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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MARCH 17, 2020
STOCKS – MA, AAPL, ZM, TSLA
MACRO – SPY, IWM, VXX
MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN AAPL, MA, TSLA,
S&P 500 (SPY)
As the S&P 500 approached the December 2018 lows, suddenly, it stopped. The tides turned, parting the seas, and then, there was light, and a path higher emerged.
The S&P 500 started on rocky ground falling to as low 2,367 and putting the index just 10 points above the December 2018 lows. It was close; I could certainly feel my heart pumping as I saw the numbers draw closer and closer. Somehow, and for some reason, it just stopped at that 2,367. It was precisely a 30.25% pull back from the peak at that point. Was 30% the magic mark? Who knows, and who cares.
It was all up from that point, and there was even this little bull pennant pattern that formed by days end in the S&P 500. Couple that with the index moving higher and breaking free of a falling wedge, it seems there is a good chance we might even have two positive days in a row.
Now, the S&P 500 faces a really tough level of resistance around 2,550 and then again at the downtrend in a range of 2,560 to 2,580. Break that downtrend, and we have some serious room to start moving higher towards 2,700.
Of course, fail, and well, that means we go right back to testing the lows around 2,370, and maybe even 2,350. Let’s hope that we move up.
We will have our answer one way or another by 12:45, that is when the downtrend and resistance converge.
Again, the RSI is also trending higher, and once again pointing to a change in trend, and the S&P 500 pushing higher from here.
Russell 2000 (IWM)
The Russell 2000, may have formed its first uptrend in this entire disaster. A push above 1,110, and we can start dreaming about 1,150 and then 1,200.
The 10-Year had a massive move higher today, rising to our target of 1.06%. I wouldn’t be surprised to see the 10-year back up at 1.32% in the not to distance future, especially with all the stimulus coming, the budget deficit is going to be enormous this year.
The VIX may be forming a bear flag, and that means we should be testing the uptrend, probably tomorrow, with a break of that trend sending the VIX back to 54. I noticed some bearish betting in the VIX options again today and mentioned in the on the premium chat boards. I will let you know tomorrow once I can confirm it with the open interest changes.
The RSI for Apple continues to point to a change in trend and reversal higher to come, with the next level of resistance at $268.
Mastercard has this giant falling wedge pattern as well, and the RSI is also signaling a bottoming pattern with room for the stock to rise to $252, then $275.
Zoom is a new one I was asked to look at, I don’t take special request very often anymore, but my boss told me too (AKA my wife). I’m sorry to say the chart isn’t all that impressive, given the bearish divergence forming between the stock price and the RSI, not to mention the uptrend is broken. If the stock breaks support at $105, it likely heads back down to $90.
Tesla’s stock hit oversold conditions today with and RSI falling below 30. The stock got pretty close to the old ATH’s at around $390, which should offer a healthy level of technical support. Anyway, long story short I think the stock rebounds to $500.
Anyway, now I have to go and home school my kids. I mean, it is nice that all the kids have from school due to the coronavirus, but they are still expected to do all the work. Tonight we are doing fractions! I use to be horrible at fractions until I started to follow stocks, then amazingly, somehow, I became a master of fractions. Who remembers the days that stocks use to trade in teenie’s, raise your hand! I’m guilty, hey only 42, but I started really really young.
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.