10 Monster Stock Market Predictions For The Week Of March 1

That is likely to damage valuation and multiples on some higher-flying stocks, specifically in the technology arena. Some of those companies will report results this week like Zoom (ZM), Broadcom (AVGO), Okta (OKTA), Snow (SNOW), and Splunk (SPLK), to name a few.

Investors need to separate these companies from their stocks. They are not the same. Just because a company has great prospects doesn’t mean the stock isn’t ahead of itself or overvalued. Phrases like "tough second comp," "decelerating growth," or "higher cost" are like death to these kinds of stocks, as is the phrase "lack of margin expansion," or worse, "margin compression."

Ask Apple (AAPL), Facebook (FB), Nvidia (NVDA), AMD (AMD), and Roku (ROKU) about these phrases. Investors don’t care about what you have done; they care about what you will do, and if investors have been pricing your revenue to grow at 35% and suddenly the company says expect revenue to grow at a slower pace in the second half of the year, forget it.

Couple this with rising rates, and suddenly those higher multiples compress dramatically. Couple that as well with lower growth expectations, and that equally lowers stock prices. This isn’t to say this will happen; it is meant to be an explanation to understand what to look for and why a stock may be falling even though they reported great results or gave better-than-expected guidance.

10-Year (IEF)

If the 10-year moves above 1.55%, then there is little to stop it from rising to 1.7%, or worse, 1.95%.

S&P 500 (SPY)

The S&P 500 is sitting on a key level of technical support which was tested last week. Currently, the index is sitting on the March 2020 uptrend, which is a huge level for the futures and the index. There is a minor downtrend that formed off of the 3950 highs, which will continue to act as resistance for the index. A break of the March uptrend would set up a rather dire scenario for the equity market.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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