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!
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Michael Kramer and the clients of Mott Capital own Acadia, Netflix
Stocks had a mild and unexpected blip on March 4, with the S&P 500 falling about 40 basis points. It was much worse at one point with the index down about 1.2%, but stocks managed to mount a nice comeback.
S&P 500 (SPY)
The S&P 500 found support today around 2,767, which was right around the February 21 low. Could this be the start of something steeper? Anything is possible. Do I think it is the start of something steeper, I do not.
The chart below shows that the S&P 500 peaked its head above 2,812 early in the morning, only to quickly reverse and move lower. Most important is that the S&P bounced and closed about 80 bps off its lows. It also managed to reclaim the uptrend that has worked so well February 21.
Russell 2000 (RUT)
We can also see there is a nice uptrend in the Russell, that held today. If that uptrend breaks tomorrow, then we might need to revisit the theory. But for now, one day does not make a trend.
Also, one of my favorite leading indicators the Housing sector, HGX, is suggesting a break out could be coming for the sector.
Amazon is one stock that surged today, jumping nearly 1.5%. The move higher came after Evercore put out a $1,965 price target for the stock, on the prospects of, get this –improving margins. It would suggest to me that the idea of Amazon being a slowing growth story may be taking hold among investors. But the problem I see with this is that Amazon margin expansion will mostly have to come from AWS. As I have already explained, Amazon gets very little of its operating margin from its ex-AWS business. It is going to be tough for Amazon to squeeze more margins for sure, especially for a company that has never cared about making profits.
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But regardless, the stock is now on the cusp of that move to $1770.
Salesforce is getting clocked in the PM trading session after the company gave weaker than expected results. The company is looking for roughly $0.60 per share in the first quarter below estimates of $0.63. It also guided revenue to $3.675 billion at the mid-point, slightly below forecasts of $3.7 billion. The miss seems pretty trivial to me.
Anyway, the market cares not, when you are a fast-paced growth company, investors want to see big beats and big guides higher. The good news, is that support for the stock comes around $153 and then again $148.
Roku fell as far as $64.63, pretty close to what I had predicted on Sunday. I think that the $64 level will hold as support for at least one more day.
IQiyi took a big step towards $24 today dropping to around $26.60. There is still that significant uptrend and gap waiting for the stock to gravitate towards.
Acadia has now failed around $27.20 three times. Not the greatest of signs. It almost appears as if a head and shoulder pattern is forming on the intra-day chart. The stock would need to fall below $26.40 to confirm a reversal. A pullback to $24 would be reasonable given the big move higher.
Netflix fell below $355, and now there is a big risk for the stock to fall to around $337.
See ya in the morning!
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. March 4