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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August 5, 2020
Stocks – AMZN, ACAD, ROKU, WDC, MU
Macro – SPY,
Mike’s Reading The Markets (RTM) Premium Content – NOW WITH A 2 WEEK FREE TRIAL
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD
Stocks jumped on August 5 despite the weaker than expected ADP job report. ADP noted that 167,000 jobs were created in July, which was less than estimates for 1.9 million jobs created. Meanwhile, ISM services came in better at 58.1 versus estimates for 55. The market’s reaction is never surprising these days, as stocks rise no matter what the news of the day is. There seems to be nothing that can derail the stock market at this point.
Of course, the significant number will come on Friday and good or bad, it probably won’t matter. These days good news is good news, and bad news is good news. At some point, all of the debt will be bad news, because it takes away from future growth, but the only thing that matters is the here and present.
By no means does this imply, I’m chasing the market here, or adding names to my portfolio. Not a chance. It just means that the markets, as we already knew, are very detached from anything anchored in reality. At some point, it will be attached to the economy; the big question is when. Please don’t kid yourself into thinking it is different; it is not.
S&P 500 (SPY)
If stocks were to have an abrupt turn around this would be the place for it, around 3330, with the S&P 500 very close to filling the gap created on February 24. It is the very last gap to be filled from the March sell-off. There is perhaps a rising wedge pattern that has formed in the chart, with a little bump out developing. Again, a bearish pattern. If the index didn’t turn lower and decided to keep plowing higher, then the next stop will be all-time highs for the S&P 500. There was even someone betting the S&P 500 would rise above 3,550 by December. (Premium content first 2-weeks free – The Mother Of Bull Bets?)
Meanwhile, gold continues to rise as the dollar continues to sink. Some think this in an inflation trade; it is not. It is a store of value, safe-haven trade. Gold is not rising because people are fearful of inflation. There is no inflation, and there won’t be for some time. The velocity of MZM fell below 1. It means that every dollar of MZM produced, there is less than $1 in GDP created.
Amazon has been consolidating a bit since reporting results staying within that triangle. Typically, I’d lean on the RSI to tell me the direction of the stock, which happens to suggest the stock falls. But none of that matters in this market, as the next likely move will be up but of course. Because these triangle patterns, lately almost always lead to higher prices.
Western Digital (WDC)
Western Digital did not report strong results and is falling after hours. Maybe that is why we have seen bearish betting on Micron in recent days. WDC also provided weaker than expected guidance, which missed estimates by a wide margin. The stock has broken support and appears it can head towards $35.
Micron is trading down in sympathy, and I still think it heads lower towards $45.50, yes, even in this market.
Roku reported better results but gave no guidance. The company noted it doesn’t see TV ad spending returning to pre-COVID levels until well into 2021. At the moment, the market seems unimpressed, with shares holding unchanged. A drop below $160 triggers a decline to around $150.
Acadia is rising a bit after hours; the company reported better than expected results and raised the lower end of its revenue guidance. If it can clear $44.50, it opens the door to a significant gap-fill to around $55.
Anyway, 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.