Stocks Near Big Breakout, Tesla Shorts Can’t Win, Booking May Fall 12%

MICHAEL Kramer AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX AND TSLA

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. Otherwise, enjoy the column!

© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

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S&P 500

The good news, the S&P 500 finished above 2,853 today, at 2,857. The next hurdle for the index is to take out the highs around 2,875. Then a move likely to 2,900 and beyond. In fact, it could even result in a bit of melt-up pushing the index on to 3,000. Unless you are new here, you know I have been calling for the S&P 500 to rise to 3,000 since late last year and even since the end of the third quarter for 2017. I still see no reason why that can’t happen, and soon.

See the most recent call for a rise to 3,500 in the subscriber section: Why The S&P 500 May Rise To 3,500

Netflix

Netflix had a nice bounce back today, rising to $327. But noticed where the stock failed on the chart today, right at resistance around $332. That price will be crucial tomorrow to know if today’s rally was a one day bounce or a sign of a turn higher in the stock. A rise above $332 likely sends the stock back on towards $357.

Amazon

Amazon fell again today, and is stepping it way lower, and continues to look as though $1840 is still in play.

Tesla

If you are a Tesla short, you have to be pulling your hair out. Tesla was down by $20 bucks in pre-market trading, albeit on no volume. But still, the stock managed to stage a comeback and finish up on the day at $309.

The stock bounced when it was supposed to off the uptrend, using the Log chart. I will repeat it, in case I haven’t said it enough, for the stock to go lower there needs to be more than short-sellers. Either the shorts need to put more pressure on the stock, or they are going to need real sellers to step in. At this point do not think that is going happen.

The cost to borrow shares of Tesla to then go short is around 3 percent. There is likely still plenty of stock to lend, which means the shorts have a lot more work to do.

Months ago I highlighted why the shorts can’t win in Tesla, from January and bunch of other thoughts. An Intelligent Way Of Looking At Tesla’s Results

Booking/Expedia/TripAdvisor

I got a request to take a look at Booking.com, and from a fundamental standpoint, I can’t say I know the story super well. Based on the estimates and growth rates, it is hard to argue shares are expensive at 18.4 times next years earnings. Earnings growth in 2019 is forecast at 13 percent on 12 percent revenue growth. TripAdvisor is far more expensive at more than 33 times. Meanwhile, Expedia trades at 20 times and offers the best growth profile.

EXPE PE Ratio (Forward 1y) data by YCharts

The chart on Booking doesn’t look particularly strong. I could make a solid case for shares to decline to roughly $1.630 from $1,860, a drop of about 12 percent.

10-Year

The moment of truth is coming for the 10-year treasury butting up against support at an uptrend. Should yields break 2.80, they may have much further to fall to 2.6 percent.

That is going to be it today, good luck tomorrow.

-Mike

Member Services

Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.

I started learning to invest when I was 16 years old. At 40, I have pieced together a long career on Wall Street, working as an analyst, and a domestic and international equity trader at two multi-billion dollar equity firms.

I started Mott Capital in 2014 to follow a passion and dream of being in control of my career path.

The idea behind Reading the Markets was to help both individual and institutional investors benefit from my experience in the business and my unique approach to dissecting stocks and the markets, which helped me become a great trader.

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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 #netflix #booking #expedia #tripadvisor #amazon#tesla