Market rally is working on overcoming resistance zone here. S&P is trading at new high. FED policymakers revealed a big dovish shift indicating they are ready to act if trade war escalates ahead. Wall Street is pricing in three FED rate cuts by January. European central bank indicated same earlier. At G20 meeting, President Trump is expected to meet Chinese Premier. Markets will be watching.
NASDAQ has successfully overcome resistance level of 7950. Next resistance level is 8175-80. VIX closed at 15.52, just below 50DMA. It needs to close below 14.40 level for validation of this trend. Markets remain news driven. We need to be vigilant.
Breakouts are mostly retesting breakout zones and not rising sharply here. Some volatility may lie ahead too. Let’s watch for improvement in leadership, internals, and increased quality breakouts in top stocks in top groups ahead, and start to reorient our head toward a more bullish bias if evidence continues to grow for a new leg up ahead that probably needs some better visibility of at least a benign trade-deal to really gather steam.
The market is in Uptrend.
Recap of last week:
Economic Reports:
| Economy Indicator | Released Date | Period | Prior | Prior Revised | Consensus | Actual |
| Empire State Mfg. Business Conditions | 6/17/2019 | June 2019 | 17.8 | 10 | -8.6 | |
| Housing Market Index | 6/17/2019 | June 2019 | 66 | 67 | 64 | |
| US Housing Starts | 6/18/2019 | May 2019 | 1.235M | 1.281M | 1.239M | 1.269M |
| MBA Mortgage Applications W/W Change | 6/19/2019 | WK 6/14, 2019 | 26.8% | -3.4% | ||
| Redbook Store Sales Y/Y Change | 6/19/2019 | WK 6/15, 2019 | 5.00% | 5.4% | ||
| Jobless New Claims | 6/20/2019 | WK 6/15, 2019 | 222K | 220K | 216K | |
| Philadelphia FED Business Outlook | 6/20/2019 | June 2019 | 16.6 | 11 | 0.3 | |
| Current Account | 6/20/2019 | Q1:2019 | -$134.4B | -$143.9B | -$124.3 | -$130.4B |
| Leading Indicators | 6/20/2019 | May 2019 | 0.2% | 0.1% | 0.1% | 0.0% |
| FED Balance Sheet | 6/20/2019 | WK 6/19, 2019 | $3.850T | $3.844T | ||
| Money Supply Weekly Change | 6/20/2019 | WK 6/10, 2019 | $28.4B | $29.0B | $40.9B | |
| PMI Mfg. Index | 6/21/2019 | June 2019 | 50.9 | 50.9 | 50.6 | |
| Existing Home Sales | 6/21/2019 | May 2019 | 5.190M | 5.210M | 5.280M | 5.340M |
| Baker-Hughes Rig Count | 6/21/2019 | WK 6/21, 2019 | 1076 | 1086 |
This week’s major events:
| Monday | Chicago FED National Activity; Dallas FED Mfg. Survey | ||
| Tuesday | Redbook; Case Shiller HPI; House Price Index; New Home Sales; Consumer Confidence; Richmond FED Mfg. Index | ||
| Wednesday | MBA Mortgage Applications; Durable Goods Orders; International Trade; Retail Inventories; Wholesale Inventories | ||
| Thursday | GDP; Jobless Claims; Corporate Profits; Pending Home Sales Index; Kansas City FED Mfg. Index; FED Balance Sheet; Money Supply | ||
| Friday | Personal Income and Outlays; Chicago PMI; Consumer Sentiment; Baker-Hughes Rig Count |
Economy:
Retail sales are showing strength. Jobless claims are good. Economy is solid. FED is ready to be proactive for any effect of trade war on economy. Markets have taken notice and working on making new highs. Let us see how the talks with Chinese proceed.
Sector performance:
Stock to Watch:
New opportunities are showing up with high RS. There are some signs of institutional demand. But we expect volatility near term. Continue to build watch list.
Strongest groups are Energy, Software, Insurance, Business service, Insurance, Computer-Tech services, Computer Software-enterprise, Computer Software-Database, Telecom, Computer Software-Security.
Weakest groups are Retail, Food, Auto, Media, Medical
Watch List: Our strong RS/Growth screen is showing following candidates.
TEAM, CHGG, PYPL, CYBR, FIVN, SHOP, LLY, LULU, NOW, HUBS, FIVE, ADBE, ADSK, MSFT, HEIA, TWLO, WDAY, ETSY, EPAM, MTCH, LPLA, GDDY; AMZN, PAGS, FB, FNKO, BAH, CPRT, ENTH, HEI, LLL, PAYC, PGR, PODD, VEEV, VRSN, KL, GNRC, CACC, AMD, MDSO
Summary:
Resistance is being challenged here. Look out for strong RS stocks and add early leaders or new ones that are emerging here.