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the stock market for the week of april 16

A Look At The Stock Market For The Week Of April 16 – Calm Is Returning


A Look At The Stock Market For The Week Of April 16 – Calm Is Returning

It is anyone’s guess just where the stock market goes this week; now with the addition of geopolitical risk from the airstrike over the weekend in Syria, it is one more thing investors can fret over. The S&P 500 finished the week around 2,656, and the stock market has virtually gone nowhere since the end of February.

S&P 500

 

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Volatility Measures

The S&P 500 put to call ratio is at 1.49, which means there are currently more open puts than calls, and that ratio is in the middle of the range and surely doesn’t seem alarming.

SPX Put/Call Ratio Chart

SPX Put/Call Ratio data by YCharts

The VIX index is below 18, and all of the indicators continue to indicate the fear level is continuing drop. We can see when exploring the options market for the $SPY, that the term structure for implied volatility is normal, and fell on Friday as well.

impllied volatitlit

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A Rise To 2,691

So if the events from the weekend are viewed as a one-off, which I think it will, then it should have no impact on trading. With fear levels continuing to fall, it would suggest that stock market will continue to stabilize around current levels and begin to work higher back towards 2,691.


Technology

Technology stocks will continue to be the focus this week, and with earnings for many of the big companies coming next week, we will want to watch how these companies are performing in the days leading up to these results.

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Microsoft

Microsoft continues to look weak and has a relative strength index (RSI) that continues to trend lower, despite a stock price that is still trending higher, and that is bearish divergence signal to me. In fact, volume levels haven’t been that strong either, a sign that perhaps interest in the name has been declining.

microsoft

While shares are nearly 4 percent off their 2018 highs, they are still up 8 percent on the year. Shares are trading at their highest one-year forward price to earnings multiple in years, and that one-year forward multiple comes to nearly 24 times 2019 earnings estimates of $3.95 per share. For that multiple you get earnings growth of only 8.55 percent in 2019,  if it seems like the stock is expesnive, you are not alone, I feel the same way.

MSFT Chart

MSFT data by YCharts


Cisco

Cisco doesn’t seem different Microsoft, with a  technical chart that looks relatively bearish. Cisco comes at a fair better valuation, and believe it or not, on better earnings growth. Cisco is expected to grow earnings in 2019 by nearly 11 percent to $2.87, while only trading at 15 times those estimates.

cisco

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Biotech

The XBI Biotech ETF has to this point avoided a massive double top formation, not breaking the neckline, and is managing to stage a relatively strong rebound. The next real test comes at $93.60, and we will need to watch closing for that to happen.xbi

If the group is to continue to rise it is going to need to come from the Agios, Spark, and Sarepta’s, three of the top performing stocks in the XBI, because it surely isn’t coming from Biogen and Amgen or the likes.

Agios

I had written in an Investopedia article, that Agios looked primed to fall to around $72, and sure enough, it did and then rebounded sharply off of support. It sure does have a strong uptrend in place, but the RSI continues to trend lower, and that makes this one’s further rise questionable.

agio

More tomorrow.

That is going to be it. Good Luck this week.

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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 #sp500 #microsoft #cisco #biotech $agios

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Tesla

Tesla and Biotech’s Have Soared, While Chips and Tech Still Struggle

Tesla and Biotech’s Have Soared, While Chips and Tech Still Struggle

The past couple of trading sessions have seen shares of Tesla rise from roughly $310 to $340, while biotechs have jumped from $102 to $107 on the IBB ETF.  Meanwhile, tech and chips have stabilized but are not out of the woods just yet.

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S&P 500

Stock prices continue to rise, with the S&P 500 getting closer to 2,700, and fast approaching the box we targeted just a few short weeks ago.

 

The S&P 500 is coming close to move above the February 2016- Brexit trendline we laid well over a year ago.  The two-hour chart below shows how that trend line became resistance a while back, and while the S&P 500 has been able to trade right along, has been unable to break above it.  Should the S&P 500 break above that trendline, my guess would be we see a meaningful acceleration in the price action of the market.

Tech

Tech shares have been able to retrace much of their losses from last week, but have not entirely escaped into safety. The downtrend in the Technology ETF ($XLK) is still very much present, and only a  rise above $64.80 would be a sign of the clear path higher.

Technology

Alphabet ($GOOGL) shares like the broader ETF have recovered much its losses but again has failed to break to new highs.

alphabet

Apple ($AAPL) shares are also still in a downtrend as well.

aapl

Microsoft shares have moved back towards all-time highs.

While Cisco ($CSCO) has also been able to continue to grind higher.


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 Semiconductors

One group that has not even come close to recovering is the semiconductor sector, with stocks like Nvidia ($NVDA), Micron ($MU), and Skyworks ($SWKS), still trying to get some upward momentum.  Micron is the only stock that has started trending higher, but then shares of the failed miserably at resistance at $45.

Micron

Tesla

One stock that has broken out and started to shows signs of life is Tesla, with shares trading back to nearly $341 just over the past couple of sessions.

tesla

A move above resistance around the $341, could send shares materially higher, perhaps back into the $370’s. Remember, Tesla will report delivery numbers three days after quarter end, and all eyes will be on the model 3. Additionally, the semi-truck reservations have been picking up steam as well, with Pepsi being the latest to order 100 trucks reportedly.

Read: Why Tesla’s Stock Price Could Double in 2018

Biotech

The biotech group has also had a big rally, with shares moving once again back to resistance at $107.

Biotech

Shares of Celgene ($CELG) have continued to move higher and are now in the process of filling the gap, which could see shares of the stock rise back to nearly $120.

celg

Biogen ($BIIB)  appears headed back towards $355.

biogen

That is for today. Lots of material to cover, but had to play catch-up.

 

Back tomorrow.

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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 #technology #biotech #tesla #celgene #biogen #alpahbet #microsoft #cisco #apple

 

Thematic Growth Investing

GE, Tesla, Celgene, Acadia, Cisco, Wal-Mart – Monster Review

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GE

It was a big week with some significant news, which started Monday morning with GE announcing it would cut its dividend, and lower its full-year 2018 guidance. Shares of GE ($GE) fell about 10 percent this week alone, and are now down by 42 percent year-to-date. With the S&P 500 up by over 15 percent in 2017 and underperforming, by,  get this, 57 percentage points.

GE Chart

GE data by YCharts

Tesla

The week ended with Tesla ($TSLA) finally showing off its new Semi-Truck. But perhaps most impressive was the new Tesla Roadster. Wow. Zero to 60 in under 2 seconds, 600-mile range.  Ferrari and Porsche were just put on notice,  that is for sure.

I don’t expect much out of the semi-truck business, to be truthful. The market is estimated at $30 billion a year in North America according to Bloomberg. It comes down to how much of the market share Tesla can capture. Even if they should win 10 percent of the market, it would add only $3 billion in revenue, and would likely be a drag on overall margins.

TSLA Annual Revenue Estimates Chart

TSLA Annual Revenue Estimates data by YCharts

According to Ycharts, Tesla is expected to have revenue of roughly $28 billion by the year 2020, which means the Truck could maybe add $3 to 4 billion to that if we aggressively target a 10 percent share right off the bat, which seems highly unlikely. But perhaps the technology being put into this truck could be easily converted into other products, like the Tesla Bus.

The most significant news out of the Tesla event wasn’t the truck or the roadster, it was the hyper-charger, which Tesla claimed could give the truck a 400-mile charge in 30 mins. I’d have to imagine that Tesla has figured out how to put this technology on all of their cars, which means every car could get a full charge in under 30 minutes.

Additionally, the idea that Tesla would be powering the hyper charger through solar energy stored in batteries is a genius idea. Again, once the company recoups the cost of the equipment and installation, the rest of the money Tesla makes on the charger is profit.

Additionally, once the Model S is equipped with the 200 kWh battery pack in the new roadster, which I can’t imagine is too far down the road, the range issue for the Tesla is officially dead. The Model S would likely be able to drive further on one charge than a car on a full tank of gasoline.

So while the truck and roadster stole the headlines, the real news was the hyper-charger and the 200 kWh battery.

I’m still waiting for the solar paint or solar roof panels on the car. The day will come.


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Biotech

Biotech has been absolutely crushed over the past month with shares of the Nasdaq Biotech IBB ($IBB), down about 8 percent, which is an improvement.

IBB Chart

IBB data by YCharts

The ETF appears to have bottomed out at the $300 -303 level again, as it did back in August. That region served as stiff resistance on the way up, and it shall act as strong support on the way down. It appears that ETF has bottomed and could be head higher again, back towards $320, as we previously noted during the week.

Biotech

The chart below shows that double bottom, and how quickly the ETF took out the $309 region, it seems like we could now fill that gap, at $322.

biotech

Celgene

One can get further confirmation by looking at some of the components. Celgene ($CELG) shares have broken out, rising above $102.5. Does the stock go straight up to $120, no but it is likely to head in that direction on both a technical and fundamental basis.

celg

Acadia

So why do we track and follow the ETF”s? First of all, it tells us the general direction of the sector, and it shows which direction stock within the ETF are likely to move. Acadia Pharmaceuticals ($ACAD) is a perfect example of this, with the way the stock goes up and down at multiples to that of the IBB. Just look, Notice anything?

IBB Chart

IBB data by YCharts

What about like this?

IBB Chart

IBB data by YCharts

Notice when Acadia and the IBB rise, the IBB trades at 7 to 8 times that of Acadia, but when the IBB falls, its trades at 11.5 times the price of Acadia. If you want to know which Acadia will go rise or fall just track the IBB if the IBB rises, Acadia rise and trades at a ratio of about 7 to one. If the IBB falls,  Acadia falls at a rate of about 11 to 1.

Cisco

csco

Cisco ($CSCO) shares have broken out to a level not seen since 2001, what is that 16 years! That is a long time to have to wait. Shares are likely going higher as well. But the stock could see a short-term pull before that longer-term rise happens.

It seems more than likely shares of the stock retreat back toward $34.50, filling the gap, before turning and making a run towards $45.

Wal-Mart

We’ll finish the week with Wal-Mart ($WMT) yes Wal-Mart, because it not every day that Wal-Mart trades like a high-flying tech stock. The share of the stock rose by over 7 percent to an all-time high, closing the week at $97.40. The company topped estimates when reporting its results this week, and its online business drove it.

wmt

That is a wrap.

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Michael Kramer and the Clients of Mott Capital owns shares of TSLA,CELG,ACAD

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: #GE #Tesla #Biotech #Celgene #Acadia #Cisco #walmart