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Michael Kramer and clients of Mott Capital own Apple, Mastercard, and Netflix
Michael Kramer owns SPY Calls
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I’m going to make one more point about the yield curve and inversion. One day of a yield curve inversion doesn’t mean a recession is coming. It takes several months or even years for an inversion to represent a potential recession. One day means nothing. As the chart below shows from the time the curve inverted to the recession in some case took over 600 days! So I think it is safe to say a lot can happen between now and 2021. Plus the 10-2 year hasn’t even invert yet.
I hope we are not going to be hearing about the “inverted yield curve” for the next 2-years.
S&P 500 (SPY)
Stocks did a lot of nothing on the surface, but there were a lot of positive developments that took place that may suggest the days of doom are not on the way. In fact, after seeing the day of trading after Friday’s sharp sell-off, I’m incrementally more positive on the market.
We can see in the chart below that the S&P 500 tested a prior break out region around 2,785 today on two occasions. Each time the bulls managed to hold firm, and the market lifted. The chart also shows that the S&P 500 broke that short-term downtrend that had been in place since Thursday. It leaves me believing the Algo’s will work to fill the gap up to 2,852 in the coming days.
Russell 2000 (IWM)
We can also see that the Russell 2000 fell right to support at 1,492 today and held firm another bullish sign. Should the index rise above 1,521, we can look for a sharp move to 1562.
Do you know what sector does very well in a low-interest rate environment? Housing –because mortgages rates get cheaper. The Housing sector index HGX continues to rise, moving above its downtrend today and could be on its way to 295.
I watched most of the Apple event; it was very dull to be truthful. I didn’t see anything that got me excited. The credit card part of the business seems interesting, but I’m wondering with no fees how will Apple enforce people paying their bills at all? With interest? Maybe tighter credit limits? Also, my instinct says that the vendor will carry the cost of no late fees and lower interest rates by having to pay higher transactions cost.
It is also important to realize this will not be a new credit card network; Apple picked Mastercard’s for the network.
The stock pretty much did we expected when I wrote up the column this morning, falling to around $186. I have a lot more questions than answers after the event. Certainly not the Netflix “killer” it was expected to be.
To no surprise Netflix is rising after the news; I think the stock continues to move higher and back to $378.
Amazon continues to look pretty solid. It has held pretty firmly around support at $1,768 and continues to look as if it is heading to $1,850.
AMD fell back to support today around $25.70 and held firm. That is a positive sign for the stock. $29.40 still seems to be a possibility.
Micron fell to $40.25 and has now refilled the gap from last weeks big earnings report. For now, resistance continues to stay around $44.
That is going to be it for today.
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 performance. March 25