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January 28, 2021
STOCKS – FB, AMD, ROKU, NOK
MACRO – SPY, EWY
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Midday Note: Big Test Ahead
- Educational Material – The Danger Of Put Buying The Most Shorted
- Morning Note- Expecting Sharp Moves
- Earnings Analysis – Tesla’s Lack Of Guidance May Weigh Short-Term
- Earnings Analysis: AMD’s Results Are Not Nearly As Strong As They Appear
- Earnings Analysis: Microsoft May Become A Victim Of Its Own Success
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
The most shorted stocks had a rough day, with the index falling almost 6%. I guess that’s what happens online brokers cut off access to traders. It isn’t surprising to see these guys try to slow the trading pace. I heard from many people that they couldn’t even get on the websites, so that is not good for anyone. Second, these brokers take on tremendous amounts of risk; it isn’t to screw anyone. It is to protect the firm and the clients. This type of stuff has happened before, and it will happen again. Brokers are running a business and have risk managing, too, so that needs to be respected. If you don’t like it, open a prime brokerage account, and then you can trade with whoever you’d like.
Anyway, all of these shorted stocks are running now after hours. What is kind of strange, well to me anyway, was the all the open interest changes in the calls for Nokia. Why is that strange? Well, Nokia is ADR, and its main listing is actually in Europe.
When the US’s stock is soaring to like $10 and is trading for like 3.80 euros, there is a major mismatch in the market. The stock’s local owners and not the depository receipt see the arbitrage and will start selling the US stock. The shares are fungible. So when you pick the stocks you want to play, make sure they aren’t an ADR.
When the two stocks are trading together, it’s called parity.
S&P 500 (SPY)
Not as good a day for the S&P 500 as it would seem. The index finished the day higher by 98 bps but had been up by around 2%. The index got right to our trend line and failed. If today is a preview of what that means, I may take the next couple of weeks off.
Gapping below a trend line and then failing at the trend line the next day is a bearish sign.
South Korea (EWY)
Everyone may want to keep an eye on the KOSPI the next couple of days for a double top alert. A break below that V in the middle of the two peaks around 3,000 is a really, really bad sign.
Facebook (FB)
Facebook had a bad day despite solid results. All of a sudden, Apple is a competitor to Facebook? Good, I think Apple should remove Facebook from its Apps store and not allow it on its phones. Facebook needs Apple; without Apple, Facebook doesn’t sit on how many phones? How are they, competitors?
Anyway, the stock doesn’t look so hot, and why should it when they are saying on there call comps will get tougher in the second half of this year.
AMD (AMD)
AMD is really close to breaking down too, a drop below $87 will open that door to $75 I have been looking for. I don’t understand how AMD couldn’t gain any meaningful margin expansion in the fourth quarter. Can’t they sell their products for higher prices in an environment where these components are in high demand?
Roku (ROKU)
I’m surprised Roku didn’t respond negatively to Comcast saying on the call they will be offering its Flex stream media device to its customers for Free that want the streaming-only package, and it will be carrying all the top streaming apps. This is why I can’t understand how Roku carries a 51.3 billion valuation, while Comcast has a $236 billion valuation. Maybe the market is valuing Comcast the wrong way? Forget it, I can’t…
The RSI trend just rolled over, and that suggests the momentum up is likely over for now. Does anyone remember TiVO?
Night!
-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.
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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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