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STOCKS – CSCO, SPLK, CRM
MACRO – SPY, IEF
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- Fed Tapering May Fuel The Dollar’s Rise, Trigger A Risk-Off Event
- RTM – A Shift In Risk Sentiment Is Approaching
- RTM- Tapering Is Probably Coming Very Soon
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SPLK
Stocks finished the day around the flat line with the S&P 500 up about 15 basis points to close at 4486, a new record. The markets grind continues even as valuation creeps higher, and the specter of the Fed is embarking on a tightening cycle. At this point, we can see that the index is once again bumping up against the top of the uptrend, which we started to watch in the middle of July.
Perhaps it can just continue to trade along the upper trend line to 5,000 or maybe infinity. I don’t know. The index has seemingly lost all senses of reality, and it isn’t even clear what the market is looking at. We are literally trading higher because the Fed went from an in-person Jackson Hole conference to a virtual one. That is supposed to mean the Fed is taking the delta variant seriously. Seriously, I doubt Jay Powell was coordinating the event, and it seems unlikely that the event venue change was meant to act as a smoke signal to the market about his intentions on tapering.
The index now trades for 19 times 2023 earnings estimates; yes, I said 2023 earnings estimates.
Anyway, my view hasn’t changed; my count remains unchanged on the S&P 500 ETF (SPY). So, therefore, I still believe this region serves as a potential turning point for a corrective wave lower.
10-Yr (IEF)
Rates moved up today, closing around the 1.3% level. We are once again watching for a potential breakout at this level. A potential break-out sets up a rise to around 1.4% or as high as 1.55%.
Salesforce (CRM)
Salesforce has broken out, and they should be reporting earnings tomorrow. The stock is obviously expecting strong results. They always seem to beat on earnings; after all, they tend to get a nice boost from their investment portfolio due to reporting unrealized gains and losses. So if they beat tomorrow and the stock goes down, make sure you check and see how much of their beat was due to “other income.” There is nice resistance around $260, as well.,
Cisco (CSCO)
Cisco is still climbing, breaking above resistance at $58; the stock hasn’t been this high since 2001. I have stopped following this one for the time being.
Splunk (SPLK)
Splunk reports tomorrow as well. The stock broke out of the falling wedge back in June and managed to get to resistance at $151 today. I like the company long-term; the problem is when they report results. They never seem to please investors, and they have this whole thing with converting revenue into this subscription-like model. Anyway, I wouldn’t be surprised if it traded follow results like it did last quarter.
That’s all for today.
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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