May 15 – Stocks mentioned: Nvidia, Salesforce, Pepsi, PayPal, Macy’s
Stocks continued to rally on May 15. However, we have not recovered all of the losses from Monday’s sell-off. Until that happens, the rally may be considered suspect.
There has been a noticeable change in tone out of Washington the last two days. Most noticeably the tweet cycle has moved from negative to positive. As much as President Trump loves tariffs, he loves the stock market a whole lot more. What may be even more important is that the equity market knows it will always have a friend in Trump. With a friendly Fed and friendly President, I would find it hard to believe if the equity market did not rally to new highs.
The 5% Rule?
I think what may be more important is that any time the market approaches its highs, we should at the very least keep in the back of our mind that Trump may launch a trade or economic attack. It would seem the President is willing to take a 5% hit in stocks until softening his tone. It sounds stupid and naive, but the evidence would suggest that it may very well be the case.
S&P 500 (SPY)
The S&P 500 managed to increase about 60bps on May 15. While the two-day rally has been enjoyable, we have recovered 1/2 of Monday’s sell-off at best. So there is plenty of work to be done on the charts. At least for today, the S&P 500 failed to break through a significant downtrend.
Its the big show for Nvidia tomorrow and the stock did not perform well today ahead of those results. I continue to think there is trouble ahead of Nvidia; I can’t get Intel’s datacenter problems out of mind and believe that Nvidia has not been affected. I continue to think $150 is Nvidia’s next stop.
I mentioned Salesforce this morning, and the more I look at the chart, the more I see a pattern that doesn’t look kind. The chart has the making of a triple top bearish reversal pattern forming, in my opinion, and it may only take a drop below $153 to get this rolling lower. The RSI still tell you all the bullish momentum is coming out of the stock.
PayPal may be breaking out and should it clear $114 we will know for sure.
Look at the series of steps higher for Pepsi. It looks like the stock broke out today and is starting to take its next step higher.
Macy’s chart looks brutal. What is there to like about this stock, besides nothing. Times have changed, it’s all you need to know.
Until next time
This article first appeared on Mott Capital.
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