Stocks Little Changed on July 22 As Risk-on Trade Comes Into Focus

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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July 22, 2020

Stocks – ACAD, AMZN, JD, FCX

Macro – QQQ, SPY, 

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD

Stocks are drifting lower on July 22 as tensions between the US and China are on the front page over the closure of a Chinese consulate in Houston. The S&P 500 SPY ETF is trading down by about 20 bps, while the QQQ ETF is up 50 bps. 

S&P 500 (SPY)

At this point, a decline below 3230 in the S&P 500 futures likely triggers a drop to around 3,150.

Copper

Copper needs to be watched closely as well, as it failed at resistance now two times around $2.99. A decline below the uptrend at $2.90 setups a drop to around $2.80. A break down in copper would be a big negative for the risk-on trade.

Dollar

The dollar continues to weakening, and while the equity market seems unconcerned at this point, we will continue to monitor. 

10-Year

The 10-year continues to drift slowly lower and is now trading around 59 basis points. I see a drop below 55 basis points as a negative for the risk-on trade and headwind for the equity market. 

JD (JD)

JD.com has broken its uptrend and then failed to recapture it. The most important region to watch for in this stock is at $58.20. A break sets up a further decline to around $49. 

Freeport (FCX)

Freeport is flattening and breaking its uptrend. If copper price starts to fall off, then perhaps the stock can fall back to around $12.70.

 

Tencent/Amazon

Tencent fell by 4% last night and looks like it may fill a gap down to 520HKD. That probably means that Amazon will be due to fall today as well, to around 2950.

Acadia (ACAD)

The sell-off in Acadia yesterday seemed a bit severe and overdone. While the data miss on the depression study was disappointing, Acadia has a bright future with Dementia-related psychosis and potentially negative symptoms of schizophrenia. As long as $44.50 holds, then I think the worst is past, and we can start to rebound back to $48. 

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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