Stocks – ACAD, TSLA, MU, XOM, NFLX
Macro – SPY
- Bonds/Dollar Not As Excited As Stocks
- On Watch For A Sharp Pullback
- Themes Heading Into Options Expiration
- Can We Expect Volatility Into Opex Next Week
- Amazon’s Pricey Stock Attracts A Bearish Bet
- Stocks Move Lower As It Continues To Wait For Stimulus
- Softbank May Have Closed Options Positions Out
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TSLA AND ACAD
Miracle Monday lived up to its name, with stock jumping following news early in the morning that Moderna’s vaccine for COVID was just as effective as Pfizer’s. Even better, the vaccine can be stored at temperatures found in normal freezers.
Still, we didn’t get the massive boost we saw last week. The law of diminishing returns, I guess. I’m sure by the time the next round of vaccine data comes around; the movement will be even less.
So one has to wonder what “catalysts” are left to send stocks up from here. There is no vaccine news left; it appears Biden has won the Presidency –pending lawsuits. The Fed seems to be maintaining the status quo. I guess there is always hope for more stimulus, but when and how much are still unknown. Is the market going to be forced to return to valuation and actual fundamentals to determine direction? Could be.
It seems to be already happening to some degree, with the rotation trade still working. This is the longest I can remember seeing small caps performing this well in some time. Even financials and energy are rising, and they have been the worst-performing groups all year.
S&P 500 (SPY)
The S&P 500 managed to finish where it could not last week, at 3,626, which for now is resistance. It seems possible that we could get ready for that next big leg up, but I question if we have the juice for it left.
The number of stocks above their 200-day moving rose to around 87%. Now partly that could because the moving averages fell sharply following the March drop. It is possible, but I can seem to adjust my moving average right on Tradingview. That is the highest level it has reached since 2014.
While we can go still even higher, the last we reached such a level for the number of stocks over the 200-day moving average, there was a significant amount of flattening in the S&P 50. Basically, 2014 as you know, was the top in the market until the big break out in July 2016. Over that time, we rose from around 2,000 to 2,100.
Additionally, we have been seeing a lot of bearish bets being placed in the SPY and Qs. Again, I’m not saying we still can’t go a little bit higher, but I think the easy gains of this rally are over, and if we return to fundamentals, several stocks will face tremendous headwinds.
Wow, Micron popped today, rising to $61. It’s the highest price in a long time. This has been a notable level of resistance for the shares, and I will have to re-exam where it goes from here, not that the options trader got it right. ( Micron’s Stock May Be Nearing A Big Breakout)
Exxon had another strong day and is getting awfully close to resistance at $39.35. I think it can still probably get there. Regardless, it has had an amazing move up. (From 10.21 – Momentum In Exxon Mobil May Finally Be Shifting For The Better)
Acadia got a big upgrade today to Strong Buy from Outperform, with a price target boost to $65. The premise was around a potential approval for Nuplazid in Dementia-Related Psychosis. In my opinion, the company has a tremendous opportunity ahead of itself.
The gap is filled on the chart, and the RSI is overbought. Now we can think about where it goes from here.
I would love to see some sideways consolidation to create the “handle” part of a “cup n’ handle” bullish continuation pattern. That would make really happy.
Netflix is still holdings on to support around $470. I do continue to think it will break lower.
Tesla is confirmed to be in the S&P 500 as of December 21. The stock is jumping by $40 after hours. If it can manage to clear resistance at $460, it probably moves back to $500. There are a lot of index funds that will now need to buy this stock.
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.