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.
Otherwise, enjoy the column!
Subscribe to the Monster Stock Market Commentary and join the 2,533 subscribers getting it for FREE every day!
MARCH 8, 2021
STOCKS – ACAD, ROKU, NVDA, DIS
MACRO – SPY, XLE
- Video: The Fundamentals Of The Stock Market Have Changed
- Midday – Today’s Rally Isn’t Likely To Hold
- Morning Note: The Dollar Will Add To Pressure On Risk Asset
- T.W.A – Trouble Lies Beneath The Surface
- The Fed Is Likely To Remain On Hold At Its March Meeting
- Live Stream Will Start At 1:10 PM ET
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD
It was a rough day for stocks, especially technology stocks. They continue to get hammered as rates push higher. Now, the dollar is starting to strengthening as well, and that could further complicate the situation.
The 10-year TIP had a monster move today, rising by almost 14 bps, to finish at -61 bps. The TIP still has a lot of ground to cover before making up for its lack of participation since the beginning of August. Since August 1, the 10-Year Treasury is up more than 100 bps, while the 10-Year TIP is around 40.
The Qs gave back all of Friday’s gains and finished not far from Friday lows. The level at $297 is a significant support region. If that level of support snaps, I think there is a good chance the index will look to fill the gap around $274, about 8% lower, a total of 19% off the high.
S&P 500 (SPY)
The S&P 500 has escaped much of the damage because it is more diversified. But if the dollar starts to move higher, it will negatively impact industrials, energy, and materials. If those sectors go, it will be tough for the S&P 500 to maintain its current levels.
If I counted out this pattern correctly, which to this point has been working, then I think we will revisit Thursday’s lows around 3720, with an increased chance for a push to 3,650.
Again, a lot of this will be determined by what happens with the dollar, but given the huge move in yields, I don’t see how the dollar doesn’t push higher. The DXY has already broken out and is likely heading to around $93.70.
Energy ETF (XLE)
The energy XLE ETF has officially closed the gap from February of 2020. Typically, once a gap is filled, a stock or index returns to the previous trend. If that is the case, then we should expect to see the XLE trade lower.
Disney had a monster move higher today, but the stock appears to start to show a sign of a turn. The RSI for the stock has been trending lower, suggesting a loss of momentum in the stock, while the pattern appears forming appears to be a rising wedge.
Acadia had disappointing news tonight regarding its application for Dementia-related psychosis. Just very strange, as analysts on the call seem just as baffled as to the company and as for me as well. I guess if all gaps get filled then the stock should find support at $24.
Nvidia sank today by nearly 7%, closing around $465. The region around $455 to $460 is a pretty big support for the company, and the next level is $425.
Roku also fell hard today and is nearing support around $318. A break of support likely sets up a further drop to around $275.
Have a great day.
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.
Friday’sthe sixth day of the week; the fifth working dayMore (Definitions, Synonyms, Translation)