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FEBRUARY 27, 2020
STOCKS – ROKU, TSLA, AAPL, GOOGL, NFLX
MACRO -SPY
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN NFLX, AAPL, GOOGL, AND TSLA
The dam not only broke to today, but it also burst open and flooded the entire village. I was hoping and praying, we could avoid this scenario and that somehow or some way, the S&P 500 would hold the key levels I mentioned yesterday at 3,110. Unfortunately, hoping and praying isn’t enough.
While it is only “money,” and there are more important things in life, it can sure feel horrible.
I’m quite sure though that the sun will rise tomorrow, and a new day will start, and in time the markets will recover, and we will recover much in the same way that we did 2018, twice, and all the nasty pullback in history. The market and the economy have always endured.
Premium content – How I’m Feeling After A Horrible Day
S&P 500 (SPY)
The S&P 500 fell by 4.4% to close at 2,978. The few companies that have issued profit warning do not seem to amount the $4 trillion in market destruction. At this point, if we assume no earnings growth in 2020 and it remains precisely at 2019 results around $156, then the S&P 500 is trading for about 19, which means it fairly valued with the historical average PE ratio of 19 going back to 1988. In this type of uncertainty, should the S&P 500 trade at 17 times, it equals 2650.
Currently, based on my own model, I am projecting earnings to grow to $171.60 in 2020, with one standard deviation of $165.35 to $177.85. If we assume earnings growth doesn’t fall to zero, but to the lower bound or around 4% to $165.35, then we currently trade for 18 times, at 17 times the S&P 500 is worth 2810. Anyway, here is a little chart based on my earnings estimates.
(Mott Capital)
The number of stock below there 50 day moving average is now at 6%.
The number of stocks below their 200 day moving is at 32.5%.
The VIX closed at 39.2, indicating extreme fear in the market.
Meanwhile, the RSI plunged to 20, and volume reached levels not seen since December 2018. Reminiscent of the Christmas eve massacre.
And if the market is going to destroy everything created from October on, it means it needs to go back to the very beginning. To somewhere between 2860 to 2940. But at this point, who knows! Nobody. This is what happens when you combine ETF’s, Algo’s, and leverage together.
Roku (ROKU)
Roku has held up relatively well, and I guess that’s because everyone will be home streaming. Anyway, the stock should find firm support if it gets sucked down the drain like everything else.
Netflix (NFLX)
If we are all going to be watching TV on our Roku, then we need some content to view, and that is why Netflix has been going higher. The stock is trending higher and could be heading to $405.
Apple (AAPL)
Apple appears that it might have some strong support in the $268 region. The stock is pretty much oversold at this point. Not that it matters if it oversold, everything is.
Alphabet (GOOGL)
Alphabet is falling and should hopefully find support at its break breakout around $1290.
Tesla (TSLA)
Tesla, maybe it goes back to $600.
Anyway, no commentary in the morning; I am doing my taxes, in case I wasn’t being tortured enough this week.
But the good news, is that there will be no evening either, becuase it is my daugther birthday. To be 6 again.
-Mike
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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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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