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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX, TSLA
There will be a lot of economic data tomorrow that will be of interest to the markets. The first and perhaps the most important will be the ADP private payroll results with consensus looking for 178,000 new jobs created. Additionally, China will report Caixin Services PMI and Composite PMI tonight. Stocks fell on Wednesday after the Caixin Manufacturing PMI showed the Chinese manufacturing sector contracted in December.
S&P 500 (SPX, SPY)
The S&P 500 bounced around for most the day on Wednesday but finished the day up 20 basis points. The S&P 500 started the day lower by about 1.5% but managed to rally all the way back and finish higher.
By the way, consensus earnings estimates for 2020 are $193.62 per share for the S&P 500. That means the S&P 500 is now trading at 13 times 2020 estimates, just thought you’d want to know that.
For now, 2,520 is proving to be a difficult level for the S&P 500.
The VIX also fell today below 26 to around 24. It is a big positive, and perhaps the VIX can begin to head back towards 20.
The housing sector had a solid showing rising 0.45% on the day, but more important is that the index is has cleared resistance at $240, and should it rise above $245 then it could be on its way to around $252.50.
The semiconductor SMH ETF is also showing strength rising 75 basis points after testing support at $85.30 earlier today rebounding to resistance to around $87.80.
These sectors are two that we need to continue to watch closely as a gauge for the health of the stock market.
Tesla fell hard after the company reported production and deliveries that fell short of expectations. When has Tesla ever meet expectations anyway? The company noted deliveries grew to 90,700 total cars, which was 8% more than last quarter. The company also said it would cut the price of all its vehicles by $2,000.
I mean the way some of the headlines read it was as if this was some disaster or that demand has evaporated. I don’t know how you can say demand was weak. The company made 61.394 Model 3’s in the quarter and delivered 63,150. It is complicated when figuring this stuff out, remember that at the end of last quarter Tesla had 8,048 Model 3’s in transit which were counted towards the fourth quarter.
Basically, at the end of the quarter, Tesla had about one week of inventory that has been produced but has yet to be in transit. Seems like anything but a big deal. It would indicate to me that the company still can’t keep up with the pace of demand.
If anything today’s sell-off once again proves that $300 is strong support.
Suntrust came out and lowered Netflix’s price target to $355 from $410, noting they think Q4 subscriber upside looks highly unlikely. This would certainly go against the trends I have watched. But I do not know what metrics they use to track, so I’m wondering like you are.
Roku was higher today after the company said it would now make the Roku channel a place to manage all your premium subscriptions. It sounds like Roku is going to run an Apple iTunes type of store where you can subscribe to different premium channels and instead of Netflix charging you for the service, Roku will you charge in one bill. Whatever floats their boat. Not sure what Roku’s take or fee will be to do this. The stock is $32, so I’m not gonna beat up on them too much.
Facebook had been lower most of the morning, but things turned later in the day. Surprised to see it up $4 bucks. Resistance is still around $140.
Amazon broke out today rising above $1520, and the next major resistance level is around $1620. But there is a minor resistance level around $1590.
Micron was able to break above resistance at $32.50, and that sets up the next level of resistance at $34.10.
Nvidia is slowly rebounding and is nearing technical resistance at $139.50.
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.
S&P 500, micron, nvidia, tesla, amazon, netflix, roku, facebook