🔴S&P 500 Sliding Down and Semis Shooting Up (w/Craig Johnson)


Welcome to trade ideas. I’m Jake Merle sitting down Craig Johnson of Piper Jaffray Craig great to have you back on the show Thanks for having me back. So we’re trading around 3,000 on the S&P right now currently around all-time highs We’ve seen a huge rally this year So given this backdrop do you think now is still a good time to be buying stocks Jake? I got some reservations at this point in time This markets moved up the S&P over 3000. But when I look at a lot of the internal work we do at Piper Jaffray I’ll look at the number of new highs a number of new lows and in our work last week We’re starting to see more new lows in our group work that we’re seeing for new highs We’re also starting to see some of our shorter term momentum indicators RSI MACD some of these things that are very widely used on many of the Bloomberg terminals and what we’re finding is that We’re starting to see a bit of waning momentum in the market Put all those pieces together with a pretty big divergence between large cap and small cap And I’m seeing a set up in the market right now that looks very similar to what we had seen back in January of last year and also September August time frame which was the market made new highs But you’re not seeing the same kind of participation Confirming the push to those new highs and then one other thing Jake I’ll just mention is take a look at the Fang stocks They’re about 20% of the overall market capitalization of the S&P 500 And this is now the fifth time they’ve tried to break out the new highs and they’ve failed So again, if the fangs aren’t making new highs the breadth is weak the markets trying to push ahead through 3000 I’m skeptical. So now what we need to watch Jake is we need to watch 2940 2950 level because that was the old highs we had seen before and when if we break back below those levels I Wouldn’t be surprised to see this market reset itself back down toward the 200-day moving average. Which gets you around 27:50 27:48 somewhere that kind of range So right now are you just cautious and skeptical or are you flat-out bearish so I never really ever go flat-out Bearish what I will tell you is I think the secular bull market is still intact at this point in time But I do think you need to see some sort of pullback in correction and just as a reminder We’ve been talking about a trade range for this market 2500 in the lower-end 2900 on the upper end. We’re at that up around at this point in time So now is not the time to commit new capital to work. I’d wait for this market to come in take some profits and again, if you come back to History as a bit of a guide you’ll also remember that in the third year of a presidential term the second half of the year is typically quite weak and you typically see with a Republican in the White House four out of Six months in the second half of the year are typically negative returns so again Setting us all up For some profit taking here in the second half and I went to find myself as all-out bearish or bearish at all It’s just markets trade and at points in time There’s better entry points and better exit points and I think you’re at a point in time where you should be taking some profits and letting it come back in because Those investors have been trying to chase this tape in full FOMO mode that they been in are ultimately going to see this market come back in and that closed below that kind of key support level is gonna make people pretty nervous and lead to a lot of profit taking So essentially you’re saying your base case scenario is for the S&P to actually end the year lower than it is right now Yeah about nine to 10 percent lower than we are now. I have not changed my year-end objective 27:25. I just think we pushed above it gone a little further than I thought. We were gonna go But again, I think we’re gonna see a slow kind of leak into year-end as investors. Say I’ve had a great year 1200 basis points ahead of my benchmark or whatever it is. I’m gonna take some profits and protect at this point in time So you’re skeptical on the overall market? However, are there any specific sectors? You’re bullish on at the current moment? Absolutely Jake So I’m skeptical in the big picture of the tape We’ve seen these SAS and software names have very nice runs so far for this year But a lot of my very crowded trades so I wouldn’t be surprised if we get some sort of Discussion about a trade deal something done Perhaps in the second half of this year or early next year and I wouldn’t be surprised to see money come out of these SAS And software names and start to rotate into the semiconductor space and that’s why I’m more optimistic about the semiconductors at this point in time so if you first at the chart of the Semiconductor space and you look at the sock specifically I always like to start with a longer term chart on the socks and you’ll see a pretty good Consolidation arrangement that’s been forming and from my perspective if I stand that up and look at it I can see a measured objective toward about 1860 So that sets us up for a nice risk reward in here as always I’d use about a 7% kind of trailing stop on this but I think we’re setting ourselves up for a nice move higher and there a Couple of the names I’d call out in terms of trade setups that look good. I’ll take a look at micron on the chart I can see a nice double bottom has been made I’ve got resistance that we’re starting to push through I can see a price upside objective to about $62 on micron so again a nice set up on that name and it also just mentioned sacks like Nvidia are also Confirming that earnings reports that have just come out on things like Texas Instruments also are constructive and starting to push through prior resistance Levels so it seems like we’re starting to see some early signs of that profit taking in a bit of a rotation towards semiconductors So Craig in terms of micron, can you please break down that chart for us a little more please? Sure so looking at this chart breaking it down if I look back I don’t who your chart at micron what I’ll see here is a nice double bottom has been forming since about November of 2018 we made a recently higher low back in the May June timeframe And now we’re starting to push through the neckline of this at around $44 and so from a technical perspective What you like to do is you like to look at the size of that kind of? Consolidation the higher lows and then ultimately stand that up and you can see that it’s going to measure out very nicely Back to the old highs you had seen back in the May June timeframe of 2017 So again a nice risk reward and a nice set up here to us it looks like about a three to one risk reward Jake and again, next price objective coming in at 62 dollars over What time rising do you expect that playing out in terms of the time horizon? the typical rule of thumb for most technical folks is about two-thirds of the time to set up the The consolidation or base is really what it takes to ultimately breakout. So if it took nine months Perhaps it’s going to take about six months ultimately before you break out and reach those major those measuring objectives So Craig when people think of micron they think of this big bull market type of stock But you’re actually saying that the bull market may be coming for a pause and a little bit of a correction How do you weigh the two against each other? So I think Jake the way to think about this is first from the long-term perspective the second their bull market is not over the economy is still in decent shape and We know that there are certain segments that often get ahead of themselves the SAS software names are there but the growth buyers the momentum buyers are gonna look for another place to go if you start seeing profit taking coming in Definitely the semiconductors could be there some of these biotech names could definitely be there I think you’re just gonna see a bit of a rotation Because when you step back and you say if money’s got to be put to work It’s probably not going into international markets at this point in time. It’s probably not going to be going into Utilities it’s probably not going to be going into a lot of other areas And so that growth and momentum money needs to go somewhere I think these semiconductor stocks the way they’re setting up or the charts look pretty interesting so even if there is gonna be a setback or a correction I would say it’s probably not more than 10 percent and it’ll be a great opportunity for people to continue to buy stocks Specifically things like micron and the semiconductor stocks and what would you say is the biggest risk to the strain? I think the biggest risk to this trade is what happens with the trade discussions if there can’t be any sort of resolution in a Reasonable time frame I think people may give up on him again And just as a reminder It was earlier this year that a lot of people were trying to take profits in these SAS stocks Rotating into semiconductors thinking there was going to be a trade deal done. It didn’t happen it got kicked down the road and then they went right back into the SAS stocks once again and gave up on the semiconductor stocks, which created that very nice kind of double bottom set up But that double bottom set up was higher than we were before so that to me is the biggest risk and he’s sort of dragging Out of that trade war well Craig. We’ll see how it plays out months to come. Thanks so much for joining us. Thanks Jay So Craig is bullish on semies Specifically he recommends buying micron ticker symbol mu at current love with the stop loss at 42 and a price target of 62 over the next six months That was Craig Johnson Piper Jaffray. And for real vision. I’m Jake Merle You You

6 thoughts on “🔴S&P 500 Sliding Down and Semis Shooting Up (w/Craig Johnson)”

  1. Isn't there ever going to be another bear market? If this it's still a bull market, it's 124-1/2 months old. That's ridiculous.

  2. What do Tariffs and Trade wars matter when you can print or create whatever money you need? who needs our taxes when they can print, Its just all BS for public control. Trump is just a bankers puppet in a Bankster world. We still remain the deplorables, with predatory loans.

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