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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February 3, 2021
STOCKS – AMZN, PYPL, V, AAPL
MACRO – SPY, QQQ, VXX
- Midday Note: This May Be The Top End Of The Range For Stocks
- Morning Note: Back To The Grind
- Earnings Analysis: Amazon’s Stocks May Struggle As AWS Disappoints
- Earnings Preview: PayPal
- Midday Note: Stocks Are Filling Gaps As Implied Volatility Drops
- Morning Note: Fears Subside For Now
- Earnings Preview: Amazon
- Midday Note: An Uncertain Path Still Lies Ahead
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL, V, MA
Stocks finished the day higher, with the S&P 500 rising by around 10 bps. It actually wasn’t a strong day at all because the index reached 3,848 at the high, officially closing the gap from last week, and essentially turned lower as it finished at 3,830.
The gap-fill and the reversal could be a sign of trouble depicting what likely starts a gap fill lower on the SPX back to 3,785.
The VIX fell dramatically today, closing at 22.9, a drop of more than 10%. It is stunning to me how quickly the VIX has fallen, given the lack of a move higher the S&P 500 has seen. For example, on November 3, the VIX was at 35.6, and it took about 10 days for it to fall to 23, versus 6 days this time around. The S&P 500 also rose nearly 8.5% back then, versus 3.3% currently. Very different positioning in the market, I guess.
As I was saying in today’s midday podcast and write-up for paying members, if the VIX is already at the bottom of the range, which, as we have talked about in the past, is around 21 to 23, then the S&P 500 will not have enough energy to push it new highs. (For paying subscribers – Midday Note: This May Be The Top End Of The Range For Stocks- First two-weeks are free to try.)
Nasdaq 100 (QQQ)
The Qs actually fell on the day by around 40 bps, to close right on support at $326.25. It looks like the ETF is ready to break support and fill the gap around $323.50.
Amazon fell by 2% today and likely has further to fall. It likely fills the gap back at $3,200. AWS was a big disappointment. AWS delivers too much operating income to Amazon, and without AWS delivering big numbers as it has in the past, I think the stock struggles to push higher. (Should be free to read – Amazon Stock Faces Massive Challenges As AWS Disappoints)
PayPal reported better than expected results. I wasn’t really impressed with the full-year guidance, especially given the stock’s valuation. But the market heard crypto-currencies and Venmo on the conference call, and the stock took-off. So is the stock breaking out or breaking down. Hard to tell at this moment in time. If the stock can hold these gains tomorrow, we could argue it is trying to break out. I can tell you the pattern isn’t a bullish one, a rising wedge, so at the moment, it could just as easily be a failed breakout attempt forming, so I’m not rushing to make a judgment.
Could you imagine what would happen to Visa or Mastercard if they said they would let their customers have access to cryptocurrencies? How much would their stocks go up? Oh, wait, Visa actually said something to that effect today. Apparently, it doesn’t matter when Visa says it, because the stock was down 60 bps and struggled all day at $203.
So if Hyundai builds a car for Apple, is it an Apple or Hyundai car? It is a good question. Look, I own Apple, but it seems like suddenly everyone wants to make a car. We went from just a handful of car companies I could count on two hands to more car companies than I am even aware of. It was like when everyone was creating a streaming service or adding a dot.com to its name. It seems crazy to me. Personally, I think Apple should focus on other areas for growth, maybe like that TV they were supposed to work on a decade ago.
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.