Morning Market Thoughts
Good morning. Today is Columbus Day, so volume should be a bit below average due to the Treasury markets and banks taking the day off. But the futures are up and it looks like this helium lift will continue. There’s not much in the way of financial news this morning, so I’ll be brief:Netflix (NFLX) is closing in on $200 and is likely to push through today. As recently noted, there is likely to be enough supply at $200 to keep the stock at that level for a while. Many traders will often use these even numbers as sell stops. “When NFLX his $200, I’ll sell.” This dynamic makes chart reading a bit easier because you can simply watch that level. If the stock stalls, you know why. Supply is sufficient to fill the demand. But if the stock instead keeps rising, you also know why. Demand is so strong that all the available shares at $200 have been absorbed and buyers are still interested in buying stock. I’m looking for higher prices. As I see the weekly chart, this isn’t a place where the prevailing uptrend in NFLX is likely to end. The R1 (first level of resistance) in pivot point analysis is $201.12. So that’ll be another level to watch.
Tesla (TSLA) is down this morning after Elon Musk tweeted on Friday (conveniently, after the market closed before a weekend, followed by a holiday) that the new Model 3 is being assembled by hand. There’s a bit more to it than that, but I’ll just leave that sentence alone because it says so much about so many things related to the company’s production estimates. The company recently published a production goal of 20,000 Model 3’s being produced each month by the end of the year. Obviously that’s not gonna happen. But no one is really surprised. The stock has been largely rangebound (in a very wide range) since the early June breakout. However, because this is Tesla, this type of pullback will likely prove to be another buying opportunity. Each time the stock falls on this type of news, it’s bought.
Mazor Robotics (MZOR) is also breaking out this morning, trading above $54 after last week’s high volume move on Wednesday. You can review Wednesday’s Strategy Session for my thoughts on the stock. This company is in the same industry as Intuitive Surgical (ISRG). The main difference is that Intuitive Surgical focuses on minimally invasive surgery, while Mazor emphasizes brain and spinal surgeries. Mazor is still losing money, but the picture is improving. The stock has been on fire since breaking out in mid-2016 at $12. Look at a weekly chart and you’ll see a dramatic increase in volume since last March. This represents institutional interest in the stock, and revenues have been increasing at a very rapid rate. I’m not worried about missing the move from $12 to $50. I’m more focused on catching the move from $50 to $100 (not a prediction at all; just a statement that a stock like this isn’t too late to buy. Rather, timing is everything).
Lastly, thanks to everyone who met up at Central Park on Saturday. It was a blast getting together with so many old friends (and a few new ones). I won the prize for traveling the farthest, but there were a few who definitely went the extra mile (pardon the pun) to attend. (We’ll be having a similar event on the west coast sometime soon, though the date is undetermined at this time).
See you in the forum.
–Dan
Market Update