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The Stock Market Falls As Emotions and Machines Replace All Logic

The Stock Market Falls As Emotions and Machines Replace All Logic

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.

Otherwise, enjoy the column!

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN GOOGL, AAPL, NFLX, TSLA

Another down day in the Stock Market. No surprise there. When will the selling stop? I don’t think anybody has that answer.  First its China, then the Fed, then its inflation, then it was Apple, today it was the looming government shutdown. Every day there is some little piece of news that sends the market lower. Tomorrow it will because traders don’t want to be long going into the weekend.

Take today; the market seemed to fall on news that the government may shut down. Doesn’t this happen like every year? Oh, wait it does. Sometimes if we are lucky, it gets to happen like 2, or 3, or 4 times.

I just want to know are there any people that actually drive trading anymore? Or is all just machines and algo’s? The patterns are amazing.

Apple

There was a report that Apple was going to slash its iPhone units sales by another 4 million. Ok, so the problem here is that we have no idea how many units Apple was planning to produce, do we?  Apple doesn’t tell us how many phones they plan to make or sell in a quarter. They give us revenue guidance. So at some point with all these unit sales being cut, one would think Apple might issue a profit warning. I mean 4 million units, even at the iPhone XR base price of $750 is nearly $3 billion. Apple guided to what like $91 billion in the quarter?  At some points based on all these cuts there being proclaimed since the three phones release, one would think Apple would need to revise its guidance. Yet with just 10 days left in the quarter, that has not happened.

So I ask with all these supply chain channel checks and reports of iPhone cuts, why haven’t these very same analysts started to slash their revenue estimates? Why is consensus revenue estimates down less than 2% from their highs? It is an interesting question?  I would think the sell-side analysts that are discovering all these little nuggets of information about weak unit growth would cut revenue target: not price targets,  but revenue estimates.

Make sense right? Of course it doesn’t.

AAPL Revenue Estimates for Current Quarter Chart

AAPL Revenue Estimates for Current Quarter data by YCharts

Netflix (NFLX)

Netflix retested its long-term uptrend and it held. The stock despite all the wild market volatility has for the moment found a floor. Let’s hope it holds.

netflix, nflx

Amazon (AMZN)

Amazon has retested it’s November 20 low, and that held too.

amazon, amzn

Alphabet (GOOGL)

Alphabet continues to hold its lows, too.

alpahbet, googl

I sound like a broken record, but that has to mean something doesn’t it? If we could get one of the ANG stocks to start to rise that would a really good sign. Notice the “F” is still missing, yeah it ain’t coming back either.

Tesla (TSLA)

Well, so much for Tesla getting to an all-time by year-end, who was the idiot dumb enough to say that. Yes, I said that last week I think.

It was one of the last stocks holding; the stock has fallen the last two days sharply. $300 is now support.

VIX

The VIX finally rose above 26, and maybe that is good, perhaps it is not.

vix

Put-to-Call

The Put-to-Call ratio today hit 1.83! That is the highest level from what I can tell in a nearly decade.  Just look.

put-to-call

That’s going to be it. There will not be a commentary tomorrow morning or afternoon. Back at some point over the weekend!

-Mike

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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.

Apple, netlfix, amazon, alphabet, vix, put, call