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The Stock Markets Rise May First Be Starting - Daily Run Down June 5

The Stock Markets Rise May First Be Starting – Daily Run Down June 5



The Stock Markets Rise May First Be Starting – Daily Run Down June 5

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Well, the Nasdaq closed at another record high and took out its old intraday high from back in the middle of March. It is surely feeling different these days, isn’t it? It is like all the doom and gloom just melted away with the summer heat. But ask yourself has anything changed since let’s say February? I do not think much has changed at all if anything we have received more confirmation over the past couple of months about what I have been trying to communicate about every day. Earnings are strong, the economy is strong, jobs are strong, and inflation is low. To me, that seems like a perfect recipe for a stock market that is likely to continue to rise.

A Strong Economy Lift All Boats

Do you want evidence of this? Is the chart below proof enough for you? Just eyeballing it, you see the correlation that exists. A healthy economy garners strong corporate earnings and a strong stock market.

US Real GDP Chart

US Real GDP data by YCharts

I know everyone focuses these days on things like inflation or rates, but why? What is the big deal if rates are 3 percent on the 10-year. Does it even matter?


The Days of Crazy Inflation and High Rates

I’m not even old enough to remember, but I have heard stories from my parents about them getting mortgages at 10 to 12 percent in the early 1980’s! It turns out rates went as high as nearly 17 percent at one point. Imagine borrowing a 30-year mortgage at 17 percent!

But despite all those crazy interest rates, the median home price in 1971 was $25,800, and by 1983 it was nearly triple at $73,300. Just look.

 

How can that be you ask? Because income levels were rising at a much higher pace. In fact, in 1981, personal income rose at nearly 13.8 percent. Today it grows at 3.8 percent.

Despite all the crazy inflation rates and economic malaise, the S&P 500 managed to rise an astonishing 44 percent from 1970 to 1982. Was it a smooth ride? No. But still

^SPX Chart

^SPX data by YCharts

Why? Because corporate profits were rising, and from 1970 until 1982, corporate profits nearly tripled!

Can rising rates or rising inflation kill the stock market? In short no. Not if profits are growing at an even faster pace.


A look on Back on Rates

The next time someone starts’s talking to you about the abnormally low-interest-rate environment, show them this chart. This is my favorite chart of all time, up there with the velocity of MZM.

You can not dispute this chart. The UK Consol Bonds provide more than 300 years for data showing just one thing. The period of 1970, 1980, and 1990’s was the anomaly, not now.

You can count on your hand the number of times before 1960 interest rates went above 5 percent.

In 2009 a very very very smart investor told me the best hedge against inflation are stocks.

I have never forgotten that, and you shouldn’t either.

-Mike

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-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. 

#stockmarket #inflation #rates #housing #prices #income #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

8 Stocks To Watch For The Week of May 21 - Mott Capital

8 Stocks To Watch For The Week of May 21 – Mott Capital



8 Stocks To Watch For The Week of May 21

michael kramer and the clients of mott capital own shares of Aapl, googl, and Netflix
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I have been writing the past few days about the moves in semis, biotech, and the small caps, but I thought today we could focus on the large caps, because eventually for the S&P 500 to continue its rise, the large caps are going to have to get involved.


Apple

It would seem relatively easy to say that Apple has been hands down the best performer in May rising by nearly 13 percent, followed by Facebook, up half as much, increasing by about 6.5 percent. Alphabet is up about 5 percent, while Netflix and Intel are both up about 3.5 percent.

AAPL Chart

AAPL data by YCharts

How much higher can Apple rise, hard to say based on the charts. I never like to try to predict how high a stock can rise when it has broken to new highs; it becomes a guessing game for the most part.

aapl

But it is among the cheapest of the large-cap stocks based on a one-year forward PE earnings multiple around 14.1, while the group has an average of a one-year forward pe ratio of roughly 18.5, with a median of 16.5.

AAPL PE Ratio (Forward 1y) Chart

AAPL PE Ratio (Forward 1y) data by YCharts

Shares are also trading at the upper end of its historical earnings multiple range, so it would suggest there is likely further room for Apple stock to rise. However, that rise may be limited from here over the next quarter until we start getting details on the upcoming iPhone launch or better visibility into next year’s estimates.

Fundamental Chart Chart

Fundamental Chart data by YCharts


Amazon

Amazon’s stock has been stuck right below its previous highs and has thus far been denied what could be a massive breakout. I thought it would have happened this past week, but the market had its thoughts on the matter. But it is quite clear that the RSI is still trending lower, and the volume has been tailing off in the recent days.  So, does the declining volume mean the sellers are waning, or the buyers? Tough to tell with no clear stock price direction in place. If the stock doesn’t break out this week, then I’m beginning to think we retrace to around pre-earning levels of $1500, and it is clear the buyers are the ones that are fading.

amazon

Analysts have gotten more bullish on Amazon as well, upping their earnings estimates for the year by a stunning 48.3 percent to $12.83 per share over the past month. But everyone knows when it comes to EPS, those numbers are BS because Amazon does what it wants when it comes to profitability. Revenue estimates have only climbed by 1.57 percent to an amazing $237.26 billion, a growth rate, of get this, 33.4 percent! That is absolutely a fantastic amount of growth given the size of the revenue base.

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Alphabet

Alphabet has a rising RSI, and that is a positive sign momentum is still building in the stock. In fact, even Friday’s price action is a positive for the future direction. Volume has also remained relatively consistent. I still see this one rising to $1175. Plus, analysts have upped their earnings and revenue estimates for the balance of the year, by 4.5 percent and 1 percent respectively. So again, it suggests positive investor and analyst’s momentum.

GOOGL EPS Estimates for Current Fiscal Year Chart

GOOGL EPS Estimates for Current Fiscal Year data by YCharts


Intel

Intel continues to grind higher, and momentum appears to be higher as well.

intel

Analysts have upped their eps estimates by about 7.6 percent to $3.85 per share while raising revenue estimates by 3.9 percent to $67.6 billion.  The setup and the momentum continue to be strong.


JP Morgan

It had looked like JP Morgan shares broke out, and while it may merely be the way I drew out the trendline, but it appears the breakout is in jeopardy.  Volume levels have been steadily dropping, but the RSI is trending higher, and if the stock can find a bounce early in the week than perhaps momentum can continue higher.

jp morgan

Boeing

Boeing shares appear to have broken out and can increase back to $370 could be in order.

boeing

Microsoft

Microsoft has broken out as well and appears headed higher.

microsoft

Netflix

Finally, Netflix looks like it may be getting to breakout.

netflix

Good Luck this week

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 #largecap #apple #microsoft #alphabet #microsoft #boeing #jpmorgan #netflix #amazon 

 

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 

amazon microsoft intel

Who Was It That Said Earnings Wouldn’t Save The Stock Market?

Who Was It That Said Earnings Wouldn’t Save The Stock Market?

Michael Kramer and the Clines of Mott Capital own shares of GOOGL,V,MA

Well, if there were any questions that a strong earnings season was not going to help lift stock, I think today’s price action officially blew that theory out of the water. Add on Amazon’s colossal beat, along with Intel and Microsoft, and tomorrow is likely shaping up to be another intense day.

One needs to remember companies like Amazon, Facebook, Microsoft, and Alphabet aren’t any companies,  these are among the most significant companies by market cap, within the top 5 of the S&P 500. When they go up big or down, they take the whole market with them.


Amazon

Amazon just blew away numbers, and crushed it on the bottom line, reporting earnings per share of $3.27 per share versus estimates of $1.25. It seems impressive just how much control Amazon has over its bottom line, it comes down to if they want to make a profit or not, not if they can make a profit, and that is something quite frankly, I have never seen before.

Revenues also beat in a big way coming in at $51 billion, vs. estimates of $49.94 billion. But more importantly, the company is guiding revenue estimates next quarter to $51 to $54 billion, primarily inline with estimates of $52.24 billion.

I know the stock is up big after, and between its monster 4 percent before results, and 6 percent move after, it now up about 10.5 percent in total, to $1,615.

The revenue guidance is very impressive to me and there is plenty to like in the quarter, well have to see where estimates going forward start coming. If we start getting meaningful revenue upgrades, then an argument can once again be made that Amazon as plenty of room to continue rising.

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Microsoft

Microsoft also reported strong results as well, with earnings beating estimates by $0.10, coming in at $0.95 per share, while revenue also top expectations coming in at $26.82 billion, vs. estimates of $25.78 billion. Again very strong numbers, and impressive levels of growth. Microsoft is basically unchanged in the after hours.

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0 For 5, What!

So lets see I’m gonna give myself an 0-2 as a follow-up to my five stock prediction article.   It makes my total predictions at 0 for 5, with the immediate after hours market reactions. But in all fairness, lets see where all these stocks are in a weeks time.

Beside I am right sometimes aren’t? LOL. Of course, I am, I nailed Visa, eBay, Intel, Qualcomm, Verizon, American Express, Netflix, to name a few. Look we all get things right and wrong, it is just the way it goes. You have to go with the flow.

Anyway, moving on then.


Intel

Intel reported a big beat, and the stock is also rocketing higher following results, and I continue to think this one is heading towards, $60. I targeted that level back in December. intel

I still think SQ has further to fall as well, perhaps towards $42.

dquare


Visa

Visa had a big day, and is trading at all-time highs, I think a rise above that upper trend line, accerlates the rise. The numbers were that good. I think upgrades are still to come.

visa


MasterCard

Pretty much where Visa goes, so too does MasterCard, so I expect good results from MasterCard as well, and could it too could be getting ready for a big push higher.

mastercard

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GE

Did you notice where GE stopped rising? Yeah at $14.85, I swear you really can’t make this stuff up!

ge

Good night, and thanks for reading!

-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 #ge #amazon #Microsoft #visa #mastercard #intel 

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

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

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Square’s Stock Is Facing Steeper Declines

Netflix’s Breakout May Boost Stock to Record Highs

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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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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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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 

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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The Stock Market Faces A Critical Test The Week of April 23

The Stock Market Faces A Critical Test The Week of April 23

The Stock Market Faces A Critical Test The Week of April 23

Michael Kramer and the Clients of Mott Capital own shares of NXPI, V, and SBUX

The week of April 23 will be a big week for earnings, and I already highlighted in my five predictions for earnings the outlooks for AMD, Alphabet, Microsoft, Facebook, and Amazon. But there are plenty of others such as Intel, Qualcomm, PayPal, Visa, Ford, General Motors, Starbucks, Exact Sciences, and the big Oil companies Exxon and Chevron.


Earnings Outlook

Yes, earnings do matter, and more important will be those outlooks for the coming quarters. According to data from Dow Jones S&P Indices, earnings are expected to climb by 40 percent in 2018 to $153,90 from $109.58  in 2017, that is a massive rise in profits, for one-year, and that leaves the S&P 500 trading at 17.35 times 2018 estimates. Earnings are seen climbing another 10 percent in 2019 to $168.64 and that leaves the S&P 500 trading at 15.8 times 2019 estimates. What do you think happens to those estimates should earnings be better than expected? That is right, full-year numbers come up; if they are weaker than predicted those estimates come down. In both cases, we find out stocks are cheaper than or more expensive than we thought. So how big are earnings and the outlooks? Very big.

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Chips

Semiconductors have been hammered over the past week, and with Intel, Texas Instruments, and Qualcomm reporting we are going to get a perfect sense if Taiwan Semi was a one-off, or if there is more pain in the group to come.

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Intel

Intel has been trending higher, and the relative strength index looks like a loaded coil, ready to pop. Meanwhile, the trend is overwhelmingly bullish, and that makes me think the stock pops higher.


Qualcomm/NXP

Qualcomm is near the low-end of the range, and perhaps we get some good news this week on some progress regarding the NXP Semiconductor deal. The NXP deal is a massive deal for Qualcomm and is extremely important to drive future revenue growth for the company.

qualcomm

As a shareholder of NXP, I’d love to get my $127.50 per share, from Qualcomm. But I’m more than okay if they don’t, because I continue to love this company going forward as a standalone, especially when trading 12.5 times next year earnings.


Starbucks

Starbucks has been trending higher, but every quarter has been met with disappointment. It will come down to same-store comps, and growth in China this quarter.

Despite all the headwinds this company has faced, an all-time is within reach.

 


Exact Sciences

Although my trading channel may be to narrow, the direction of the trend seems to be one way.


PayPal

The trend in PayPal is lower at this point, and the RSI is trending that way as well. Support at $73 is extremely important in this case, should PayPal fall.


Visa

Visa has been in a channel now for some time, and it appears shares and the RSI have both broken out from a downtrend, with a positive setup in place.

visa

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Exxon

Exxon shares can’t get out of a long-term downtrend, and while support at $72 held, this stock is not going anywhere until it breaks above that downtrend.

xom


Chevron

Chevron may have room to rise towards $135.

chevron

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Ford

I think the Ford chart is self-explanatory.

That is gonna be it. Good Luck

 

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Tags: #stockmarket #sp500 #amazon #facebook #amd #alphabet #microsoft #earnings

5 Monster Stock Predictions For Earnings During The Week of April 23

5 Monster Stock Predictions For Earnings During The Week of April 23

5 Monster Stock Predictions For Earnings During The Week of April 23

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

With earnings seasons underway, the intensity picks up in a big way this coming week, with Alphabet kicking things off this Monday afternoon, and then companies like AMD, Qualcomm, Facebook, PayPal, Amazon, Microsoft, and Intel later in the week. I have highlighted and attempted to predict the direction of the stocks following results, for five stocks, Alphabet, AMD, Facebook, Microsoft, and Amazon. Hope you enjoy, and good luck.

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Alphabet

Estimates

Shares of Alphabet have a one-year forward PE ratio of about 22, putting it among some of the cheapest technology companies. Analysts are looking for the company to report that first-quarter earnings fell by 7 percent to $9.28 per share, while revenue is expected to climb by over 22 percent to $30.26 billion. Revenue estimates have been creeping up since the start of the year, from $29.43 billion, according to Ycharts, a rise of 1.78 percent.

Options

The long straddle options strategy for expiration on May 18, are not pricing in a massive move in Alphabet shares, a rise or fall of only 7 percent, placing the stock in a trading range of about $1000 to $1150 from the 1,075 strike price.

The implied volatility is currently around 47, and that suggests a one standard deviation move of about of 6.5 percent, so again not a huge move.

Technicals

The technical’s are sending mixed signals, but that seems to be the case with every stock chart these days. The stock price recently filled a gap at $1,096 but failed to break above that resistance level. But there is a clear uptrend in the chart currently, and the $1,000 level acted as a firm support level during a time that saw very high volume levels. Additionally, it is clear that volume declined as the stock settled in around $1,000 support, which would suggest that selling pressure was easing, resulting in the stock move higher. Additionally, the relative strength index (RSI) reached an oversold condition in mid-February, and that lead to an RSI that is rising and trending higher, while the downtrend in the RSI had been broken.

googl

Price Target

The average analyst price target would suggest a rise of about 17 percent, to $1275.

The underlying technicals are bullish; the options market seems not to be looking for a big move in shares of Alphabet either, which likely implies no big surprises, while analyst trends in revenue and earnings have been relatively steady.

It would seem to suggest to me that the market is set for shares of Alphabet to rise post-earnings.

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AMD

Estimates

AMD is expected to report on April 25, and analysts estimates are expecting revenue to rise by 59 percent to $1.566 billion, while earnings are forecast to be flat at $0.09 per share. That doesn’t give me a warm and fuzzy feeling. It would suggest two things going into these results, a risk of a significant miss or a significant beat. But based on the latest set of results from Lam Research and Taiwan Semi, it makes me a little bit concerned for a miss; there seem to be a tremendous amount of operational risk here such as declining margins, or revenue falling short.

Options

The options market appears to agree, because the long straddle options strategy is pricing in a rise or fall for the stock of 13.7 percent by expiration on May 18, from the $10 strike price. It places the stock in a trading range of $8.65 to $11.35.  The puts at the $10 strike price out weight the call by a ratio of nearly 2:1 with 51,000 open put contracts to approximately 25,000 call contracts, again a bearish indication.

The term structure of the implied volatility implies a tremendous amount of volatility too. The near-term options have an implied volatility level over 90 over the next seven days, and that also means a rise or fall in the stock about 12.5 percent.

Technicals

The technical chart is also bearish at this point, with a clear downtrend in place, while failing at resistance at $10.70. The RSI is also trending lower, while volume levels have yet to reach a capitulation type of moment.  Should the stock rise on better than expected results a jump to $11.70 seems possible, while bad results could see the stock fall to early April lows around $9.

Analyst Price Targets

The average price target on the stock has been trimmed since the start of the year falling to $13.77 down from $14.04, a decline of nearly 2 percent. Meanwhile, of the 31 analysts that cover the stock 35 percent rate the stock a “buy” or “outperform,” while 45 percent rate it a “hold,” and 19 percent rating it an “underperform” or “sell.”

All of these signals appear to be negative and suggest the market seems setup for shares to fall post results.


Facebook

Facebook’s results are going to be huge, as investors await commentary on the fall out from the Cambridge Analytica data scandal.

Estimates

Analysts are looking for Facebook to report that earnings fell by 1.75 percent to $1.34 in the first-quarter, while revenue is seen rising 42 percent to $11.42 billion. Facebook naturally will significant expenses in the future when it comes to putting more staff in place to better monitor what is happening on its platform. In fact, analysts have trimmed their earnings results for the quarter from $1.38 per share since March 19.

Options

The options market has an implied volatility of roughly 55 percent, and that suggests a one standard deviation move of about 7.6 percent, putting the stock in a trading range of $153 to $179.

Technicals

The technical chart still has a solid downtrend in place, but the big volume levels in the stock around $150, also suggest a current floor in the stock. The RSI also hit oversold levels at the end of the March, but, it too still has a solid downtrend in place.

facebook

Other Factors

Rising cost continues to be a significant issue for Facebook going forward, while it is also unclear how users are responding, and the overhang of potential regulatory issues loom.

It would not be surprising to see a retest of the $150 lows following results.


Microsoft

Estimates

Analysts estimates see Microsoft earnings climbing by 16.5 percent when it reports fiscal third-quarter results to $0.85, while revenue is seen jumping by only 9.5 percent. Analysts are bullish on Microsoft and have been raising their price target on the stock since the start of the year, pushing the price target to $105.71, up by 13.15 percent since January 5, from roughly $93.40.

Options

The options market is not implying a big move in shares of Microsoft post results, with an implied volatility of roughly 44 percent. It represents a rise or fall of 6 percent. The $95 Calls set for expiration on May 18 outweigh the puts by a ratio of 9 to 1, with almost 39,000 open call options versus 4,000 put contracts. The number of open call contracts is a sizeable dollar bet at that strike price worth nearly $11.8 million.

Technicals

The chart is sending bearish indications, with an RSI trending lower and falling volume levels as the stock price continues to rise, two bearish divergences. Meanwhile, the long-term trend is higher though, and that is a still a bullish signal.

The options market and analysts price target are both overwhelming bullish, and with such a big jump in revenue during the quarter, it may not be too hard for the company to top earnings estimates. The real test will come should shares be able to breakout technically and rise above $97. Be mindful of a gap higher following results, only for that gap to be refilled.

microsoft


Amazon

Estimates

Amazon’s stock is up nearly 31 percent on the year and has been among the best-performing stocks in the market. Analysts estimates are looking for revenue to have climbed by 41 percent, to $49.92 billion, while earnings are seen falling by nearly 18 percent to $1.22 per share. Amazon has a history of being incredibly inconsistent when reporting earnings, with either big beats or significant misses. It all comes down to how much the company is investing in R&D and such during the quarter.

Options

The implied volatility is at 61 percent, and that means shares could rise or fall by 8.5 percent, putting the stock in a trading range between $1398 and $1656. The options set to expire on May 18 at the at the $1530 strike price have put to call ratio of about 1:1, with 4,900 open call contracts to 4,500 open put contracts.

Technicals

There is a long-term uptrend in the stock, but the RSI has turned bearish, with the RSI trending lower. There was a significant surge in volume when shares reached $1360, and that would seem to be strong support for now. But with the divergence in the stock price and the RSI, it would suggest that shares still have further to fall, after results.

amazon

Hope you enjoyed the 5 predictions for earnings for the coming week.

-Mike

 

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Why Big Bank Stocks Are About to Crumble

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Square’s Stock Is Facing Steeper Declines

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

Tags: #stockmarket #sp500 #amazon #facebook #amd #alphabet #microsoft #earnings

stock market sells off again as new reasons emerge

Stock Market Sells-Off Again As New Reasons To Sell Stocks Emerge

Stock Market Sells-Off Again Has New Reasons To Sell Stocks Emerge

The stock market fell again today, honestly, it doesn’t matter because the reason shifts on daily basis. Rising rates, inflation, trade wars, technology stock valuations, Amazon, politics, more trade wars, now its Apple and yields again! Ugh. Exhausting to say the least.

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Apple

I’m not talking about Apple; I’m not, it isn’t worth the time of day. Apple gave guidance of between $60 and $62 billion; analysts have been slashing their estimates since the start of the year and are currently sitting at $61 billion because that is the mid-point and it is the most comfortable place for them to live. The markets have not worried about iPhone sales since the beginning of February, and up until yesterday,  Apple was up over 5 percent on the year. The Taiwan Semi news was not good, it should not have been enough to send Apple’s stock down 7 percent in two days.

It tells us two things, well three things; investors have a short-term memory and forgot about Apple’s iPhone weakness, as they were bidding the stock up from the lows around $150 in the middle of February. Second, they were looking for a better than expected results, or three; they were not paying attention when Broadcom said the same thing last month! Come on.

That is me not talking about Apple, too.

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S&P 500 – Broader Stock Market

Moving on, the S&P 500 fell by over 80 bps, today, well because of Apple dragging down the whole sector with it.  The bigger question is where is this market genuinely going? All I can tell you at this point is that each low has not been lower than the previous, and that shows us in an incredibly bizarre way; the stock market is still trend higher.


Technology

Even the XLK technology ETF, managed to hold on to support around $66 and is still firmly within its long-term channel.

technology


Bonds

Why did I mention Bonds, because the 10-year got to 2.95 percent. First people are concerned the yield curve is too flat., now those concerns shift to yields on the 10-year nearing 3 percent, blah blah blah.

Well here is the thing, the US 10-year / German 10-year spread is at a fascinating point as of today. Now, let’s see what happens next week? Do the European bond buyers rush back to US Treasuries and start purchasing Treasuries? Maybe.  It would surely not be the first time.

yield spread

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Dollar

Not only that, the dollar index has yet to breakout over 90.50.

dollar

Unforuatnately, the bond market is getting a lot of assistance from global bond buyers, taking advantage of our higher interest. That has helped to keep a lid on yields rising significantly on the long end.

To this point, the dollar has gone nowhere, and without the dollar breaking out and start rising significantly, I can’t see yields on the long-end getting much higher at this point. Perhaps they peak right around 3 percent, after all, it was one of my ten predictions. But until the dollar breaks out, and the global bond buyers step away, I think this may be the upper end of the trading range.

I have a few other things on my mind, but well save those for tomorrow or Sunday.

That is it; I have a pounding headache.

-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.

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Tags: #stockmarket #sp500 #bonds #yields #apple #dollar

 

 

 

 

stock market apple iphone suppliers

Here We Go Again, Bring On The Apple iPhone Worries


Here We Go Again, Bring On The Apple iPhone Worries

Michael Kramer and the clients of Mott Capital own shares of GOOGL and TSLA

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I talked yesterday about the importance of today’s trading action, and for the most part, the market’s decline on the day doesn’t come as a surprise. The Algo’s just weren’t ready to let the S&P 500 breakout, plus with the negative headlines out of Taiwan Semi, and the pressure it put on Apple and its suppliers, it was too much to overcome.

But the charts tell a tale of markets that retested support at 2,691 and for the most part that held, and the S&P 500 managed to close above it. The action in the market today, was nothing that terrible or anything to be too worried over.

SPX

The VIX was up just a touch to about 16, again, nothing alarming.

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Technology Stocks

The technology sector also tested support today, around $67.11, and held, and that is also a positive.

technology


Semis

So I guess I’m surprised by the markets reaction’s to Taiwan Semi noting soft smartphone demand. But is this new? Didn’t Broadcom tell us this back in March after reporting results, and February when they revised guidance, that they saw weakness in Wireless? Has it deteriorated that much in about four weeks? Anything is possible, but the fact that Apple iPhone demand is weak is surely not news.  Apple reports on May 1, so you have a good week of the market going back and forth over this.

Don’t forget the same exact thing happened last quarter going into Apple’s reports, let’s see where this goes.


Tesla

Tesla had a nice uptick on a down day; all these emails mysteriously keep leaking out about Model 3 production rates. Coincidence? Doubtful.  But it is undoubtedly worth nothing when a stock goes up on a weak trading day. Perhaps the buyers are returning.

Alphabet

Alphabet is another stock that pieced together a good day of trading as well, with the stock nearing $1,100. The company reports on Monday after the close, and I would not be surprised to see if shares continue to rally going into the earnings print, Monday after the close of trading. The stock is among the fastest growing of the top 25 stock in the Select Sector SPDR Technology ETF, XLK, and it carries a one-year forward PE ratio of only 22 times 2019 earnings estimates of $48.40.

Alphabet is expected to deliver earnings and revenue growth of 15 to 16 percent in 2019 and 2020.


Microsoft

But then there is Microsoft trading at 24.3 times 2019 earnings of $3.95 per share, while it is forecast to grow earnings and revenue by only 8.5 to 9 percent. By the way, how have investors not roped Microsoft into this whole social media, advertising,  Facebook regulatory issue? Does Microsoft not own Bing? You know the search engine.  They also own that small social media thing, you know, LinkedIn, the one that collects users professional and career data.


General Electric

Tomorrow we get GE’s earnings, and from a market standpoint I doubt it matters. But the stock is running out of room to rise at this point, with a downtrend around 14.25 and resistance around 14.95. For now, the trend is still lower, and unless management comes out with something very positive and unexpected, the current downtrend likely remains in place.

ge

That is it; I have a pounding headache.

-Mike

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Tags: #stockmarket #sp500 #microsoft #alphabet $tesla $technology #apple #suppliers

 

Micron, Amazon, Halliburton, Anadarko All Have Big Breakouts

Micron, Amazon, Halliburton, Anadarko All Have Big Breakouts


Micron, Amazon, Halliburton, Anadarko All Have Big Breakouts

The S&P 500 got up to 2,713, and it stalled out at that level. It makes tomorrow price action critical, because should it rise above 2,713 it signals a strong breakout. If it should move lower tomorrow, it could serve as a double negative, with a filled gap and a reversal, while failing at resistance. I’d like to see the S&P 500 rise firmly above 2,713 tomorrow, and with some significant earnings coming up next week it could set up a positive tone.

S&P 500


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Technology

Technology names continue to trend higher, as well, and I think also it serves as a positive for the broader S&P 500.

technology

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Micron

Micron stock had looked pretty lousy, and at the open, the stock seemed like it was going to cave and give us that big break lower. But then shares jumped sharply higher and took off. When looking at the hourly chart you can see a reverse head and shoulder in it, and couple it with the breakout, and the narrative suddenly changed.  It was just the other day, I could make a strong case for shares retesting the April lows, and that looks completely wrong, now. $55.50 is the next level to watch with a clean rise above that level sending the stock easily on towards $58. It isn’t easy reading these chart usually, and in this crazy market, it feels downright impossible some days.

micron


Amazon

Two interesting points on Amazon today, first word the company has over 100 million prime subscribers. A considerable number and extremely impressive. The stock jumped in the after-hours on the news, but I am not sure it changes anything, for the stock.

The stock broke out today, can I say I’m surprised? No. I thought it would retest $1,440 first, but I guess the market had something else in mind. Next weeks earnings results will be a huge deal, and I think it may take a massive beat to advance shares further. But that doesn’t mean the stock can’t rise back to $1,600 in the interim.

I still think based on the current sales estimates,  shares are expensive based on historical sales multiples, but a solid beat and strong guidance would up those estimates, and likely lower the valuation. So the upcoming results are a big deal, and the guidance will be even more significant.

amazon


Roku

Second, Amazon announced it would partner with Best Buy to sell TVs. Roku’s stock fell hard on this news. Did the market finally realize that what Roku does isn’t so unique? Well, it isn’t, any TV maker can do what Roku does, and the rise in the stock yesterday due to ESPN + becoming available, as I said yesterday, was a complete joke. Roku is not the second coming of Netflix. By the way, if Netflix thought Roku was such a game changer, why did Netflix spin it off Roku? Netflix didn’t want to become a streaming media device company, and potentially have barriers to other streaming devices.

roku

Energy

These energy stocks are starting to fly, and perhaps some of the money these financials are losing is going into energy companies. As I have said, Oil looks primed to rise to $75, and it is getting close to that price, now up to nearly $69.


Halliburton

Halliburton shares have broken out rising above $50.25, and should oil keep rising a move towards $58 seems like the next stop.

halliburton


Anadarko

Anadarko broke out as well rising above $63.75, and resistance area comes around $73.

apc

That is going to be it.

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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 #energy #oil #amazon #micron #roku #halliburton #anadarko #technology #energy

stock amrekt soars netflix april 17

Netflix Jumps, While IBM Slumps, Roku For Real?


Netflix Jumps, While IBM Slumps, Roku For Real?

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If the stock market needed the narrative changed then Netflix did just that. The S&P 500 jumped by over 1 percent on the day. The jump helped to the fill the gap at 2,713 was filled today in the S&P 500, closing at 2,706. We got right up to that resistance level in late trading and managed to back off by the end of the day. It will not surprise me if we retest the 2,691 level again tomorrow, before moving higher again. The next significant resistance level comes at the downtrend around 2,740.

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spx


VIX

The good news is that the VIX continues to decline and is back to 15. We want to see the VIX continue to fall, and I think as strong earnings continue to roll-out and the narrative in the marketplace shifts, that will be the case.


Netflix

Netflix was a prime example of that today with shares of the stock soaring above its old high, and rising to $334 up 9.2 percent on the day. $333 will now serve as support, and we can see that held today when tested.

netflix

IBM

Interestingly IBM posted what on the surface looked like substantial numbers. But if you want to be picky, gross profit margins slipped by 60 bps, to 43.8 percent. Total expenses were up; net income was down versus last year. Even on non-GAAP basis gross profit margins were down to 43.7 percent from 44.4 percent a year ago.

When adjusting for currency IBM’s revenue was mostly flat on the year, and this strategic imperatives part of the business, that is supposed to be the big growth engine, only grow by 10 percent on the year adjusted for currency. That cloud number seems awful low? 20 percent growth? 14 percent adjusted for currency? Amazon’s AWS only grew 42 percent last quarter. How does that 20 percent sound now? I guess we will know how good or bad that number is when Alphabet, Microsoft, Amazon start reporting next week.


Amazon

I hope for Amazon’s sake cloud didn’t slow to mid-teen growth rate, if so watch out. The chart is in an interesting spot here, we never entirely made it to $1,250, but we got to about $1,360. The stock finally firmly crossed over $1,440, and now the next big test comes around $1,500, where a downtrend meets a resistance level. Breakout and jumps quickly to $1,578. Fail, and you fast fall back to $1,440. Which way do I think it goes? Well, I believe it sees $1,440 again before it sees $1,578. We’ll see.

amazon


Roku

So I want to know did Roku go up to because it launched the ESPN app on its platform, or because Point72 has a 5 percent in it; because neither was a good reason for the stock to rise by 9 percent. I’m sure if ESPN + isn’t on other platforms, it will be soon. But yet the stock was up how much? 9 percent? That is a joke right?  I never said the market made sense.

That’s it!

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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 #netflix

 

 

 

Netflix’s Monster Beat Continues To Show Why Shares Are Still Cheap


Netflix’s Monster Beat Continues To Show Why Shares Are Still Cheap

Expectations were high for Netflix, and the company delivered in a big way, adding 7.41 million new subscribers in the quarter. Total subscribers now stand at 125 million, and the company is guiding for that number to climb to 131.20 million at the end of the second quarter. The beat was driven by international growth as we expected, with nearly 5.46 million new subscribers in the quarter, down sequential from 6.36 million, but again google trends was suggesting strong international growth, but not as strong as the last quarter.

It was US growth that was very strong, with nearly 1.96 million net adds, primarily in line with the fourth quarter. Surprising to me. The strong domestic subs were very impressive, with the growth coming despite the price hike last fall, and suggests the price is likely still too low. I think even at $19.99 a month it would not hurt the companies ability at growing revenue.

Guidance was solid too. There is nothing from what I can see from my quick look that suggests anything bad.

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145 Million Subs By Year End

The company is now on pace to eclipse 145 million by the end of 2018, based on my model.

 

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Jumping Afterhours

The stock is trading around $325 in the after-hours, and that clears resistance at $323, but we shall see what happens in the morning. I expect that the stock will be up tomorrow.

netflix


Can Still Rise

The stock is likely still cheap based on expectations of earnings growth of around 55 percent in 2019 and 2020, with earnings forecast in 2020 of $6.58. A PEG ratio of 1, gives the company a 55 earnings multiple and the potential to rise to around $360, based on those 2020 estimates. It sounds crazy, I know, but remember Netflix gave guidance of $3.934 billion for the second quarter, and that comes ahead of estimates of $3.893 billion. It means that revenue estimates need to come up and so do all those earnings estimates.


ARPU Second Ingredient

Additionally, the ARPU for the latest quarter rose to $9.86 per month, up from $9.31 per month in the fourth quarter. Also based on those estimates, ARPU is expected to be $10.01 for the second quarter.  ARPU is trending higher and looks to be heading towards $11.75 per month by year end too. The higher ARPU climbs, plus the addition of more subscribers has a multiplying effect on revenue.

With 145 million subscribers at $11.75 per month, the company could be looking at total revenue in 2019 starting the year around at over $20.5 billion. That is about $1 billion more than current estimates of $19.47 billion.

International Growth

International growth remains in the early innings, and I expect this part of the business will only accelerate. Additionally, one must remember that ARPU in the latest quarter for the international segment was only $8.70 per month vs. $10.70 per month for the US. So the ARPU is likely to continue to climb as well in the international segment.

S&P 500

The S&P 500 got up to 2,686, within striking distance of 2,691, which I noted yesterday as the next level of resistance. I drew in a new uptrend in the S&P 500 chart for the first time in a while, as it has become a little bit more clear now.

sp500

A rise above 2,691 puts the S&P 500 on pace to reach 2,713, filling a big gap, from at the end of March. The Vix also fell below 17, as volatility continues coming out of the market.

Back tomorrow.

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Tags: #stockmarket #sp500 #netflix

 

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.

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

Tags: #stockmarket #sp500 #microsoft #cisco #biotech $agios

banks bets blame netflix tesla amazon

Banks, Bets, Breakouts, and Blame – Freaky Friday


Banks, Bets, Breakouts, and Blame – Freaky Friday

It was another exciting day in the stock market. Nah not really,  it was mostly uneventful. Technicals continue to dominate trading, with the S&P 500 testing resistance at 2,672, and testing support at 2,647, at the end of the day, we closed at 2,656.

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S&P 500

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Taking A Look The Banks, And Prepping For Earnings Season

Banks

As of right now, it would seem that the financials will not be the group to lead stocks higher. JP Morgan, Citigroup, and Wells Fargo reported results and all three were down despite posting good results. It could be a combination of things at play, expectations were for better, all the good news has been baked in, or investors are concerned about slowing earnings growth. It doesn’t matter what the reason was, but what seems to be crystal clear to me at least, is that the banks will not be the group to lead this market higher.financials


Yields

I think for the most part the treasury yields on the long-end of the curve are not giving in and are refusing to rise, and again I think that is a function of the low yield environment globally. The Fed can control the short-end of the curve, but the Fed has no control over the longer-end the yield curve. As long as the free market controls the long-end of the curve, I think the yield curve may continue to flatten, and that is very bad for the banks and interest income.

The spread between German and US bond is fairly steep at over 2.3 percent, and that is likely a problem

yields

In fact, I continue to believe the 10-year is going back to 2.6 percent.

Amazon

Amazon failed to stay above 1,440. Again, bad!

amazon

Nvidia

So now, Citron is betting Jim Cramer $230k that Nvidia’s stock will be below $230 in 12 months.

All I can say to Citron is that Nvidia is a tough stock to bet against. I have never once traded a share of Nvidia long or short. But I have sure written plenty on it, and I for some time I was extremely negative on it, probably from around $100 to $200, :). Every time I thought Nvidia would crack, or revenue and earnings would slow, they didn’t. To this point, it still may be easy to bet shares of Nvidia continue to rise than to bet they shall fall. Good luck to those two, I’ll remain an onlooker.


Netflix

Netflix shares broke out today, and it managed to close above the downtrend. That is a positive, considering the stock is heading into results Monday after the close. The stock got a couple more upgrades today as well. I will put a pre-earnings look on Sunday, again.

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Tesla

Elon Musk was busy on Twitter today, first challenging the economist and claiming Tesla will be cash flow positive in third and fourth quarters, and then taking the blame for excessive automation causing problems in production.

I have no idea if Tesla will be cash flow positive or not by the third quarter. Lets first see how the first and second quarters go.

The one thing I do know is that that stock can’t get over $303.

tesla

Oil continues to rise and is getting closer to our $75 target.

oil

That’s it, see you Sunday! No commentary tomorrow, I’m taking the day off!

-Mike

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Recent Videos:

Taking A Look The Banks, And Prepping For Earnings Season

Passive Investing May Not Work In 2018

Stock Surge, A Breakout Is Close

Trade War Worries Returns

Free Articles Written By Mike:

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3 Biotech Stocks Analysts Have Been Too Bullish On

Bank of America Shares Seen Rising 8% Short Term

Visa’s Breakout May Boost Stock by 10%

Amazon’s Stock Faces Wild 10% Swings on Earnings

Why J&J’s Fallen Stock Is Still Too Pricey

Facebook Traders See Stock Rising 10%

3 Technology Stocks Facing Steep Declines

Why Nvidia’s Bulls May Be Way Too Bullish

Walmart Options Traders See Stock Surging 12% Short-Term

Citigroup Shares Poised to Plunge Further

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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 #sp500 #amazon #tesla #nvidia #netflix #jpmorgan #banks

 

 

technology stocks

Technology Stocks Are Getting Ready To Go Higher, Plus Much More


Technology Stocks Are Getting Ready To Go Higher

There were a couple of positive developments today. First, the S&P was higher, by 83bps, and closed at 2,663. Next, the close above that pesky resistance level at 2,660 we had been watching. Today also established that 2,672 is now the next resistance area. The last two times the S&P 500 got to 2,672 it was followed by two nasty downdrafts, resulting in a fall of about 3 percent back to 2,600, each time. A rise above 2,672 would be an immensely positive sign for a continuation of the most recent rally.

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S&P 500


Technology Stocks

A new trend line was born today for the technology sector, XLK, and for the first time in a while, the technology sector has a direction other than down. $67.10 continues to be a resistance level, but should it rise above resistance to say $67.50 it gives the ETF a perfect shot of filling the gap at $69.25.

technology

Nvidia

Nvidia looks to be heading back towards $245.

nvda

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Consumer Stocks

Discretionaries are continuing to struggle after hitting resistance around $102.

consumer

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Amazon

For right now, Amazon maybe the only stock capable of lifting the entire group. First, because it has a nearly 20 percent weighting in the ETF, second because today it closed above $1,440, a mild positive. There are still plenty of hurdles for Amazon to overcome; the most obvious is that the stock needs to stay $1,440.

amazon


Netflix

Netflix appears to be setting up for a breakout towards $322. The company reports results on Monday after the close; I will have a closer look at it over the weekend.

nflx


BANKS

Tomorrow will be a big day for the banks, with JP Morgan, Wells Fargo, and Citigroup all reporting before the open.

JP Morgan is slightly breaking out

jp morgan

But the setup in Citi doesn’t look nearly as strong.

citigroup

If the banks want to be a leading sector in the stock market, tomorrow will be the day they can prove they are capable are leading or not.

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Acadia

Why is Acadia not back to $22 already, after the BS story from Monday? I was shocked to see the FDA made a statement on it.

The stocks downdraft proves once again you can’t believe everything you read, and that understanding what you are invested is so extremely important.

At this point, I’d be happy if we filled the first gap at $22, but the one at $30 would be a whole lot better.

acad


Tesla

You know, I was gonna end after Acadia, but then I saw this stupid analyst comment that Tesla is going to fall $84, because, get this, “increasing competition.” Are there no cars sold today? Is Tesla the only automaker in the whole world? Of course not.

I’m sorry, but Tesla has competition today and has had competition since the moment Elon Musk thought about making a car. A car is a car, and the thought that because Audi or Mercedes is going to start making an electric car, people are suddenly going to stop buying Tesla’s seems crazy to me. If someone wants to buy a Mercedes, they can get one right now. I do not think the world has become entrenched enough in the thought process of buying only green cars, that everyone is now running to Tesla. Besides, just how green are electric cars? The energy to power the battery needs to come from somewhere.  They are undoubtedly better than gas but come on; you still need the energy.

By the way, once again, the proof is the Chevy Bolt, how many cars did Chevy sell so far in 2018? A crappy 4,375.  How many in 2017 total? 23,297. Btw, they cost nearly 3 times less than a Model S, so why not 3 times the sales if the electric part matter so much?

People are buying a brand; they aren’t buying it because of the engine or motor type.

Good luck tomorrow

-Mike

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3 Technology Stocks Facing Steep Declines

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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 #sp500 #amazon #tesla #acadia #nvidia #netflix #jpmorgan #banks