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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Why Amazon, Netflix, JD, Alibaba, Square, and Splunk May Fall Further
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX
Stocks took an abrupt turn lower, but the trend in the broader S&P 500 is still higher at this point. That has not changed, yet. Earnings season is quickly approaching, and it would seem more likely to me that trade talk will soon take a back to seat earnings.
But it may have been more of a risk-off day, and less about trade tensions. Consider, that trade tension heavyweights, Caterpillar and United Technologies didn’t have terrible days when compared to technology and consumer stocks, which got hit far worse.
Caterpillar was up by more than 75 bps, and the chart looks somewhat encouraging. If CAT can continue to hold support around $144.50, then shares likely have room to rise on towards $157.50.
United Technologies (UTX)
United Technologies finished the day flat, but more important held a critical technical level of resistance.
Amazon is one stock that did not have a good day. The stock is sending mixed signals if you ask me. The technical pattern in the stock, a rising wedge, tells me a reversal is in the works. But for now, the stock found a bounce off its 50-day moving average. Regardless, the shares have a further risk to the downside, then the upside, in my opinion. The first level to watch for is 1841, and then 1740.
We had been tracking this wedge for some time, and then AMZN broke out hitting our resistance around 2,025 and has been unable to crack it since. Therefore there may be a change of trend in the works. Be ready for lower lows.
Netflix is flashing a warning sign now, one that suggests shares may be heading lower. Not what we want to see. But the NFLX fell below the uptrend I had noted in Sunday’s write-up. $343 is likely the first level of support.
Well JD got down to our original price target of $25.50. It better hold $25.50. Otherwise, it has more room to fall. $22.30 may be the next stop.
Alibaba is different from JD, and could be on its way to the low $140’s.
Square is likely heading to $82.
Splunk maybe primed to refill that gap, at $108.
Anyway, that’s going to be it!
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.