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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Michael Kramer and the Clients of Mott Capital Own NFLX
S&P 500 (SPX, SP500)
The stock market continues to mend itself, and today the S&P 500 took another big step in the right direction. The index cleared a significant technical hurdle at 2,752. That may help to set up a rise to 2,794 on the index.
Russell 2000 (RUT)
The Russell 2000 is also set up very nicely. It put in a big triple bottom between October 24 and 29. Now it is trending modestly higher and looks like it ready to pop higher. There is a rising triangle pattern in the chart which is also bullish. An increase of around 2% to about 1,590 is in the works.
Ten-year yields are running into some trouble at the top end of the range here. Again, inflation rates remain in check for the most part, and I see no reason for rates to continue to rise on the 10-year. I think the long-end of the curve is heading lower.
Have you seen oil? I mean who’s the only guy around who got Oil right twice in the same year? Yeah, me! I told you at the end of last year it was going to about $75. Then I said over the summer it was going back to $61. Nice!.
Momentum continues to come out of commodity and should break below $61; I think the trend line at $58 comes back into play.
As long the dollar continues to strengthen then oil shall continue to sink. My expectation is for the dollar to continue to increase, especially if the Fed continues on its crazy path of raising rates on the short-end of the curve.
Let’s move on to stocks.
I had grown more positive on Micron, but now I’m flipping back to being bearish. The stock has an awful lot of headwind in front of it for 2019.DigiTimes had an article out today talking DRAM prices falling by as much as 20% in 2019. There is also a lot of bearish put positions out there for January expiration. The stock is really struggling to get over resistance at $40.25. Can the stock pop to $42, sure, but I’m not sure there is much room to rise from there.
I’m watching the semis very carefully again. The SMH ETF is gearing up for another breakout, we could see a rise to $100.
I still can’t find the uptrend in Netflix, but we have firmly identified two key levels here. $320 is resistance and $306 is support. I’m still sticking with the view of the stock rising to $330.
It is encouraging to see Amazon hold support at $1620, again I still believe $1750 is in the cards.
Morgan Stanley (MS)
The banks are starting to look awful again and Morgan Stanley is one. It is failing around $46.50, and that means that $44 is on the way.
Citigroup is another one. it looks like it on its way to $61. So much for those stock buybacks.
Sorry the last one, almost forgot. Microsoft. I saw a bunch of put buying yesterday that increased the open interest on the Dec 14 $100 puts, to roughly 14,000 open contracts. The puts imply a drop to about 98.70. But the chart still looks decent and suggests the stock could work its way higher towards $113. Some conflict here, I know.
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.
sp500, S&P 500, russell 2000, amazon, netfix, micron, banks, microsoft, oil, dollar