The Stock Market Rally Is Not As Amazing As It Seems

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.

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August 18, 2020

STOCKS – AMZN, NFLX, MU, WDC

MACRO – SPY, QQQ

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Stocks are rising here in the US, with the S&P 500 ETF up about 17 bps, and the Qs up about ten bps. We will see where this goes, but trading overseas hasn’t been particularly strong, with Hong Kong trading lower and Germany up about 30 bps. 

I have been particularly interested in watching LG Chemical in Korea, and Tencent in HK. The chart of LG Chemical is breathe taking, but the turn lower is equally as scary.  The stock could easily fall 25% from where it is and still be up tremendously. This, to me, maybe one of the critical sentiment stock that needs to be followed. 

Meanwhile, Tencent continues to tetter on what could a massive decline… 

…and continues to be a pretty good leading indicator for Amazon and Netflix.

Meanwhile, the memory chip maker, Micron/Western Digi competitor, SK Hynix, looks pretty dire. 

Meanwhile, the SMH is forming a large rising wedge pattern, and if the memory chip guys are sending a message, then the SMH could easily fall 10% from where it is currently. 

Meanwhile, the KOSPI, one market I have followed every night since February, is now 4% off its peak, and diverging from the NASDAQ 100. 

Meanwhile, the S&P 500 rose to a record close last night as the number of stocks above their 50-day moving average fell by 2% and has been trending lower.

This, as the Advance/Decline line, fell as well. The AD line hit a record high on August 12 and has been trending lower since. It suggests the rally is getting narrower, and failing to confirm the record close.

Good Luck

-Mike

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.  

 

 

 

 

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