Stock Market Update 5-28-2019

Stock Market Update 5-28-2019

6 min read

Hump, Slump or Bump?

Markets opened with a slump Tuesday after the long memorial weekend. The SP500 closed at lows. It’s possible the bulls were feeling uneasy with President Trump’s visit to Japan. Unfortunately it wasn’t too insightful for investors about what to expect next in the U.S.’s trade dispute with China. What’s it going to take to get the market up over the hump? Or are we going below the 200 SMA yet again?

Now one thing weighing on investors minds is the Bond market. Bond yields opened with a big bump. Yes, the demand for safe-haven assets continues to pick up steam. As markets are seemingly growing more unpredictable, investors need a place to park their cash and protect their assets. Yields on 10-year U.S. Treasury bonds hit 2.27% early Tuesday morning, their lowest since October 2017, while the two-year yield, which is more closely tied to the Federal Reserve’s official interest rates, fell to 2.13%.

Time will tell, but the trade war with China has encouraged investors to bet on the Federal Reserve slashing interest rates to keep the bull market rocking.

Vroom + Vroom into June?

The global automotive industry could see two major companies combine to become a metal juggernaut. Fiat Chrysler Automobiles (FCAU) has proposed merging with France’s Renault (PA:RENA).

Individually, the two companies would make the world’s third-largest auto group. But if Renault’s current partners, Nissan (T:7201) and Mitsubishi (T:8058) joined the shindig, the new group would become the world’s top group by sales, beating   Toyota (TM) and Volkswagen (DE:VOWG_p).

NIO misses, again.

The Chinese electric car maker failed to make it out of the slump. The company missed on earnings and lowered guidance.  The CEO made some less than inspiring words on Tuesday: “Looking ahead to the second quarter, we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease, as competition continues to accelerate and the general automobile market in China”

If I had to pick between the two, it looks like Tesla (TSLA) is still a better buy than NIO for the foreseeable future but the future of electric cars grows more uncertain each quarter that drives by.

 MARKETS

  • Crypto to the moon? Bitcoin (BTC) blasted past 8k resistance before hitting resistance just below 9k. On social media the bullish sentiment is everywhere. The rally got started in February and turned into a rocketship in April, and the bullish price action looks to be following through. Is BTC a hedge,an avoid, or a risk on type indicator for you? Do you think it’s headed to the Moon, Mars, or will gravity cause the dust to settle?
  • Gold Stocks: Shares of Eldorado Gold (EGO) rose more than 20% Tuesday after Greek Prime Minister Alexis Tsipras called for a snap election after his party was defeated in the European parliamentary elections over the weekend. Investors are hopeful that a snap vote could catapult the business-friendly New Democracy political party into office.. That could provide a boost to the gold miner, which has struggled against regulations in the country. Gold Futures (GC_F) have been struggling to get above their 50 Daily Moving Average since March. 1268 is seen as a key level for the shiny asset for traders. Watch to see if we catch a bounce when this level is inevitably tested.

On The Lookout Tomorrow

Mortgage application data at 7AM and Redbook at 8:55AM

More daily economic data for the markets to digest come tomorrow with Mortgage Applications and retail data from the Redbook report.

Investors are hoping for higher than expected readings as this should be seen as positive and bullish for the USD and thus markets.

Charts: FB, TVIX and AAPL have good descending triangles at angles and are prime for a move in either momentum breakout mode OR reversal mode. Exciting.

FB Descending Triangle

TVIX
Aapl Hourly

Earnings

DICKS (DKS) Earnings…home run or fly ball?

Your local sporting goodies store is set to report earnings tomorrow at 7:30EST. Looking back at last earnings, Dicks performed well, but after the earnings honeymoon wore off, the stock has retreated back to its 200 Daily Moving Average.

The main reason was Q4 earnings highlighted headwinds for investors to expect for 2019. Namely: Higher investments (in E-commerce) that will impact 2019 earnings as the retailer fights for online sales. Lowered guidance suggesting to expect negative comps in the first quarter. And lastly transactions were declining by 3.1 percent in the fourth quarter, all which may shed light on tomorrows Q1 results.

BZUN Earnings – Beat or hit the street?

As we’ve seen (unless you’ve been living under a rock) The Chinese tech world was shaken up by the spreading of the U.S. crackdown which threatened to suck in more victims beyond Huawei. As such, Chinese stocks are on the move, with $BZUN being a one of many that has given a lot of gains back in the last 52 weeks (roughly 34%). $BZUN reports before the bell and investors will be watching closely to see if the tech company will produce strong results and raised guidance. BZUN itself as the famous brand E-commerce business partner, and a leading digital technology solution company in China.

Bzun Channel

ECONOMY

Uh oh. Top officials at the New York Fed are stepping down.

Two of the top dogs at the NY Federal Reserve bank are saying ta-ta to their co-workers. There isn’t much news as to why, as most close to the bank have declined to speak on the event. Could this mean something coming? Typically resignations are seen as prelude to…something. Maybe they’re just ready to retire…maybe something else.

Remember, The Fed has had an expanded role in markets because they made massive asset purchases to support the U.S. economy in the aftermath of the 2008 global financial crisis. The central bank currently holds nearly $4 trillion in assets…for now. The Fed caught the knife when we needed it, but will they drop the hammer? Or keep floating the markets with cheap, easy credit?

Big Money and a Bigger Heart

MacKenzie Bezos pledges to give half her $36 billion fortune to charity!

Have you heard? The Ex-wife of Jeff Bezos, billionaire and Amazon CEO is donating half of her fortune to charity. MacKenzie is an accomplished writer and philanthropist, and clearly, an extremely generous person. She also worked at Amazon back in the day, long before it grew into the $905 billion retail behemoth it is today.

Unlike her ex husband, MacKenzie Bezos has kept a relatively quiet profile and hasn’t had a public role in Amazon in many years. But she’s making a big splash now. What charities would you donate to if you were a billionaire? How much would you donate?

The Bullish Bears believe in charity and helping others. I donate to my local food bank, wounded warrior project, I also donate my time to help coach soccer. There are so many ways to give back. Including helping people learn to trade without making them take out a second mortgage to afford the membership!

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