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 2,043 subscribers getting it for FREE every day!
These 4 Stocks Are The Canaries In The Coal Mine
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF AAPL, NFLX, MA, V
All of this bouncing around in the stock market which has taken place amid rate worries is occurring while the bond market has been closed! So not easy to judge which way stock should be going when the very market they are worried about is closed! I can tell you though that dollar index very little of anything.
So anyway the good news again is that stocks, for the most part, are holding around their lows on Friday. I know for some you aren’t taking comfort in that, but I can tell you that I do. (Read more free content: 8 Signs The Worse May Be Over For Stocks and Yields Are Going Lower.)
S&P 500
We can start with the S&P 500 which got to a low of around 2,870 on Friday closing around 2,885. Today the S&P 500 traded as low as 2,862 and got to within spitting distance of its long-term uptrend that has been in place in February. It was followed by a sizeable rebound with the index rising back to 2,885 by day end.
NASDAQ
The NASDAQ traded as low as 7,715 on Friday closing at 7785. Today we reached a low of 7,655 and bounced sharply higher by days end to 7736.
When we turn to the leadership that I noted in Sunday’s right up, The Monster Look At The Week Ahead In Stocks For October 8, I talked about the importance of stocks like Apple, Amazon, Alphabet, and Netflix.
Apple (AAPL)
Apple fell, tested, and bounced off the lows from Friday as well.
Netflix (NFLX)
Netflix also fell to support around that $342ish level we had watched and again within reason held firm.
The Canaries in The Coal Mine
But the leaders of the pack have become very obvious to me as Visa, MasterCard, PayPal, and Square have been crushed. MasterCard at one point today was 9% off its October 3 highs. This is MasterCard, a company with a $220 billion market cap. That is a massive move in just three days. Visa was down by almost 7% at the lows; this is a $325 billion market cap.
The market must be thinking that because of the rising rates consumer will never use their credit cards again. It could be. I’d be willing to bet that is not the case though. Visa and MasterCard make their money from transactions, not from the interest rates. My understanding is that the same is true for Square and PayPal. I don’t see people using these service less because of interest rates going up by 15 basis points on the 10-year. In my book, these are now the 4 stock to focus your attention on, the so-called canaries in the coal mine. The market shall go where they go, watch these stocks.
MasterCard
MasterCard bounced where it was supposed to at support around $203.
Visa
Visa stopped falling at support around $139.50.
Square
Square dropped right to its uptrend and stopped where it should around $86.
PayPal
PayPal also seemed to find some support today as well, although not as easily.
We will need to see what happens to rates tomorrow. But again, I still think rates go lower, not higher from here.
Til then.
-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.
SPY, AAPL, NFLX, SQ, V, MA, PYPL