Jim’s Notes – Mixed Activity for Stocks

Moving the Market – May 20th

The markets remain mixed as investors continue to look for direction after testing new highs. Monday was definitely a news-driven day led by earnings, announcements, and speculation. HIMS runs higher on offering GLP-1 injections for weight loss from the digital pharmacy. CCL jumped higher on earnings. CB fades following the Berkshire pop last week. JPM falls on Jamie Diamon stating retirement was getting closer. The banking sector was lower overall as BAC fell along with KBE. The NASDAQ closed at a new record high. With no economic data on the day, the markets were split with some sectors moving higher and others continuing to test the downside. Global stocks hit record highs as more countries joined in the rally. Target cut prices on 5k items as it ramps up competition with Walmart as shoppers take on debt to buy groceries… is it the proverbial canary in the coal mine? The debate is heating up relative to the consumer. Delta CEO stated people were spending money on airline tickets, but fast food says they aren’t spending at restaurants. Big Box stores are chasing younger shoppers to help their bottom line. The consumer is challenged by the rate of inflation and becoming strapped as it relates to discretionary dollars. The markets remain in an uptrend as we continue to follow the money and take what is offered.

The major indexes closed the day mixed with the Dow closing lower as JPM and JNJ were a drag on the index. The focus remains the Fed and talk of rate cuts on the horizon. Semiconductors, cryptocurrency, natural gas, and biotech led the day. The direction short term is higher as we bounced off the April lows to new highs The NASDAQ closed up 0.6%, DIA was down 0.4%, and the SP500 was up 0.1%. The major indexes closed mixed on the day. The SOXX was up 2.2%. Small Caps (Russell 2000) were up 0.2%. The ten-year treasury yield was 4.43% up 1 bps for the day. Crude Oil (USO) was down 0.3%. (UGA) was down 1.2%. Natural gas (UNG) was up 3.7%. The dollar was up 0.1%. Plenty to deal with moving forward as we manage our money and emotions relative to the current environment.

Tuesday Outlook: Broad indexes await more economic data and retail earnings. New highs in the large-cap technology stocks and the NASDAQ. Watching the leaders and the laggards relative to money flow… seeing some interesting developments short term that are worthy of tracking moving forward. The economic data would point more to defensive or value stocks versus growth which have led the last five weeks… thus, we are tracking that discrepency. Remember the facts will eventually matter, until then you follow the trend. 1) Watching the dollar, gold, interest rates, and crude oil. Commodities are seeing some rotation and volatility. 2) Mega caps have been lagging, and if we are going higher they will need to participate in leadership. 3) QQQ hit new all-time highs. 4) EFA and EEM continue in their uptrends. 5) SOXX moved near the March highs. 6) XLF, KBE, KRE, and KIE tested their breaks higher. 7) XLY is lagging showing a slowdown from the consumer.

Chart of Sectors: The scatter chart below shows the activity of the sectors relative to the S&P 500 index. The red down trendline was broken back to the upside. Watching how this unfolds moving forward.

Charts to Watch: See Notes on “Reality of the Markets”

Headlines Worthy of Note:

Even the Supreme Court Justices are trading stocks... maybe the highs or in? Or maybe insider trading is alive and well.

Target releases thousands of deals to “help” consumers with inflation… their focus is on grocery items as well as other necessities. TGT has been in a battle with Walmart relative to market share. They are due to report Q1 earnings May 22nd. Question: If Target is cutting prices how does that impact their profits looking forward? $156 is key support. The chart is currently in a downtrend from the March highs.

Nvidia is trading near an all-time high and the ‘rumor’ on the street is they are going higher. I am not in the habit of investing in rumors or speculation for that matter. They are also ready to announce their Q1 earnings on May 24th. Question: Does NVDA produce another beat-and-rise report? If so, the stock could move up 10+% on the announcement. The Chart is currently in an uptrend from the April lows with the March highs next resistance point.

Quote of the Day: “Rough diamonds may sometimes be mistaken for worthless pebbles..” — Thomas Browne.

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