July 23, 2020
Stocks - AAPL, AMZN, INTC, NFLX
Macro – SPY,
Mike Reading The Markets Premium Content – $35/Month or $300/Year
- The Momentum Trade Is Breaking
- Morning Write-Up
- AMD Breakout, Markets Holding – Midday
- Index At Razor Thin Levels – Morning
- Nothing Makes Sense Anymore
- Still Buying Puts On The Markets
- A Decpitive Bull Run – Morning
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
Nasdaq 100 (QQQ)
Stocks fell sharply with the NASDAQ 100, dropping almost 2.7%, and the S&P 500 falling by 1.2%. We have seen these fast and sudden drops many times over the past few months. They seem to happen for one day, followed by a sharp move lower the next morning, and then proceed higher again. That has been the trend since April. I'm getting the feeling this time may be different.
The amount of put buying I have been seeing in the QQQ has been consistent now since the beginning of July. I talked about again on the morning call. Again, just passing the message the market sends along. (Premium content - Morning Write-Up)
Yields on the 10-year fell today to 58 bps and are pretty close to that 55bps level we have been watching with great interest. If that level breaks, it likely falls back to intraday low on March 9 of 36 bps.
There was a difference today when compared to prior sell-offs; most notably, it was Apple. During this whole bull run that started at the end of March, Apple has never fallen below its uptrend. Today it did, and it closed below it. It also came on hefty volume. It wasn't helped by the fact that there were rumors the newest iPhones will be delayed and not announced in September.
I would consider today's price action a huge deal. It could be what I called on the midday call - a momentum shift. (Premium content - The Momentum Trade Is Breaking)
That said do I think this start of something more serve than what we have seen in the recent past, I obviously can't say with certainty, but something did materially change today.
Amazon has now given back all of its gains from Monday, and that is also a big deal because from what I can tell, that is the first time the stock has made a lower high. It hasn't made a lower low yet, but that maybe tomorrow. I still think this one is falling back to the uptrend around 2850.
Intel is getting smoked tonight after reporting results and giving weak guidance, and another delay of their 7nm chip. Right now, the stock is trading at $54.60 and is down 9.7%. If the stock closes tomorrow below $55.90, you have a head and shoulders pattern, and that could mean even steeper losses to come, maybe $50.25.
Netflix managed to hold its uptrend finishing the day around $475. If the stock falls below $475, the flood gates open. The uptrend is broken, and it set up a decline to $448, and probably $405.
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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.