Technical Tuesday – 3,000 Or Bust On The S&P 500

Here we are again!  

2,978 on the S&P 500 is within spitting distance of 3,000 and today it will be all about Apple (AAPL) and the market's reaction to their event at 1 pm today, where they are expected to announce yet another new iPhone and probably more watches and stuff about their TV Service and who knows what else…

Apple is 3.5% of the S&P – its largest component and it's 14% of the Nasdaq – by far the largest component and it's a Dow component where each $1 move in AAPL stock moves the Dow by 8.5 points.  So, to say there's a lot riding on AAPL today is a huge understatement.  

The Nasdaq, for it's part, is having a rough week – so they could use some good news from Apple, who are the only FAANG stock besides NFLX who are not involved in anti-trust investigations and NetFlix WISHES they were more of a monopoly because AAPL, DIS, and a dozen other streaming companies are putting pressure on their bottom line and limiting their growth (our hedge fund is short NFLX). 

My early summer comments to our Members on NFLX were:

Submitted on 2019/06/01 at 7:43 am

CMG/Sun – NFLX would be my top short, I just don't think they can keep their growth up, there's no moat to their business and costs are skyrocketing because they are a movie studio selling subscriptions (HMNY) when push comes to shove, not a tech company.

Submitted on 2019/07/17 at 4:17 pm

As I said in the Webinar, it's not really possible for them to sustain that ridiculous valuation.  They are no different than TWX or CBS and those companies trade at 15-20x earnings.  The same people who were convinced to subscribe to HBO over the past 40 years are the people subscribing to NFLX now and I very much doubt there's any magical thing they can do to entice more people that HBO hasn't already thought of and tried. 

In fact, it's disappointing subscriber growth (2.7M vs 5M expected) that's tanking them now as the profits were a 10% beat but who cares if a $320 stock makes 0.54 or 0.60 per share in a Q – that's still not even 1/100th (annualized) of what they are expecting you to pay for the stock. 

Submitted on 2019/07/18 at 10:34 am

NFLX finding dip buyers at $320 and that's down from $380 (18.75%) but I'd call $300-400 the range as NFLX consolidated at $200 back in 2017, topped out at $400 ($423) in mid 2018 and then down to $230 and back to $370 still centers around $300 so it's messy but I think realistic so the run from $300 to $400 gets $20 bounce lines and $320 is the weak bounce line, $340 strong, $360 strong retrace and $380 weak retrace so, generally, they've been failing to get over the weak retrace all year and now they've dropped to the other end of the range but $320 should hold and $340 should be tough to get back over now without better news. 

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