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The stock market is going down because it is going down

The Stock Market Is Going Down Because It’s Going Down


The Stock Market Is Going Down Because It’s Going Down

I’m struggling to get a handle on what is happening, and the stock market feels more like a casino than anything else. The losses across the market evaporated the gains from yesterday, as technology stocks continue to get hammered. Did the trade war start back up? No.

Mott Capital Management, Michael Kramer

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Go Take A Walk

When I was walking my dog tonight, the thought came to me, find out when the sell-off started and see what happened on those early days. The beautiful thing about writing this blog, and the member videos, is that it also serves as my notes of things I’m watching. So I came back home, and I looked, the latest wave of selling in the S&P 500 started around March 13 and 14. That was when I started noting about all the stupid upgrades in stocks like Amazon, Micron, and Nvidia, from Amazon conquering the world to Nvidia getting upgrades based on an upcoming movie, and Micron getting upgrades just because it broke the analyst’s previous price targets.  Even MarketWatch.com picked up on my observation.

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Air Coming Out?

Perhaps the sell-off is nothing more the air coming out of some these overhyped tech stocks, like Amazon, Micon, Nvidia, etc. Perhaps it is has nothing to do with trade wars or even my stupid theory about the Fed. Maybe it is selling off is because once again too much momentum was built into some of these technology stock and now the air is coming out.

Would you believe that Nvidia even after today’s brutal sell-off is still up since February 8, by 3 percent! While Amazon is up by nearly 11 percent. Microsoft is up 5.5 percent. Microsoft got a lame upgrade yesterday, actually.

NVDA Chart

NVDA data by YCharts

Amazon is still up 28 percent on the year, while Nvidia is still up 16 percent on the Year! Even Microsoft is up almost 5 percent.

NVDA Chart

NVDA data by YCharts

The Nasdaq 100 is up 2 percent on the year!  Geez the S&P 500 is only down 2 percent.

^NDX Chart

^NDX data by YCharts

Micron is up 27 percent on the year! Geez, even Macy’s is up 11 percent on the year. I only know that because I type an M instead of MU in the ticker field.

M Chart

M data by YCharts

 


VIX

Did the VIX break? I keep looking at it but it ain’t going anywhere. How is it only 22.50, what? How can that be, the NASDAQ was down 3 percent, but the VIX hardly moved.

Blame Facebook

The Facebook news stoked the fire and put the sell-off into overdrive.

Nvidia

Today Nvidia reignited the fears after the company said it was suspending the testing of the autonomous vehicle platform. The news broke around 12:15 and then carnage followed. The problem, the negative feedback loop. Nvidia makes up 8 percent of SOXX ETF, so Nvidia goes down, then SOXX ETF goes down, then Soxx ETF starts selling the positions in the portfolio, that puts pressure on the other ETF’s with stocks such as Intel, Broadcom, and so on. This is the one drawback of all the ETFs.

You can see the sell-off rather clearly and when it started, spreading like wildfire.

NVDA Price Chart

NVDA Price data by YCharts

Was it an overreaction, probably. Nvidia gets the majority of revenue from gaming. But the market has high hopes and expectations for data center, while the automotive end of there business has been slow growing. Of the $2.9 billion in revenue they did last quarter, $1.739 billion came from Gaming, $606 million from the data center, and $132 million from automotive.

The stock stopped right at support around $218 and found a bounce, that is the good news.

nvidia


Facebook

Facebook was down hard again today as well, 5 percent. Is Facebook putting in a double bottom? Well, let’s hope so.

facebook

Because the next level is around $138.

facebook

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Micron

Micron shares have now retraced all the way to $52, and have filled a gap. Now that the gap is filled will the bleeding stop? Let’s hope or the stock is going to $49.

mu

S&P 500

The S&P500 manage to at least stay even with the lows from Friday.

spx

I have nothing else to say for today. I need to take a break.  I suggest you do the same.

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Tesla

One comment on Tesla, I do not know how Model 3 production will be or what the burn rate is.  I read the blogs tracking the vins, the Bloomberg model 3 tracker, and I drive through the parking lots of Tesla stores looking for the elusive model 3, making into a game to keep my kids entertained. But if you are betting on Tesla going out of business, then you must also bet that it can’t raise funding through an equity offering. Or that someone like Tencent, who already owns a 5 percent stake, would not just buy them out.

-Mike

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Michael kramer and the clients of Mott Capital own TSLA

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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.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

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