we only returned to the March levels on the nominal number, not the percentage.  The first chart makes it seem as if retail sales exploded higher.

But when you look with the actual dollar values, it is less than an impressive. I’m wondering hwo I should think about that number. Remember, many states opened at the start of May, yet we only returned to March levels when most states were closed halfway through the month.  So strong number or weak number? I’m not sure, but it is something to think on, June will be very telling.

 

Oracle (ORCL)

Oracle is falling sharply, after the company reported disappointing results, and noted that some customers are postponing their orders. Certainly not a good sign for the stock. The $51 to $52 region appears to be somewhat relevant to the health of this stock. A drop below $51 would indicate a further decline is coming, probably to $48. 

oracle, orcl

Facebook (FB)

I tend to think that Facebook pushes lower from here. I have been saying since the middle of May, and so far, it is yet to happen. Today, I noted some bearish betting in the options, that suggests maybe finally it does go down. A drop to $204 seems to be possible. Here you can read the free article – Facebook’s Bull Run May Be Ending

Square (SQ)

Square manages to just stay in this perfect little trading channel as long as it does not deviate from that channel it is on a path to $102.

PayPal (PYPL)

I’m thinking PayPal may be retesting the breaking of the rising wedge pattern. If that is the case, then a move back to the gap around $129 seems like a reasonable stop.

Zoom (ZOOM)

Maybe Zoomania is slowly fading out, volume levels are not that great, and the stock, like PayPal, has a rising wedge formed, a dip to $198 may be coming. 

zoom

-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.    

 

 

 

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