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Michael Kramer and Clients of Mott Capital own Netflix
May 9, 2019
Stock Mentions: Roku, Amazon, Netflix, Micron, Nvidia, Alibaba, Boeing, Square
- S&P 500 Futures -22.50 points
- US 10-Year 2.44%
- Dollar Index 97.57
- VIX 21.61
- Oil $61.94
- Japan Nikkei -0.93%
- China Shanghai -1.48%
- Hong Kong HSI -2.39%
- South Korea KOSPI -3%
- Germany DAX -0.79%
- UK FTSE -0.46%
Markets in Asia have broken down, and what had been positive setups have turned decisively bearish. We can see that the South Korea Kospi has fallen through a level of support at 2,121. At this point, the index needs to stabilize or risks an even further drop. The downturn in the market is a negative development for the global economy.
The Shanghai Composite is at a point that if it fails to stabilize the market could see a more sizeable decline to 2,650.
It is doubtful to me that the equity market understands something more about global growth or the economic outlook than the rates, oil, or FX markets. If history is our guide, the equity market is usually pretty far off base on these topics. But I guess anything is possible, maybe the equity algo’s have undergone a significant reboot. We also know that the equity market can be slow to catch on to what the rates and fx market are seeing. The rates and FX have been relatively calm this despite all the equity market volatility, in a sign that perhaps is there less to worry about than some may make it seem.
The price of oil has held up pretty firmly in recent days. The cost for a barrel of oil has thus far been stable at support around $61.70. It merely may be a pause in the recent decline, with a more significant drop to come or it may also mean that the oil market isn’t as nervous about the global growth as the equity market.
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Even interest rates have remained relatively unchanged. Certainly, there is no rush to safety.
Meanwhile, the course of the dollar’s strength appears to be unchanged as well.
S&P 500 (SPY)
The equity market is another story; it seems to be much more nervous. For now, it would seem that at the very least we are going to get a retest of the S&P 500 lows from the other day around 2,863. Whether it holds or bounces will be the key. A drop below 2,863 opens the door to 2,830 and blows my model out of the water.
The Russell also appears to be heading towards its lows around 1,560
Roku is popping to resistance at roughly $70.75 this morning after reporting better than expected results. I think given the weakness in the market it may be tough for the stock to rise above that resistance level today.
Amazon is at a point where it needs to move higher or is on the cusp of breaking down. $1900 is the key, and it needs to hold the uptrend.
Netflix is also heading towards the lower end of its trading range at roughly $355.
Micron is starting to break down now, and the risk for the stock falling to around $36 is growing.
Alibaba has turned decidedly negative and is now trading below support at $179 and that ups the potential for the stock to fall to around $166.
Nvidia is on the cusp of a significant break down which could send the stock back to $150. Nvidia Is On Shaky Ground Heading Into Results
Should square drop below $65.50, it ups the potential the stock drops to $61.
Boeing’s stock continues to look weak with the potential for that drop to $320. Boeing Is Breaking Down
Hang in there, it feels worse than it is.
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