Tomorrow May Bring More Pain For Stocks

Michael Kramer and the clients of Mott Capital own shares of AAPL, NFLX, SWKS

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NASDAQ

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For a minute it felt like the bulls were back. The NASDAQ even rallied about 1% at one point. But the rally fizzled by midday and by days end we finished right where we started, in the same precarious position we were in yesterday. The bad news is that tomorrow we are likely to fall, yet again.

S&P 500 (SPX)

The S&P 500 managed to make it all the way to resistance at 2,752 only to fail and finish down on the day. It leaves the index slightly above technical support at 2,716. That sets us up to now refill that October 30 gap. It would take the index down too 2,687, about 1% lower.

Look we are likely going there anyway. Let’s open the day lower, fill the gap and see if the market can bounce off support and rise into the end of the day.

Here are some other reason why I think we aren’t done falling yet.

Netflix (NFLX)

Netflix hasn’t refilled its gap either, and that needs to happen. I think it falls to around $286. At that point, we can re-examine the stock. Resistance seems firm for now at approximately $300.

Amazon (AMZN)

Amazon has held support at $1,620, but a break below that support regions sends the stock back to the lows around $1,470. Let’s hope it holds. So much for my genius call of it going to $1,850.

Apple (AAPL)

I’m devastated by how Apple has traded. I reviewed the numbers again last night, I thought they had a great quarter. So what the guidance missed by 2 or 3%? Regardless, it is all about the future, and the stock is now in the midst of a sharp pullback and that likely means it has further to fall. $180 to $186 is the level to watch for, that is the base of the long-term uptrend. It will be just enough of a decline so everyone can panic over how Apple has fallen into a bear market down by 21% from its highs.

There are just too many negative headlines floating around and too many people and algos reading those headlines.

AMD

AMD managed to bounce too but failed a bunch of times around $20. This one is still going lower. $16.

Skyworks (SWKS)

Skyworks has turned into a disaster too, another piece of genius on my part. Was the quarter that bad? No. but now analysts are slashing forecast based on the guidance. Analysts now see first quarter revenue and earnings both falling 4%. Full-year estimates have come down too, and now earnings growth is estimated at 2% and revenue growth at 1%. It makes the fiscal 2020 pe ratio of 9 not seem that cheap anymore.

Sage

Sage is getting closer, $98 will be here shortly.

Qualcomm (QCOM)

$50 is coming.

Oil

What about to all the geniuses that thought oil was going to $100? $54. wow. Even worse, it broke the long-term uptrend. Even more bad news.

Yields

10-year is coming down, as it should because inflation is melting like an ice-cube in the middle of the summer

Inflation

How do I know? Oh just a hunch, while working on a significant piece of research I’m preparing to put out. Here is a clue.

Just a small relationship.

Have a great night!

-Mike

Michael Kramer publishes independent macro and options research read across 10+ platforms and by institutional desks. For research syndication, licensing, or consulting inquiries, visit michaeljkramer.com.

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Tomorrow May Bring More Pain For Stocks – Daily Commentary