Stocks Pop And Drop
Growth, Long/Short Equity, Momentum, Macro
Seeking Alpha Analyst Since 2014
I am Michael Kramer, the founder of Mott Capital Management and creator of Reading The Markets, an SA Marketplace service. I focus on long-only macro themes and trends, look for long-term thematic growth investments, and use options data to find unusual activity.
I use my over 25 years of experience as a buy-side trader, analyst, and portfolio manager, to explain the twists and turns of the stock market and where it may be heading next. Additionally, I use data from top vendors to formulate my analysis, including sell-side analyst estimates and research, newsfeeds, in-depth options data, and gamma levels.
February 26, 2021
STOCKS – JPM, BAC, CRM, SBUX
MACRO – SPY, TLT
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Friday Stream Session 1.26.21 Starting At 1 PM ET
- Morning Note: Waiting For The Markets Next Major Move
- Live Webcast Session- 2.26.21 12:30 PM ET
- Midday: Stocks Cave As Rates Rise Too Much
- Morning Notes: Rates Are Breaking Out Globally, The Big Risk For Stocks
- Chatboard 2.24.21 – Nvidia Commentary
- Midday: The Dynamics Have Changed
- Morning Note: Yield Breaking Out, Don’t Trust The Rally
- Bear Case: S&P 500 2,860
Stocks had a rough day falling by around 50 bps; the big sell-off came in the final 10 minutes when it was revealed there was about $2.5 billion worth of stock for sale on the closing cross.
The index finally filled the technical gap today at 3,785, where it managed to find support. The index was clearly rejected on a few occasions around 3,850.
Until the index breaks below 3,785, it is tough to know where it could go next. If there is a further drop on Monday, it is likely to be the decisive drop that sends the index on its way lower. It will result in the RSI breaking support at 42, and a clear sign that momentum has shifted lower. I would expect there to be decent support at the 3,650 level if it should come to that.
The 10-year finished the day lower at 1.42%. Not surprising to see yields come down some. I expect that they should stabilize, as there is firm resistance in the 1.50 to 1.6% region, with support of around 1.30%
"Value" stock JPMorgan is looking a little bit toppy here. I thought that was the case at $141, and that was wrong. The stock ran up to $147. Still, if I drew the chart out the right way, it looks like a bearish bump and run pattern along with a rising wedge pattern. It suggests a pullback to around $135. The RSI is insanely high at over 81.
Bank of America (BAC)
Bank of America, which is also considered a "Value" stock, is in a similar boat, dropping out a rising wedge pattern of its own with a dip below $34, creating a potential pullback to $29.75.
Not a good day for Salesforce, not sure if this a "value" stock, but it might be one soon. The stock is sitting on support at $215. A break of support will send the stock lower to around $191.
A big breakout in Starbucks today out of a bull flag probably sets up a push to around $115.
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.