August 17, 2020

STOCKS – 700, ACAD, ILMN, REGN, UBER, FDX

MACRO – SPY, XBI, XLU

Mike’s Reading The Markets (RTM) Premium Content – NOW WITH A 2 WEEK FREE TRIAL

• Inflation Does Not Appear To Pose A Threat Anytime Soon 
• Risk-On Trade Remains In Focus The Week Of August 17 
• Visa Shares May Decline Over The Near Term
• Earnings Trends For The S&P 500 Continue To Drift Higher
• Dull Friday – Midday
• On Gap Watch For The S&P 500
• Warning Signs
• The Message Remains Unchanged, The Market Has Limited Upside
• S&P 500 At THE Critical Moment
• Risk-On Still Under Stress

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD

MICHAEL KRAMER OWNS XBI PUTS

Stocks are mixed this morning with the SPY ETF rising by ten bps and the QQQ ETF increasing by 45 bps. It follows what a relatively quiet overnight session around the world is. Hong Kong traded higher by about 1%, while Japan traded down by 83 bps, and Germany is up by 18 bps. Yields are moving down some to just below 70 bps, while the dollar index is down by ten bps to 93. 

Tencent

Despite the strength in Asia, Tencent finished the day flat, again an indication that this technology trade is still struggling. The stock has managed to hold on to the 500 HKD level, which is essential. Again, this stock has served mainly as a proxy for the status of the technology trade here in the US.

S&P 500 (SPY)

We will find out today if the S&P 500 can fill the gap from last week around 3,340. Ideally, you want the gap to get filled because the market can move forward, whether it be higher or lower. Gaps generally get filled at some point, and the sooner it gets filled, the better.

Acadia (ACAD)

We will keep an eye on Acadia, as the stock continues to struggle, and needs to hold this $39 level to avoid a decline back to $31. 

FedEx (FDX)

FedEx can remain on watch as it challenges resistance at $209. A break out sets up a rise towards $235. 

UBER (UBER)

Uber has been holding on to support at $30, and that is a massive level for the stock that must hold. A decline below $30 triggers a sell-off to $28.30.

Regeneron (REGN)

The big biotechs broke their uptrend, and now they are at levels that must hold. Regeneron is now sitting on support near $595. A break of this level sets up a further decline to $575. 

Illumina (ILMN)

Meanwhile, Illumina is sitting on support near $336, with the potential to fall back to $315 should that level break.

Risk-on/Risk-off

The reason I bring these up is that biotech is a crucial risk-on trade, and represents what I think is the riskiest part of the equity market. The chart below, we have been tracking in the Reading The Market subscriber area, which is the XLU relative to the XBI. If the risk-on trade is going to switch to risk-off, this would be the spot. (premium content – Risk-On Trade Remains In Focus The Week Of August 17).

 

-mike