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.
Otherwise, enjoy the column!
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STOCKS – CSCO, SPLK, CRM
MACRO – SPY, IEF
- RTM – The Mother Of All Divergences?
- RTM- Is The Equity Market Simply Wrong?
- RTM Short Term Bearish Idea- Ford Further Downside
- 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.
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 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 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 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.
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.