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July 2 – Stock mentions: XBI, TSLA, FB, JD, SQ
Michael Kramer and the clients of Mott Capital own TSLA
It slipped my mind yesterday that the ISM PMI was out. I don’t know what happened?! Maybe it is the summertime blues that got me. The number was better than expected at 51.7 versus estimates for 51.1. I had a chance to dig through the report, and my take was that manufacturing isn’t as bad as some people would want you to believe. The report notes that the June reading coincidence with an annualized real GDP growth rate of 2.6%. Not so bad. Anyway, I thought it was worth the mention. I guess we may need to keep waiting for that recession. I won’t hold my breath.
S&P 500 (SPY)
It always gets hard to start predicting the markets move, when you are in record territory and lose those support and resistance levels. At least, for now, we do have a resistance level around 2,980. That is likely where the S&P 500 is heading, eh, probably tomorrow.
A Push To 3,300
Deep down, I feel nervous about this rally. Perhaps because the market has risen only 3% since January 26, 2018. Pretty pathetic. Call it a sideways consolidation if you will.
If the S&P 500 fails to advance meaningfully from its current levels, I think people will start calling this a market top. That will pull in more negative sentiment.
However, we have seen this story before in 2011, 2015, and now. Each period of consolidation was about one and a half years long. The break out in 2011, lead to a 56% rally. Meanwhile, the one in 2016 led to a near 40%.
Should we see a break out like, in the past, we could rise to roughly 3,300. I had been looking for 3,200 but have since revised that higher. That would be an increase, believe it or not, of just 10%. The index would push higher to resistance at the long-term uptrend which has been in place since April 2012. From there I would need to re-assess, but calling a 10% advance in the S&P is not as easy as you’d think.
I talked about it much more in this video; I also got into the dividend yield and multiple expansion tantrum. The Race To S&P 500 3,300 Is On!
Believe it or not even at 3,300, the S&P 500 would be trading at just 18 times my 2020 S&P 500 earnings estimates of $183.18 per share.
The XBI may be about to push towards $89, after breaking a downtrend and finding support at $87.50
Tesla is rising in the after hours, breaking above the December downtrend. The results are impressive with deliveries coming in at 95,200 vehicles. The bad news is that it is now the second quarter in a row that Tesla has seen Model S/X delivers of around 15,000. Remember the two cars use have production of about 25,000 per quarter. It may be because of the price mix, as TSLA has eliminated the lower Kwh battery variants, making only the more expensive cars more available. We will have to see what the company says when they report quarterly results.
The chart shows that the stock is rising to around $241. You can see that downtrend is broken, likely pushing the stock towards $250. I last wrote on Tesla on June 26 in my premium area Tesla Nears Massive Break Out
Square is nearing a big break out at $75, with a rising triangle forming, a bullish continuation pattern. It could send the stock on to $83.
JD.com is getting close to breaking out and could be on its way to around $34.80. I noted some bullish options activity today for the stock in a premium story. JD.Com: Bullish Betting As Break Out Nears
The pattern in Facebook looks ominous, with the rising wedge. It suggests a decline to around $186.
Have a great day
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