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Stocks Show Their Might Led by Chips and Biotech

Stocks Show Their Might Led by Chips and Biotech – The Daily Rundown



Stocks Show Their Might Led by Chips and Biotech – The Daily Rundown

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We surely didn’t get the breakout I was looking for today, but we sure did get an exciting trading session, that told us about the market’s current state of mind. If this had been February, I think word of tensions with North Korea, or President Trump pulling out of a meeting with the leader of North Korea would have sent the market reeling lower by 1.5 to 2 percent on the S&P 500. But this is May and spirits seem much brighter.


Equities indeed sold-off following the news President Trump was calling off the summit with Kim Jung-Un of North Korea in June. The S&P 500 had an initial knee-jerk reaction taking it down about 1 percent by 11 AM. But the rest of the day was about price recovery, and by the close, the S&P 500 finished down about 20 bps, while the NASDAQ recovered all its losses to finish essentially flat. That is impressive, and I think it tells us a lot about the state of mind for the market. What had been a weak market just a few short weeks ago, seems to have become more confident.

^SPX Chart

^SPX data by YCharts


Risk-on Leadership

Like I wrote yesterday, we saw leadership prevail from the key players, with chips and biotech’s up on the day by nearly 40 bps, the risk-on sectors of the markets. Yes, Utilities rose by 80 bps on the day, but that has more to do with yields falling, with 10-year yields down to 2.98 percent, from 3.10 a week ago.

Chips mounted a rally, from down 80 bps at 11 am, to up 34 bps by the close, a significant recovery. What stocks led, well the usual suspects, Micron up 2.6 percent and now at $61.50, followed by AMD up 2.0 percent, On Semi up 3.6 percent, and Broadcom up 1.3 percent.


Micron

The advance in Micron continues to be impressive, shares are nearing a very big breakout, sitting right at resistance at $61.50. If it can manage to advance tomorrow, then it might still have some further to go, and $61.50 should offer support in the future should it climb and retrace.

Should Micron break out tomorrow and rise above its 52-week high of $63.42, then it may be on a trip towards $73, a price not seen in nearly two decades, back to the year 2000! Yes, a break out for Micron is a huge deal.

The bears will argue the DRAM pricing cannot stay strong, and Micron’s recent revenue and earnings surge cannot last, while the Bulls say the opposite.

Based on estimates to the year 2020, analysts are forecasting flat revenues and declining earnings, the street seems to believe the good times can’t last, which means Micron’s stock can continue to climb should it keep putting up strong results because a positive outcome is not baked into the stock.


Netflix

As noted yesterday, Netflix broke out, and it continued today with shares reaching an intraday high of $353. Some in the media were talking about Netflix now having a market cap just barely higher than Disney’s and Comcast, at $152.14 billion to Disney’s $152.03 billion, and Comcast at $145.78 billion. Most of that has to do with the fact that Comcast is nearly down 20 percent on the year.

DIS Market Cap Chart

DIS Market Cap data by YCharts

Plus, my knee-jerk reaction, why shouldn’t Netflix be worth more, aren’t Comcast and Disney trying to become like Netflix? Isn’t that why Disney is launching a direct to the consumer product. Isn’t that why Comcast is trying to steal Fox’s assets away from Disney? Of course, it is. Comcast and its cable line will be worthless in another few years when Verizon and the other wireless players launch 5G, and cord cutting start to accelerate at an even faster pace.

Imagine a world, where one day like your phone and your tablet, your TV will be able to access data, but not through wifi, but your wireless provider. It sounds crazy, but how hard could it be?

Why else would Comcast be so hot to get Fox? They want to keep building up their content library and become a content business.

-Mike


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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #netflix #micron #comcast #disney #amd #broadcom #biotech #chips #stocks #sp500

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4 Stocks and 3 Sectors To Watch For May 22 - Mott Capital

4 Stocks and 3 Sectors To Watch For May 22



4 Stocks and 3 Sectors To Watch For May 22

michael Kramer and the clients of Mott capital own shares of visa
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It was a solid day for the S&P 500, with the broader index up about 75 bps, closing at 2,733. Meanwhile, Industrials were the clear winners rising by about 1.6 percent, followed by chips, and more general technology, and financials.

The setup looks very strong in the broader market, and it looks there are still more gains to come. I have written over and over about the strong fundamentals, and now the technicals are coming into alignment.


Small Caps

The strength in the small caps is confirming the positive tone, which is now at all-time highs.

russell


Boeing

Boeing was the big winner today with shares jumping by nearly 4 percent. I wrote on Sunday that the stock was likely heading back to $370. Well, today it finished up at $364. Should it get to $372, it will be a big test for the stock, because that is resistance from the previous high set back on February 28.

boeing

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Industrial ETF

The setup in the industrial ETF (XLI) doesn’t appear to be all that different. That ETF is looking very strong too.

boeing


Technology

The setup in the technology ETF XLK looks like it is just ready to bust out, and continue its previous rise.

xlk


Visa

Visa also looks set to breakout to new record highs.

visa

Micron

Micron was a clear leader in the chip sector today, and it too looks set to go higher. The company pre-release better than expected quarterly guidance prior to their investors day. Tonight, after the close, the company announced at $10 billion shares repurchase.

mu

Chips

The setup in the broader SOXX also looks very positive. I think we may see $197 in the not to distance future.chips

JP Morgan

JP Morgan is also nearing a potentially massive breakout.

jpmorgan

That is it for today.

-Mike


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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #boeing #jpmorgan #visa #industrials #chips #micron

Stock Market Sentiment Is Turning More Bullish – For The Week of May 21



Stock Market Sentiment Is Turning More Bullish – For The Week of May 21

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Michael kramer and the clients of mott capital own shares of Swks

The bull run in stocks was put on hold last week, but the current run is likely not over. In fact, there appears to be a clear separation that has taken place since the start of May. We find that Biotech and Semis are the leaders this month, with each up by over 7.5 percent. Followed by a group of Technology, Energy, the Small Cap Russell 2000, and Materials all up about 5 percent. Meanwhile, the S&P 500, Financials, Health Care, and Discretionary are all up about 1 to 2 percent. Finally, Utilities and Staples are down on the year.

XLK Chart

XLK data by YCharts


What Is The Market Telling Us

It tells us how the market is feeling on a couple of topics. The underperformance of the utilities and the staples is an apparent concern by investors regarding the more interest rate sensitive portions of the equity market. As interest rates rise, dividend yields must increase, and that puts downward pressure on the stock prices in the group. Additionally, it would also suggest a rotation out of the defensive part of the market.

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Risk On Back

Meanwhile, the risk-on parts of the market, Biotech, and Semis are in favor and that would suggest that investors are feeling more comfortable moving back into the riskier more volatile parts of the market. It would indicate to me that if these two sectors continue to perform well, the market will continue to rise.

Even the second tier of leaders, in Technology, Energy, Small caps, and Materials are another layer of risk, and again it too supports the continued rise in the broader S&P 500.


Looking at The Semis

When we look at the semiconductors, AMD has been the best performing stock this month rising by about 20 percent, followed by Qorvo, Micron, Teradyne, and Skyworks.

Teradyne

Teradyne’s significant gains in May are more of a bounce back, because even with the 15 percent rise thus far in May, shares are still down by nearly 25 percent from their peak earlier this year. The poor company guidance led to be a big gap down in the technical chart. It seems like the stock wants to fill that gap back to around $40, but one must worry that once filled, the stock may continue that trend lower.

Qorvo

Qorvo has been a stock stuck in a trading pattern of up and down since the start of 2017. After a significant gain; shares could be heading back the other way.

qrvo

Micron

Micron gave us the big breakout, but to this point, resistance at $54 has proved challenging.  But what I take as a positive is that that stock has been rising on more volume, and the trend, for now, continues to be higher. I still think we reach around $61.50.


Waiting On Qualcomm/NXP

It will be interesting to see given the setup in these stocks if there shall be a rotation into other parts of the semiconductor space. Remember, we are still awaiting word on the Qualcomm/NXP deal from the regulators in China, regarding a potential approval. If that should happen, I think the sector will get an extra jolt, in a sign that that trade tensions has been easing between the US and China.

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Staying Hot

For the most part, we need to continue to see the risk on the part of the market stay hot, and investors continue to move back into these parts of the markets.

Perceptions and Mood

At this point, much of where stock prices go will be driven by sentiment, mood, and perception more than anything else. Fundamentals are solid, with GDP for the second quarter tracking at 4.1 percent, according to GDPNow, through the mid-way point of the quarter. Meanwhile, earnings season for the first quarter of the year were very strong.


 

Strong Fundamentals

According to Dow Jones S&P Indices of the 91 percent of the companies in the S&P 500 to have reported results 77.25 percent beat estimates, while sales grew by about 9.5 percent versus a year ago. The S&P 500 is trading at just 16.7 times 2019 earnings estimates of $163.33 per share.

It is a robust fundamental setup, while the bulls appear to be coming back.

Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #may21 #bull #senitment #biotech #technology #semiconductors #chips #stocks 

The Stock Market Is Moving Back To A Risk-On Mentality



The Stock Market Is Moving Back To A Risk-On Mentality

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The risk-on asset classes had good days, with Biotechs (XBI) up 1.4 percent, Chips (SOXX) up 1.3 percent, and materials (XLB) up about 1.2 percent. Risk-on is what one wants to see start to happen more because it tells us that investors are looking to move into more aggressive parts of the market, and that bodes well for a rise higher.

S&P 500

The S&P pieced together a decent day, rising about 40 bps, recovering about 2/3 of yesterday’s decline. It seems the past three days have been a game of back and forth filling the gaps from the previous day. The good news is that today, there was no gap up or down, and that should hopefully mean tomorrow we continue higher.

S&P 500


Sectors

The XBI continues higher and appears to be heading back to the previous highs.

xbi

The setup in Chips also continues to be very strong.

ch

What is ironic is just how much alike the two charts look. I guess the chips and biotechs are part of the same risk-on algo running.

Materials are also breaking out, and that, of course, is a positive as well.

materials


Russell

Not only that, but the Russell 2000 is breaking out as we talked about the other day.

russell 2000


Stocks

Nektar broke out today, after bouncing off our support level around $70.

nektar

Intercept looks close to breakout too.

icpt

Micron broke out and appears to be heading back to $61 now.

micron

Lam Research also appears to be breaking out and could be heading back to around $224.

lrcx

Texas Instruments back to $120.

txn

The suspense in Amazon is just killing me! BREAKOUT ALREADY!

amazon

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Dollar

It looks like the dollar finally broke out, and it seems clear which way it is going.

dollar

Night!

Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #biotech #materials #chips #nektar #amazon #micron #lam #texas 

 

Earnings take center stage

It Is Time For Earnings To Take Center Stage

It Is Time For Earnings To Take Center Stage

Michael Kramer and the Clients of Mott Capital own GOOGL

Earnings take center state with companies like Facebook reporting today, and tomorrow we get Microsoft, Intel, and Amazon. It doesn’t get much bigger, and Facebook didn’t disappoint.

But first…

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Broader Markets

The S&P 500 continued to bounce around today, with the index finishing the day slightly higher up about 20 bps. The index managed to stay on the breakout side of the of the downtrend we crossed on April 11, and it has acted as support, to this point.

spx

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VIX

Meanwhile, the VIX has remained on the other side of 20, and that is also a positive.

vix


Facebook

Facebook, may have put some questions to rest, with its strong quarterly results. The company reported daily active user was up 13 percent to 1.45 billion on average. The second quarter will give a better reading of active users post the data scandal, but my gut suggests that the impact will be minmal, at least from my usage, and I have noticed a slowdown in my friends ussage either.

Revenue for the quarter grew to $11.97 billion, versus estimates of $11.41 billion. EPS came in better than expected, at $1.69, vs. estimates of $1.35.  Shares were up about $12 in the after-hours trading around $171. I got the retest of $150; post-results wrong!


AMD

Another call I got completely wrong was AMD, shares of that one are jumping after hours as well, to around $10.70. The company reported better than expected earnings per share of $0.11 per share, vs. estimates of $0.09 per share. Meanwhile, revenue also topped estimates at $1.65 billion, vs. estimates of $1.57 billion. The company also sees revenue in the second quarter at $1.725 billion, better than estimates of $1.57 billion.

0 for 2, out of five earnings predictions, and if you count Alphabet from Monday, that makes 0 for 3.

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Tomorrow

Tomorrow Amazon, Microsoft, and Intel report. I think if Intel can put a good report on the back of Texas Instruments, and Qualcomm it will give the semis a good jolt. The group has been walloped in recent days and needs to some positive newsflow.


Boeing

Boeing had a nice bounce today following its strong results, but the stock action didn’t impress me so much. Shares where up about 4 percent, basically regain the lost ground from yesterday.

boeing


Cat

To this point, Caterpillar has been able to stay above support at $143, and I think that is a huge positive. It is a critical level for the stock.

cat

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Yield

Finally, the 10-year got to a significant level today, right around 3.04 percent. We could see a considerable acceleration higher if we rise much above current levels.

That’s it.

-Mike

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #stockmarket #tesla #chips #stocks #model3 #netflix #verizon #ibm 

It Is Simple Some Stocks Are Just Overvalued, It Is Obvious!

It Is Simple Some Stocks Are Just Overvalued, It Is Obvious!

It Is Simple Some Stocks Are Just Overvalued, It Is Obvious!

Michael Kramer and the Clients of Mott Capital own shares of GOOGL and UL 

Volatility continues in 2018, and again the narrative around the reasons for the volatility continues to shift. Earnings have not been too bad so far, but still, the significant results continue to roll out the rest of this week and next. So it is yet to be seen what direction earnings will keep sending the market. But in some cases it is crystal clear why stocks are going, they are merely overvalued, and no I am not talking about the FANG’s, nor most of the Techs. I’m talking about staples and industrials like Boeing, McDonalds and Home Depot.

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Wait, What?

Listening to the TV all afternoon, I got the impression that investors seemed surprised that 2018 would be the peak regarding earnings growth from a percentage standpoint. It has always seemed fairly obvious to me that 2018, earnings growth was being aided higher by the one-year tax benefit, and that growth would return to “normal” growth rates in 2019. The rate of growth in 2019 is undoubtedly nothing to dismiss, because as of right now that growth is expected to be around 10 percent, and with an S&P 500 trading at roughly 15.5 times 2019 earnings estimates, the stock market seems relatively cheap.

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Economic Slowdown?

To this point, I see no evidence of an economic slowdown. A company like Unilever saw pretty good growth in its first quarter with sales growth and volume growth of 3.4 percent, which again is a pretty healthy number for a company of its size, while emerging markets grew at a much faster pace.


Just Overvalued

I think in some cases, there are merely stocks that advanced so much ahead of these big earnings expectations, now it is time to sell the news.

BA Chart

BA data by YCharts

Companies like Home Depot, Boeing, McDonald’s, Lockheed Martin, Caterpillar were all up tremendous amount from the start of 2017 through the end of January 2018, much more than the S&P 500.  Boeing even now is up nearly 112 percent since the beginning of 2017! 112 percent! It and the others like it are trading at some of their highest earnings multiples in some time, and in some cases, those companies still need to see further multiple contractions.


Slowing Growth

The market is also looking to the future, and while Caterpillar is seen growing earnings in 2018 by over 36 percent, those earnings are seen rising by only 13 percent next year, while Boeings earnings growth is seen slowing from 37 percent to just 18 percent next year, while revenue is seen climbing only 5 percent! Better keep buying back that stock or improving margins. Home Depot is no different going from 27 percent to only 7 percent.

BA PE Ratio (Forward 1y) Chart

BA PE Ratio (Forward 1y) data by YCharts

How do you feel about paying 20 times one-year forwards earnings for growth in the mid to high single digits? Yeah, they are expensive. I have been saying this about McDonald’s for quite some time, with its monster earnings growth of about 14 percent in 2018, on an 8 percent drop in revenue! Give me a break; the stock is up nearly 30 percent! And it is no different for any of the others, and these are just a few.  The Banks may be another group in the same situation.

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Google or McDonald’s

Right now it would seem the selling is indiscriminate, but the cream will rise to the top, because companies like Alphabet are seen growing by 22 percent in 2018, slowing to 17 percent in 2019, on 11.5 percent revenue growth,  while trading at only 21 times, so I ask,  would you rather own Alphabet or McDonald’s? Alphabet every day of the week hands down.

If McDonald’s can trade at 19 times earnings than Alphabet must be the steal of a lifetime.


Moving on then to other topics….

VIX

The VIX got right back to nearly 20 today, before backing off. Remember 20 has been a support/resistance line, and the fact that it backed off is at that level is good.

vix

The S&P 500 also managed to find a bounce at least for today off its downtrend.

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Technology

The technology earnings are going to be extemely important the rest of this week, because the setup in the technology ETF XLK looks really bad. I’m hoping that is not a head and shoulder formation, because if it is then a fall back to $61 or further could be in the cards. With all the big results this week, those results could be a tipping point for the group.

technology

The one piece of good news so far is that Texas Insrutuments appeared to report solid results and for now at least the stock is finding a bounce.


Facebook

The big one tomorrow will be Facebook, and the stock melted today, falling below support at $161.50. It could be headed back to retesting the lows around $150. The chart clearly shows the stock was unable to rise above resisntacnce around $168.

facebook


Apple

Apple fell again today, and now sits at $163, and the company still has a week to go before results. Apple’s results can not come soon enough.

Micron

Micron staged a head fake breakout on April, 18 and it has been nothing but down since that time. Is there a rise in Micron’s shares in the future? I’m not sure, but the chart looks pretty weak, at current levels, and more declines may be in store.

micron

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Amazon

Amazon shares continue to trend lower too, and they are expected to report Thursday after the close. The chart like the others looks fairly weak. The earnings will matter  a great deal when they are released. We can see we back to within $1440 on the chart, and that again is an important level for the stock.

amazon

That is it!

-Mike

 

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Biotech Stocks Face a Steep Drop

AMD’s Stock Faces 14% Swings on Uncertain Earnings

Traders Bet Qualcomm’s NXP Takeover Will Fail

Apple’s Stock Sharp Decline May Be an Overreaction

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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.

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Tags: #stockmarket #tesla #chips #stocks #model3 #netflix #verizon #ibm 

Chip stocks continue to sink, tesla register 5,000 model 3's

Chip Stocks Continue To Sink, Tesla Registers 5,000 Model 3’s

Chip Stocks Continue To Sink, Tesla Registers 5,000 Model 3’s

Michael Kramer and the Clients of Mott Capital own shares of VZ, TSLA, NFLX, and GOOGL

The S&P 500 managed to finish the day flat, and for the most part, this 2,670 level on the S&P 500 continues to hold.

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Chip Stocks

The semi companies continue to struggle, with the SOXX down by over 1.3 percent, but some stocks were down by far more. The chart on the Soxx ETF surely doesn’t look great, and the big test for the ETF comes around $167.

chips

The relative strength index is still trending lower, and unless Intel, Qualcomm, and Texas Instruments can say something more positive, it might hard to turn the direction of this group.

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Verizon

Verizon reports results tomorrow, and what will be the most thing that comes from the report? Well, any commentary the companies give around the upgrade cycle of smartphones will be interesting. Remember it was Verizon that told us last quarter, that they saw an elongation of the upgrade cycle. That will give us a good sense of where we stand with the chip stocks until we find out details on next iPhone launch from Apple.


Tesla

Tesla registered over 5,100 new VIN with NHTSA, which is the highest total I can remember. This comes after the company shut production for a week. Again, we will need to see what that number the next time they register VIN’s, and just how much time has passed. That could help us get a handle on the weekly production rate.

 


Netflix

Did Netflix the gap today? Maybe, it sure was impressive where the stock stopped falling and where it stabilized.

netflix


IBM

IBM shares have struggled since its quarterly results, for apparent reason, but the stock is pretty close to having an even bigger fallout.

Ibm

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Alphabet

Finally, Alphabet reported strong results beating on both the top and bottom line. But for now, investors are not happy enough to send shares higher in the after-hours. The stock is mostly flat at that moment. I haven’t had the chance to dig through the numbers yet, but when I do will be sure to share any feedback, if I should anything worth noting.

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Tags: #stockmarket #tesla #chips #stocks #model3 #netflix #verizon #ibm 

Chip Stocks Monster Week, Plus Micron, AMD, Netflix, Visa and Microsoft


Chip Stocks Monster Week, Plus Micron, AMD, Netflix, Visa and Microsoft

Believe it or not, the S&P 500 was up by about 3.25 percent for the week! An unexpected gain, with most of it coming on Friday. The semiconductor stocks ($SOXX) led the charge with the group up by nearly 5 percent, followed by Industrials ($XLI), and Biotech ($IBB). Outside of consumer staples ($XLP) and utilities ($XLU), it was a good week for all.

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Chips Stocks

Look at the chip stocks! Wow. We aren’t even though the first quarter and look at these significant gains. Micron, Microsemi, MKS Instruments, Qorvo, Nvidia, On, astounding, all up over 20 percent. Of the top 25 stocks in the SOXX ETF, only two are down for the year, Qualcomm and Broadcom.

Micron

I was surprised to see how poorly Micron performed today, after a strong week. The momentum has been strong, and one has to wonder why the momentum suddenly came out of it today? micron


AMD

On the other end of the spectrum, AMD is a stock that has gone nowhere. Don’t be fooled by the stock being up by 16 percent in 2018. The stock is actually down nearly 12 percent over the past 52 weeks. The earnings growth appears to be present, with earnings in 2018 expected to rise by over 117 percent to $0.37, followed by $0.52 in 2018, and $0.58 in 2019. Even revenue is expected to grow from roughly $6.3 billion in 2018 to $7 billion in 2020. But the stock won’t budge. The only problem I see with it is that for a chip stock it is expensive at 22.6 times one-year forward earnings. That is a lot, for a stock in this space, especially for one that’s name is not Nvidia.

AMD Chart

AMD data by YCharts


Microsoft Or Visa

Out of all the stocks that make up the SPY ETF top 25 holdings, I never would have guessed that Microsoft at 24.3 times one-year forward earnings estimates was the second most expensive stock behind Amazon. Followed by Alphabet at 24.06 and Visa at 24.03.

Microsoft is trading at all-time highs, but one has to wonder just how Microsoft is a better buy then say Visa presently, at the same earnings multiple. Microsoft is expected to grow its earnings by 8 percent in 2019 to $3.64 from $3.95. Meanwhile, Visa is expected to increase its earnings by nearly 17.5 percent from $4.41 to $5.18. If the bet for Microsoft is blockchain for example,  and that is going to be a way to transact in the future, Visa and MasterCard are going to be involved in some way shape or form, don’t you think?

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Amazon and Netflix

Amazon and Netflix continue just to lead the consumer names, and can you wonder why? These two companies are just loaded with future growth. But the pace they are both rising in 2018, just leaves me lost for words.

AMZN Chart

AMZN data by YCharts

As I have said before I own Netflix, and I am more than happy for the stock to rise over time, but 72 percent in the first six weeks of the years, seems like a bit much. Keep in mind; I’m the guy that wrote Netflix was cheap after it reported results in the middle of January. Then I took it one step further and said shares could rise to $355. But the pace of the rise makes me feel uncomfortable, and you are right I could sell it. But I do believe this is a multi-year growth, and even at its current price, it likely has much further to rise over time. This a global growth story in a way that has never happened before. I’d take a month or two of sideways consolidation at this point.

Tomorrow we’ll take a look at the week to come.

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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.

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Tags: #sp500 #chips #micron #nvidia #amd #visa #microsoft #amazon #netflix

 

 

 

 

micron analog devices applied materials walmart

Micron, Applied Materials, and Analog Lead Stocks Higher, Walmart Lags

Micron, Applied Materials, and Analog Lead Stocks Higher, Walmart Lags

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The S&P 500 managed to eek out a slight gain for the week of about 60 bps. But it was the semiconductor sector ($SOXX) that stole the show, jumping by over 2.15 percent. The broader Technology sector ($XLK) finished in a distant second place up roughly 1.5 percent. Consumer staples where by far the worst performing group down by over 1.8 percent.

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technology secmiconductors

Semiconductor Stocks

When we look at the different stocks in the chip sector, we can see that Micron was the best performer up by nearly 7 percent, followed by Analog Devices, and Applied Materials.

semicondutor

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Micron

Micron shares jumped by nearly 5 percent on Friday alone, and the options activity was also pretty substantial. Almost 12,000 of the March 16, $47 calls traded on Friday, along with another 9,000 calls at the $50 strike, while 17,000 of the April $50 calls traded as well. The notional value was nothing overwhelming, with the March $47 calls trading at roughly $1.50 per contract, giving the contracts that trade a dollar value of about $1.8 million. The April 50’s trade at roughly $1.90 giving the contracts traded a dollar value of about $3.2 million.

Micron

The stock cleared the multi-month downtrend, moving up to resistance at $46.80. If the price rises above $46.80 it has a clear shot to reach its old highs near $50.

Analog Devices

Analog Device got an upgrade from Bernstein boosting Analog’s price target to $105 from $90. Meanwhile, RBC noted that Analog could be among a list of companies that Broadcom may look at should the Qualcomm deal be killed.

The chart is nothing to get excited about, as the stock has been relatively choppy recently. Although there is a noticeable uptrend, there is nothing in the pattern to suggest that stock is going to rocket higher anytime soon, but seems worth watching at this point. analog devices

Applied Materials

Applied Materials is in a vital spot, fail at resistance,  $55.50,  or breakout and rise. Options active is pretty muted in the name.

applied material

But analysts are looking for significant growth this year, with revenue expected to climb by nearly 21 percent to $17.51 billion, while earnings are expected to soar by almost 36 percent to $4.43 per share. But earnings growth is seen coming to a halt in 2019, to only 5 percent, while revenue is expected to grow by 6.5 percent. The average price target on the stock is $68.91, according to Ycharts, giving the stock upside potential of about 21 percent.

AMAT Chart

AMAT data by YCharts

The stock is trading at only 12 times 2019 earnings, which seems cheap enough. But the 2019 earnings growth rate of 5 percent,  is concerning, especially given the 6 percent revenue growth. It could suggest that analyst are expecting costs to rise next year, and margin compression. When it comes to chip stocks, the market does not like margin compression. It is something you have to consider, and pay close attention too.

Until this one makes a clear technical breakout or fails on the charts, the stock is a toss-up.

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Consumer Staples

CONSUMER STAPLES

Consumer Staples performed the worst of all sectors in the stock market this past week. It should come as no surprise with Walmart down by over 10 percent for the week, while General Mills fell by 7 percent, and Kraft Heinz falling by 5 percent.

Walmart

It seems that suddenly that e-commerce juggernaut, Walmart, is not what was first thought. First off, e-commerce growth fell during the fourth quarter to 23 percent, from 50 percent in the third. But it is also obvious now, that Walmart’s e-commerce ambitions are going to take a long time before they become meaningful. The company noted total sales over the past year were about $11.5 billion, out the roughly $500 billion in total revenue the company had. The e-commerce sales represented only 2.3 percent of total sales. Suddenly it makes what was previously perceived as significant growth in e-commerce for Walmart is suddenly not so impressive or important.

That’s It!

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Tags: #sp500 #stocks #chips #semiconductors #micron #analog #applied #materials #devices #walmart #consumer #technology

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Stock Market Bounce, Volatility Drops, Amazon’s Push Into AI Chips

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Stock Market Bounce, Volatility Drops, Amazon’s Push Into AI Chips

Stock markets continued where they left on Friday, with the S&P 500 climbing by roughly 1.4 percent, bringing the index to roughly 2,655. The index continues to make headway rebounding from the steep sell-off last week, that saw the index touch 2,535 at the low point.

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S&P 500

The chart suggests the S&P can continue to rise toward 2,690 without hitting any resistance, about 1 percent higher than its current level.

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Vol

The VIX continues to decline, and that is a positive for the stock market, with it now trading around 25, well off the highs around 48 seen last week.

vix

Yields

Yields on the 10-year continue to hold around 2.85 percent. A trigger point for yields will come Wednesday morning when CPI is reported.

10-year yield

Apple

Apple shares are also building on their steep sell-off and have bounced support at $150.

apple

It would seem for the most part the market continues to recover, and showing signs that volatility may at least be passing for the short-term and while it is always hard to say that the worst is over. It would at least seem that for now things certainly are feeling much better.

Amazon

Did you notice that Amazon is going to start making its chips for Artifical Intelligence? It sure caught my attention, and apparently, the markets with Nvidia’s stock trading lower on the day, by about 2 percent to roughly $228. The question, does it mean anything?

Well, we have seen Apple do the same when it came to some of its suppliers like Imagination Technology and Dialog Semi. It just makes me wonder if any of these big technology companies could decide to the same and what that means for some of the big chipmakers? Something surely worth thinking about and exploring further.

That is going to be it for today.

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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.

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Tags: #sp500 #apple #amazon #apple #AI #chips #yields #vol

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The Monster Week In Review: Target, Netflix, Amazon, Nvidia, AMD, Tesla and More

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The Monster Week In Review: Target, Netflix, Amazon, Nvidia, AMD, Tesla and More

The market continues to rise at a torrid pace, and the S&P 500 is now up by over 4 percent for the first 9 trading days of 2018. But it is not the technology group leading the markets higher in 2018, its energy and consumer discretionary stocks, which have already surged by 7.3 and 6.4 percent. 

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^SPX data by YCharts

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Energy

Energy stocks continue to outperform as Oil continues to rise, and that rise likely will not stop anytime soon. WTI Oil has already surged by nearly 7.5 percent to start the year. From the looks of the chart for Oil, it seems more likely to see $75, before we see $60 again. 

oil

Consumer Discretionary Stocks

If Consumer Discretionary ($XLY) stocks are ripping higher, then Amazon ($AMZN) and Netflix ($NFLX) must be pulling the group up. But, it is Target ($TGT), up nearly 13.5 percent in 2018, then Netflix, and Amazon. 

target amazon netflix

But shares of Target, have rallied hard and look overextended. The stock has broken out of a multi-year downtrend, but has an extremely high relative strength index (RSI) reading, higher than 70, a reading over 70 indicates overbought levels. It means the stock could be due for a pull-back or period of sideways consolidation. 

target

Netflix

Netflix shares have gone into beast mode, and one can only imagine what the expectations are going into earnings. The technicals suggest the stock is overbought at the current price, and it has to make any investor think we get a sell the news response after results. I for one do not like seeing this type of price action going into an earnings report. It likely means expectations could be approaching unachievable levels. 

nflxThe options set to expire on February 16, are pricing in a nearly 10 percent move up or down for the online streaming media giant, using the $220 strike price. Huge! It seems likely that spread gets bigger this coming week as well, with earnings slated for January 22. 

Amazon 

The expectations for Amazon continue to build as well, as the online retailer, moves higher, like Netflix. The long-straddle for expiration on February 16, using the $1310 strike price, only indicates a rise or fall of 7.5 percent. 

Amazon

Chip Stocks

The chip stocks, despite some of the negative headlines about the Spectre virus, have been performing reasonably well in 2018, with the PHLX Semiconductor ETF ($SOXX) now up 5.5 percent, and could be on the verge of a significant breakout. 

chip stocks

The chart above shows just how the ETF is making a run towards its earlier highs, last seen in late November before all the Apple iPhone supply issues started floating around. A rise above $183 signals a clear breakout, and given that the RSI and the price are trending higher, and the RSI is nowhere near overbought territory, I think we see that breakout. We just need a spike in volume to confirm the rise. 

It should not come to anyone’s surprise that Nvidia ($NVDA) and AMD ($AMD) are the best-performing stocks in the group, up about 18 and 16 percent, respectively. It’s no surprise either that Intel is the worst performing stock in the group down nearly 6 percent. 

Nvidia

Nvidia had its monster breakout, and to this point has been able to hold that breakout, staying above $219. 

Nvidia

AMD

Trying to predict the direction of AMD lately has been a nightmare. It feels like it can change course like the wind, and it doesn’t take much to make this stock rise or fall by 3-5 percent. But I’ll take a stab at it, and say that ADM looks like it’s set to rise.  The RSI has increased, and the recent consolidation in the stock bares the resemble of a bullish pennant. I shall guess, and say we see $14.25, some time in the not to distance future. 

Amd

Intel

For Intel, the long-term picture still looks solid, but in the short-term, the stock looks at risk of falling further, perhaps to as low as $41.50.

Intel

Tesla

What would the week be without some crazy call on Tesla? The stock appears to have had a significant multi-month breakout, and we can see the market tried to retest that breakout today. The stock held above the downtrend and the breakout continues to be intact. $385 seems possible, yes even from the current price.

TESLA

That’s it! More tomorrow for the week ahead. 

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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.

© 2017 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #chips #stocks #energy #consumer #target #amazon #netlix #intel #nvidia #amd #tesla

 

Roku Tech Nvidia Micron

Why Roku’s Stock Is Not A Streaming Play- Plus S&P 500, Nvidia, Micron and Tech

Why Roku’s Stock Is Not A Streaming Play- Plus S&P 500 Record, Nvidia, Micron and Tech

Roku’s stock continues to surge higher on calls of it being a streaming media play, however it would seem to me, to be anything but. Meanwhile, the S&P 500 continues to hit new record highs, while Nvidia and Micron continue to stuggle.

S&P 500 Record High

The S&P 500 continues to rally, up about 90 bps mid-way through trading on Friday. The index is now sitting at 2,675, and approaching the 2,700 level with about two weeks left in 2017. The S&P 500 just continue to rise, and is approaching the box we targeted a few weeks ago.

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S&P 500

Nvidia and Micron

We will continue to follow the trend in Nvidia and Micron because it has been so exciting to watch, and these two stock had been up by over 100 percent at one in 2017, and have given back sizeable amounts.

The rally today is not without Technology, in fact, the NASDAQ is up over 1 percent. Nvidia shares are up a little less than 2 percent as of 1:45 PM. Which given the steep pullback of about 13 percent, just doesn’t seem like much of a rally. Nvidia’s rallied failed today at the $191.50 resistance level, not a good sign.

Nvidia

Micron shares are struggling as well, up only 50 bps, this after a slew of analyst came out with positive comments leading up to Microns results next week. Again the price action today seems to differ from the positive analyst commentary.  It tells of a market that is not as positive on Micron as the analysts.

micron

Thoughts On Roku

Roku shares just continue to melt higher, up by nearly 11 percent this afternoon and are getting a boost after Needham said the recent Disney/Fox deal would be a positive for Roku. Noting that Roku might be able to negotiate its typical 20 percent revenue share for Disney’s new streaming product.  Additionally, it was said Roku could benefit should Disney’s sport and entertainment service take away from viewership from Netflix or Youtube.

I couldn’t disagree with this more. Roku is not in a position to negotiate anything from a company like Disney, in fact, Disney could very well decide to not to launch on Roku’s platform should Roku try to negotiate a 20 percent revenue share. Disney does not need Roku because Disney could simply work out a deal with Amazon, Alphabet, or Apple, or make a deal directly with TV makers like Samsung and have the Disney app pre-installed on every TV made like Netflix and bypass Roku altogether. Roku is doing nothing special on its platform. Roku needs players like Netflix, YouTube, and Disney on their platform. In fact Disney already has a streaming service on the Roku platform, one that I’m very familiar with, it requires a log-in from your cable provider.  Disney would likely demand a discount or a deal on pare with Netflix or YouTube, whom Roku now makes no money on, and does not expect too, as I have mentioned in some previous articles.

Roku is a commoditized product, it is not an ecosystem. Roku has a tremendous amount of competition in Chromecast, Fire, and Apple TV, and Smart TV’s. Readers here no my stance on streaming media, and the On-Demand Generation, it is the future, but it is the content providers that win, not the distributors like cable companies, or the media device makers.

Technology

We noted on December 4 Alphabet looked close to a bottom, and indeed it seems that was close to the bottom because shares have now rallied by nearly 6 percent then. Meanwhile, Amazon and Facebook have surged by almost 5 and 4 percent, respectively.

GOOGL Chart

GOOGL data by YCharts

That’s It for Today.


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Disney- The Market Finally Get’s It

Why The FANG’s Could Lead In 2018

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Why Tesla Could Double, And Nvidia Could Get Cut In Half

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Watch my interview with Cheddar

Top 3 Predictions for the 2018 Market

Seeking Alpha Author Michael Kramer joins Cheddar to give his top three predictions for 2018 market trends. The first one: Tesla will hit a $100 billion market cap! He explains why he’s comparing the auto company to Amazon in his analysis and prediction.

Free Articles Written By Mike:

AMD May Fall By 20% As Short Interest Surges To 5-Year High

Disney Is Poised to Break Out on Fox Deal

Why Starbucks Is Poised To Rise Over 20% In 2018

IBM’s Stock May Rise 10% In Short-Term Rally

Nvidia’s 11% Plunge May Be Just the Start

Why Qualcomm May Have To Pay 20% or More For NXP

Facebook Shares May Rise 20%, Options Trades Indicate

These 2 Suppliers Can Survive Without Apple

FANGs Are Cheaper Than Soda and Burger Stocks

Why Visa and MasterCard May Have Fallen Too Far

Biotech Stocks May See a New M&A Wave in 2018

Why Tesla’s Stock Could Rally Into Yearend

Disney’s Stock Advance Could Be Just The Beginning

Netflix Shares Could Be Headed Lower

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Michael Kramer and the Clients of Mott Capital own shares of  $DIS $NFLX $GOOGL

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.

© 2017 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #technology #chips #nvidia #micron #GOOGLE #roku #sp500

bitcoin

Why Bitcoin Is Poised To Fall, Plus Skyworks, Micron, Nvidia, Tesla

Skyworks, Micron, Nvidia Still Struggle, Bitcoin Reversal Pattern, Tesla

 

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Chips Still Struggle

Chip stocks just continue to melt, and I’m at this point I’m no longer sure what the driving force behind this melt is, as it seems completely overdone.  When looking at shares of Apple supplier Skyworks ($SWKS), the stock had now fallen nearly 19 percent since November 6, when it reported results that beat estimates and gave solid guidance. Shares are currently trading at less than 12 one-year forward fiscal 2019 earnings estimates of $7.98.

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SWKS Chart

SWKS data by YCharts

If the problem is Apple related, then it inevitably hasn’t been reflected in Apple’s stock, because those shares are only down by 1 percent during the same period. Broadcom, another Apple supplier, is down 6.7 percent. But Cirrus Logic and Qorvo two more suppliers have also been slammed, 14 and 17 percent respectively.

But the problem may very well be Apple related, just not on the supply side. Reports have floated for some time that Apple may be about to cut off its second supplier of chips in Dialog Semi. The shares of Dialog Semi have fallen from 44.09EU to 24EU since November 6, a decline of almost 41 percent since November 6. So why are the chips like Skyworks and the smaller suppliers getting crushed? Look at Dialog.

I had written a pretty detailed piece on December 7 for Investopedia, going through this, and the potential fall out. Skyworks and Qorvo have done an excellent job over the years diversifying their revenue streams, but still, have more work to do.

swks

At this point, if Skyworks trades below $94, it seems obvious the next stop is likely on towards filling the gap, in the low to mid-80’s. It would surely be a disappointing finish to what had been a strong year. But the market needs to play this game and will need to sort this out, and it will.

Micron

Micron continues to trade terribly, and can’t seem to hold any gains, even on a day when it gets an excellent commentary out of Morgan Stanley reiterating a buy and $55 price target. It tells of a stock that sellers are just taking advantage of any uptick to pounded it lower, and it means the stock is likely not done going lower.

micron

Nvidia

Nvidia is in the same boat as Micron, the bulls may not want to admit it, but stocks that were once might high flyers that can’t mount a meaningful bid, means their wings have been clipped and likely headed lower.

nvidia

Tesla

Tesla is a zero according to interview with Jim Chanos on CNBC today.  So most would know that I very much disagree with this viewpoint. In fact, I think it may be misguided on his part to believe it is a zero. Tesla has seen relatively high demand all year-long, while many of the high-end luxury automakers have struggled. Additionally, there are reports that Tesla’s Model 3 production is now nearing the 5,000 cars per week according to suppliers.

Remember Tencent took a 5 percent stake in Tesla this year, while there are plenty of other famed investors that would gladly take the other side of Chanos. Short selling is not easy, so I give him credit for being short for so long, considering the cost to borrow shares as well.

Biotech

It seems like the IBB goes up and down by one percent now on a daily basis, and I’m beginning to think that splitting the shares 3:1 did nothing but increase the trading and the vol.  The IBB ETF has now failed at $107 on three occasions, recently.

biotech

What do you think about this next chart? Does it make you want to run and buy it?

bitcoin pirce

Bitcoin

If you don’t know what it is, it is Bitcoin. I simply am not smart enough to understand what is going on here. Because when I look at Bitcoin, all I can see is a “currency” with no government backings, with nothing standing behind its value. $100 is worth $100 because it has the full faith and credit of the US government standing behind it. What stands behind the value of Bitcoin? Currency is worth something because it has the backing of a Government.

I will take a stab at this tonight, because quite frankly I’m bored, and because I’m tired of covering the same things.   Again I’m not expert in Bitcoin, nor do I wish to become one.  I am merely reading this like I would any other chart. That formation I circled in green below, I just do not like and looks very much like a head and shoulders, which means Bitcoin could be headed lower, and if I had to guess I’d say to $13,000 is likely the next stop.

Additionally, we can see the rise in the price from 11,000 to 17,000 the first time around came on higher and higher levels of volume. The more recent surge came on declining volume, while the relative strength index has fallen as well.  A bearish sign as well.

Take it for what it is worth.

bitcoin

Night!


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Disney- The Market Finally Get’s It

Why The FANG’s Could Lead In 2018

Tech Wreck V12.4.17 – More Room Too Fall

Machines Break Loose

Why Tesla Could Double, And Nvidia Could Get Cut In Half

Why The S&P500 Could Melt-Up Into Year End

S&P 500 Breakout- 2700?

Nailing The Biotech Breakout

 


Watch my interview with Cheddar

Top 3 Predictions for the 2018 Market

Seeking Alpha Author Michael Kramer joins Cheddar to give his top three predictions for 2018 market trends. The first one: Tesla will hit a $100 billion market cap! He explains why he’s comparing the auto company to Amazon in his analysis and prediction.

Free Articles Written By Mike:

AMD May Fall By 20% As Short Interest Surges To 5-Year High

Disney Is Poised to Break Out on Fox Deal

Why Starbucks Is Poised To Rise Over 20% In 2018

IBM’s Stock May Rise 10% In Short-Term Rally

Nvidia’s 11% Plunge May Be Just the Start

Why Qualcomm May Have To Pay 20% or More For NXP

Facebook Shares May Rise 20%, Options Trades Indicate

These 2 Suppliers Can Survive Without Apple

FANGs Are Cheaper Than Soda and Burger Stocks

Why Visa and MasterCard May Have Fallen Too Far

Biotech Stocks May See a New M&A Wave in 2018

Why Tesla’s Stock Could Rally Into Yearend

Disney’s Stock Advance Could Be Just The Beginning

Netflix Shares Could Be Headed Lower

We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get all our free commentaries sent directly to your inbox or follow us on Twitter.

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Michael Kramer and the Clients of Mott Capital own shares of $TSLA $SWKS

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.

© 2017 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #technology #chips #skyworks #nvidia #micron #bitcoin #tesla #broadcom #apple

micron

Trouble Brewing For Micron? Plus Nvidia, Acadia, Visa, MasterCard, Altria

Trouble Brewing For Micron? Plus Nvidia, Acadia, Visa, MasterCard, Altria

Parts of the market continue to perform, while other parts are continuing to struggle. The chip stocks Nvidia, Micron, and just continue to come under tremendous pressure, and what had been stellar years are beginning to become, well mortal.

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AVGO Chart

AVGO data by YCharts

Nvidia Shares

Nvidia’s trading pattern just continues to deteriorate and for now seems to point to a stock that could continue heading lower.  The next level of concern should come around $175, from there it is a long way down.

Micron

Micron shares attempted to rally, but failed to break resistance at $45 and have turned lower. What seems startling as we continue to look more closely at this name, is how earnings estimates are expected to fall over the next three years.

micron chips nvidia

As the chart below shows estimates are expected to fall from 7.98 in fiscal 2018, to $6.79 in 2019, and $6.21 in 2020.

MU EPS Estimates for 2 Fiscal Years Ahead Chart

MU EPS Estimates for 2 Fiscal Years Ahead data by YCharts

While revenue estimates show flat revenue growth over the next three years, which proves problematic for the stock going forward. No revenue growth plus earnings contraction equal margin deterioration.  2017 has been a good year for Micron and margin expansion, should it go the other way it could foretell further declines in the stocks. Look at the correlation between gross profit margins and the stock price.

MU Gross Profit Margin (Quarterly) Chart

MU Gross Profit Margin (Quarterly) data by YCharts

Interesting for sure.

Visa and MasterCard

Another set of stocks like Visa and MasterCard, which got slammed before have not only bounced back but are now higher than they were before the steep sell-off on December 4.

V Chart visa

V data by YCharts

A tale of two tapes, What does it mean? Not sure, it could be year-end profit taking or shorts that are starting to pile into the chip stock. Nvidia and Micron have seen an uptick in short interest recently.

NVDA Short Interest Chart

NVDA Short Interest data by YCharts

Altria

Talk about a comeback story, but have you noticed shares of Altria recently? It was crushed in the mid-summer, falling from $74 to under $61, and now they are back to $72. It shows how irrational the market can be at times, and why panic selling isn’t always the right thing to do.

altria

The FDA had purposed changing the rules around nicotine levels in cigarettes, and the stock tanked. But any change to the regulations would likely take years to happen if it ever happened. So now, the stock is  rising as reality comes back to the market’s sense.

Acadia And The ETF’s

Lastly, behold the effects of index funds and ETFs, the subject Acadia Pharmaceuticals. When you look at the chart of the IWM, the ETF for Russell 2000, and Acadia stock price, you don’t see much.

ACAD Chart acadia

ACAD data by YCharts

But when you do it as a ratio, it looks like the chart below. What is most fascinating is that the IWM has risen by nearly 32 percent over the past three years, while Acadia is down about 8 percent. But when Acadia falls, it stays at a ratio of nearly 5.25 to the ETF.

Fundamental Chart Chart

Fundamental Chart data by YCharts

The same happens when compared to the IBB.

Fundamental Chart Chart

Fundamental Chart data by YCharts

Interesting for sure, it tells us that sometimes stocks go up and down for no reason other than because ETF’s or indexes are going up and down. It is important to remember that when ETF are falling in price the underlying stocks that make up the basket of shares in the ETF are also being sold, and when ETF rise, they are buying the stocks in the basket.

In this case, we can see the effects because Acadia is very tightly held for the most part, with the Baker Brother and Fidelity owning nearly 35 percent of the shares, while index funds for Vanguard and Blackrock own another 11 percent.

Even more, the Biotech ETF ($XBI) owns 2.2 percent of Acadia shares, while the iShares Nasdaq Biotech Fund ($IBB) own 1.36 percent of shares.

Which way will Acadia go from here? Just watch the IWM and IBB and multiple or divide, it could be just that easy. That’s if you aren’t investing in it for the long-term.

Night…


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Why The FANG’s Could Lead In 2018

Tech Wreck V12.4.17 – More Room Too Fall

Machines Break Loose

Why Tesla Could Double, And Nvidia Could Get Cut In Half

Why The S&P500 Could Melt-Up Into Year End

S&P 500 Breakout- 2700?

Nailing The Biotech Breakout

 


Watch my interview with Cheddar

Top 3 Predictions for the 2018 Market

Seeking Alpha Author Michael Kramer joins Cheddar to give his top three predictions for 2018 market trends. The first one: Tesla will hit a $100 billion market cap! He explains why he’s comparing the auto company to Amazon in his analysis and prediction.

Free Articles Written By Mike:

Why Starbucks Is Poised To Rise Over 20% In 2018

IBM’s Stock May Rise 10% In Short-Term Rally

Nvidia’s 11% Plunge May Be Just the Start

Why Qualcomm May Have To Pay 20% or More For NXP

Facebook Shares May Rise 20%, Options Trades Indicate

These 2 Suppliers Can Survive Without Apple

FANGs Are Cheaper Than Soda and Burger Stocks

Why Visa and MasterCard May Have Fallen Too Far

Biotech Stocks May See a New M&A Wave in 2018

Why Tesla’s Stock Could Rally Into Yearend

Disney’s Stock Advance Could Be Just The Beginning

Netflix Shares Could Be Headed Lower

We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get all our free commentaries sent directly to your inbox or follow us on Twitter.

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Michael Kramer and the Clients of Mott Capital own shares of $ACAD $MA $V $MO

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.

© 2017 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #technology #biotech #ACADIA #MASTERCARD #VISA #MICRON #NVIDIA #ALTRIA #ETF #CHIPS #STOCKS