Stocks Test Critical Resistance Levels And Fail For The Fifth Time

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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June 23, 2020

STOCKS – ACAD, AAPL, MU, INTC

MACRO – SPY, QQQ, XLK

Mike Reading The Markets Premium Content – $35/Month or $300/Year

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL AND ACAD

S&P 500 (SPY) 

Stocks had an ok day, rising by about 50 basis points on the S&P 500. It could have been much better, but the index can’t get out of its way. There is something that is happening in the E-minis and the SPX cash that there is a huge level of resistance the market just can’t get through. I think it is a negative sign for the index at this point. 

Today marked the fifth time the futures have failed at 3,145. Something similar did happen in July 2019, and it led to a sizeable sell-off of about 8% at the time. Today 8% doesn’t seem so scary or severe, given what we have gone through. It also resulted in August being an extremely choppy month. 

I think the S&P 500 is setting up for a decline to around 2,960.

NASDAQ (QQQ)

The Nasdaq is just not set up to go higher either at this point. It is now the sixth time the Qs have reached the upper level of its trading range. Since April, every time the ETF has hit that upper range, it has resulted in a decent pullback. Additionally, the ETF’s RSI hit overbought levels today around 70. It seems like there is a good chance here for the Qs to fall back to $240. Premium Content – Nasdaq 100 May See A Sharp Reversal Short-Term

Technology (XLK)

The XLK technology ETF also continues to move higher, but interestingly, the trading channel is not a channel at all. It hasn’t become apparent until recently to me, but it is one large rising wedge pattern.  You can see when the channel started in April it was about 8% wide, now it is just 3% wide. 

Alibaba (BABA)

Alibaba has had a powerful run and is pushing up near resistance at $231. The RSI is still tracking higher, and I think the stock continues to push up, despite broader market weakness. $247.50 is an achievable level. 

Apple (AAPL)

Apple continues to melt higher, and nobody could be happier than I am. But even I know when stocks I own need to cool off, Apple needs to cool off. The RSI is over 70 again, and the stock hit that resistance level I point out a few weeks ago at $372. So this seems like the ideal place for a pullback to $325. 

Intel (INTC)

Intel doesn’t look particularly strong here, with the potential to drop to around $55.90. 

Micron (MU) 

Micron is also sitting on support at $49.80, and the RSI is moving lower. I think the odds of a drop to $45.50 are rising. 

Acadia (ACAD)

Acadia is so close to making a new all-time high. Today it got some positive commentary out of Jefferies about the companies upcoming readout for its depression trial. I think there will be plenty more positive commentary to come. I happen to believe they will have a positive readout for depression as well. A break out could push shares on to $75. 

Have a good one. 

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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