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July 9, 2020
STOCKS – NVDA, SHOP, AMZN, ZM
MACRO – SPY, QQQ
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- Afternoon Repo To Determine Direction- Midday
- Downwards Trends Remain
- Markets Setting Up For 5-6% Dip
- Downwards Trends Remain
- Nvidia Is Priced For Perfection, May Have Topped Out?
- Stocks Trying To Breakout Ahead Of Data
Stocks had a volatile trading session falling by about 60 basis points on the S&P 500 while the Nasdaq rose by 84 basis points. It seems relatively apparent how there is a massive herd-like mentality taking place in the market, with everyone just rushing to a handful of names. It is terrifying to be honest because the ending will not be good, and there will a lot of damage on the way lower. People will unsuspectingly think they are getting bargains when a stock like SHOP is trading at $800, only for them to go even lower. It happens, a lot, I have seen it happen a lot, it is an unforgiving process. I use to trade some of the biggest momentum growth orient names when I was on the buy-side desk. The unwinding process is brutal. Â
No matter how you describe it, the NASDAQ Qs are trading at the upper end of the range, and as I have noted five prior times, every time it gets to this point, it pulls back sharply. I said this the other day, for subscribers and even pointed out some bearish betting in the QQQs. So I am looking for a pullback to around $245 at the moment. Premium content – Markets Setting Up For 5-6% Dip
S&P 500 (SPY)
There is a substantial level of resistance at the downtrend in the S&P 500 around 3,180. Meanwhile, the RSI is trending lower still, while the advance-decline is also now beginning to turn lower as well. Both bearish momentum indicators.Â
50-Day Moving Average
The number of stocks above their 50-day moving average in the S&P 500 has fallen sharply, and could even be heading lower.Â
20-Day
Meanwhile, the number of total stocks above their 20 days moving average is now down to 42%. It confirms the view that there are just a handful of stocks driving the Q insanity.Â
Meanwhile, what may be even more critical is that 10-year is now attempting to break support around 63 basis points, and if that happens, it will signal a further decline for yields. Think Risk-off
Nvidia (NVDA)
Nvidia is perhaps one of the scariest stocks leading the charge because there is no fundamental underpinning to the move higher, and it is likely to end disastrously as well. The stock is now trading on the other side of the rising wedge and has an RSI over 70. I still think the stock pulls back to $350. Premium content – Nvidia Is Priced For Perfection, May Have Topped Out?
Amazon (AMZN)
Amazon has gone vertical, and if there is any company that is likely to disappoint investors when they report results, it is Amazon. We have been there and done that. I still think it heads back to $2460.
Zoom (ZM)
I still think Zoom goes back to $225.Â
Shopify (SHOP)
There is no reason why SHOP can’t go to $750 or lower. It is expected to have $4 billion in revenue in 2022; even if that number $16 billion, the stock is overvalued; the company has a $120 billion market cap. Fundamentals always matter, don’t be fooled.
Meanwhile, the Fed’s balance sheet fell again this week. Uh-oh.Â
Mike
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results. Â
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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