Recession, Really? Not Based On Today’s Economic Data

Russell 2000 (IWM)

Anyway, I want to be wrong here, and I am hoping my eyes are deceiving me. However, the chart on the Russell 2000 is looking slightly head and shoulder -ish. It makes the current level around 1450 very important. If the index breaks that level, it could be a terrible sign, suggesting a decline to significantly lower levels. Perhaps some of my CMT friends have something to add.

russell

Cisco (CSCO)

Anyway, Cisco is falling sharply today, much to my surprise. The move lower seems to be due to the guidance miss, which seems minor in comparison to the prior estimates. It would seem that most of the miss is due to “softness” in China. It sounds more like China is putting Cisco on ice, to make up for the US Huawei ban, that is my interpretation. China makes up about 3% of Cisco’s total revenue. From what I can tell estimates had been calling for Growth of 2.5% in the first quarter for 2020. That was higher than the companies guidance of around 1% at the mid-point. $46.50 is support for the stock.

Cisco

GE (GE)

GE is breaking support at $9, and now it sets up a drop to $8.25. The stock is falling after the Bernie Madoff whistler blower is calling into question GE accounting. I don’t know that I’d want to be mention in the same sentence as Bernie Madoff. Indeed not good, and more thing for investors to worry about.  It didn’t take long for those put buyers to profit. 

ge

Alibaba (BABA)

Alibaba reported better than expected quarterly results, and the stock is rising. But again, the trade war and the currency risk are the most significant weight on this stock for now. $166 is now resistance.

alibaba, baba

Walmart (WMT)

Walmart is rising after delivering its results. Resistance is around $115.

walmart

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Disclosure: Michael Kramer and the clients of Mott Capital own Cisco

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice when the ...

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Comments

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Carol W 9 months ago Contributor's comment

Great points as usual Michael - blame the hedge funds wreaking havoc in the bonds. When will they ever learn?

Jimmy Richards 8 months ago Member's comment

Bump.