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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OCTOBER 27, 2020
Stocks – AMD, CAT, LLY, EXAS
Macro – SPY
Stocks are rising on October 27, with the S&P 500 ETF trading higher by around 50 bps, making up for some of yesterday’s drop. The best thing that could happen today for the market is an early gap-fill lower after the open and then a steady grind higher for the day’s balance. The S&P 500 will need to reclaim the 3,425 level, while the QQQ ETF will need to reclaim the $282 level. The worst thing that could happen is for the indexes to fail at resistance.
The big news of the day is that AMD pre-announced the quarter and said it would buy Xilinx (XLNX)for around $35 billion. This is an all-stock deal, and I know AMD had a great quarter, but the stock should be down, not up. Currently, the stock is up 2%, but the deal is dilutive to existing shareholders and accounts for nearly 35% of AMD’s market value. The stock should continue to fall, heading towards $75.
Eli Lilly (LLY)
Eli Lilly is trading lower after it reported weaker results. The stock has really broken down the last few weeks and needs to hold onto support at $132.
Caterpillar is getting rocked after it reported weak results. The stock is approaching support at $159, and that needs to hold. Otherwise, $148 is next.
Exact Sciences (EXAS)
Exact Sciences is rising today after it announced it would buy an early cancer detection company for over $2 billion and raised about $870 million through a direct offering to ten institutional investors. The stock is now approaching a big resistance level at $114.50, which is where it could pause for sometime after a huge run-up.
-Have a good one!
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