Stocks jumped on August 6 ahead of the big job report for July.

The Stock Market Continues To Race Higher As Pivot Lower Draws Near

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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August 6, 2020

Stocks – UBER, NFLX, AAPL, FB

Macro – SPY,

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Stocks moved higher today, and like I have pointed out, from here forward, we either have much higher to go or a significant pullback. In an SA story, I noted the continued bearish betting taking place in the market. This betting has been consistent for weeks; now, these guys may be hedging or flat out wrong. Sure, anything is possible, and that would mean I am picking up on the wrong signals. But again, when I see trades of this size, this consistent, it makes me think the options guys are on to something, or in some cases, know something.

There is a big difference in options and equities, and that is something newer investors simple do not appreciate, which is the risk and leverage, and of course, options are a zero-sum game. Options give trader incredible amounts of leverage, with massive levels of risk, and to the ability to see their money go to zero. Who knows…

Technically, again, if there was a place in time where the S&P 500 could reverse lower, as I said this morning, this is the place it would happen. It isn’t an exact science, but somewhere around this 3,340 region with some give and take would be the area I’d think that pullback would happen.

There is a clear rising wedge in the chart and the gap from February 24, which is now filled. Again, if I had to pick the perfect place for a reversal, coupled with the options betting and pricey market valuation, this would be the place for it to happen.

Technology (XLK)

The XLK is flashing a pullback signal of its own, hitting the upper end of its trading channel, along with an RSI at about 71.

Uber (UBER)

Uber looks like a disaster on so many levels. How does a company lose $1.8 billion? How is this stock not down even more? I don’t understand. Wait, Wait. I know. I’m sure somewhere in the world, they are showing signs of improving trends.

The stock needs to stay above $32.90 to avoid a deeper pullback.

Netflix (NFLX)

Another thing I didn’t understand was why the stay at home stocks rose today, even though the travel stocks got a bid after the state department lifted travel restrictions. American Airlines rose by almost 4% today on the news. So if more people are going to be traveling again, they won’t be at home watching Netflix? Right. Still, Netflix rose by 1.4%. Netflix hugs the uptrend.

Facebook (FB)

Why was Facebook up 6%? What did I miss there?

Apple (AAPL)

Apple may not stop rising until it gets to $480, hey, why not.

Have a great one. Tomorrow is jobs Friday; I wonder what that’s going to be like. Probably as clear as mud.

-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.