May 13, 2019 – Stocks mentioned: Apple, Netflix, Boeing, Intel, Nvidia

Michael Kramer and the clients of Mott Capital own Apple and Netflix

May 13 was another wild one for the stock market. The S&P 500 fell 2.4% and the NASDAQ fell over 3%. It is what it is, and whether it makes sense at this point, it does not matter. The market appears to be assuming the worse as it typically does.

S&P 500 (SPY)

For now, the region around 2,812 seems to be holding for the S&P 500. It was the next level of resistance after 2,836, and the one beneath it comes at 2,790. Will the S&P 500 fall to 2,790, the trend would say yes. To this point, every attempt by the market to rally has been sold, so at this point, there isn’t enough of a reason for that trend to change.  As of now the S&P 500 is about 5% from its peak on May 1. (Premium content: The Next Big Level To Watch For In The Market)

We do not want the index to fall much further than 2,790 or things could get uglier.

The last week or so I have been brutally wrong, and despite the market feeling oversold to me, it is hard for me to get positive at this point. Again, I don’t think longer-term the trade war will have a significant effect on the overall economy, but we will have to wait and see.

NASDAQ

The NASDAQ is down nearly 7%. Unlike, the S&P 500 it needs to hold around the 7,625 or risk falling to around 7,400.

VIX

What bothers me some about today is that the despite the steep decline the VIX didn’t take out last weeks highs. Which suggests one of two things: 1) The selling is coming to an end or 2) the selling is about to get much worse. Seems obvious, the one thing I never like is when the market is falling sharply, and the VIX isn’t rising.

What also makes me worried is all those institutions that have been shorting volatility

10-Year

If the Chinese are selling our Treasuries, it didn’t start today, because the 10-year yield fell to 2.4%, which suggests buying.  A drop to 2.32% seems possible.

Copper

Copper is breaking down and that is a bad sign for global growth.  We want to avoid a decline below $2.70.

Apple (AAPL )

Apple fell hard today and for now, is holding $182. Apple could be one company hurt if the trade war steps up. The company is facing a double edge sword with a good portion of sales coming from China, and the iPhone being hit with a tariff in the US. Believe it or not, the stock is down 15% from its highs following results.

Netflix (NFLX)

Netflix fell today too, even though it has nothing to do with the trade war. However, when considering that risk is coming out of the market this is one stock likely to get hurt. For now, the area around $340 continues to hold. This stock is down nearly 11% over the past couple of weeks.

Intel (INTC )

Intel has fallen about 25% in a straight line. $42.80 is a must hold level for the stock.

Boeing (BA)

Everything is going the wrong way for Boeing, and it looks like $320 continues to be on the horizon.

Nvidia (NVDA)

Nvidia is reporting earnings this week and it will be one of the first companies to comment on the potential impacts of a trade war. The chart looks brutal with a test of $150 on the way.

Just remember better days are around the corner, they always are.

-Mike

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