June 10, 2019
State of the Markets
Last week markets made a massive 5% push on news; that the Fed is likely to cut interest rates in July, but some real hopefuls are hoping for that cut in June. Currently markets have priced in a 20% chance for interest rate cut in June, and a 70% chance for rate cuts in July.
So what does this mean?
If rates are cut in June, then markets will POP, and if they don’t markets won’t really mind. If they cut in July, markets will not do much because, you guessed it, it will be priced in. But if they don’t cut in July, then its major selling time, as this week’s massive 5% push calculated for that rate cut.
There is more news to be discussed as well though. Friday late evening President Trump announced that the U.S. and Mexico had agreed to a trade deal. There are a lot of moving parts with this deal including some aspects of border security that are required by Mexico, but in short, markets will love that news and expect a significant gap up tomorrow.
Now on the negative/bear side, the U.S. jobs report for May was released last week and they were the worst growth numbers since roughly 2010. Only 75,000 jobs were created against the expected 185,000. The numbers were abysmal, however no one even blinked an eye. We also have to remember that anytime we get a fed rate cut, that implies our economy and markets aren’t strong enough. In a sense, it’s almost like a stimulus package.
So while markets are currently focusing on all the bullishness that the news above brings to markets, you have to be educated and aware that this news is two-sided, and there are plenty of bear markets to be made. In short, don’t get too comfortable out there.
KAF Stock Picks
Written By: KAF – Lead Stock Trader
Beyond Meats ($BYND) The major short squeeze on Friday led to the short float moving from 51% down to as low as 25%. This means that roughly half of the shorts who were in BYND had to buy on Friday and exited their short position. Additionally, roughly 24 million shares were traded on Friday, and about 6.5 million of that were short sales. These numbers are important and mean a few things, first, this verifies that a large portion of buying on Friday were shorts exiting. And even though there was some volume with shorts trying to enter BYND on Friday, they only made up about 1/5th of all the trading volume from Friday. While there certainly are still alot of shorts in this name, on Monday we will start to see shares become available to short more readily, which should take a lot of pressure off the short squeeze. Next, we have to consider the very high turnover on the float from Friday. The stock traded 2.5X its float on Friday, making the average buy on Friday right at about $132. Now, this is a BIG deal. For a few reasons. This means that when the stock falls under $132, the average buyer from Friday is red. Additionally, this level is incredibly important because it acted as MAJOR support from friday as the stock put in a triple bottom mid day right at $132. Additionally this $132 level was major resistance earlier in the day as well. So, we have a lot of things happening and riding on $132 support. The fall under $132 should likely mean the stock is done making new all-time highs, and the slow trickle back to halfway understandable valuation levels kicks in. Keep in mind everything I mentioned here is purely off the intraday trading aspects of the stock, I won’t even get into the insane valuation levels. Price target on this stock within 5 years is $21. But thats meaningless if you’re day trading it. Also, would not be surprised at all to see a secondary this week so Beyond can take advantage of the valuation levels they are currently getting.
Ambarella Inc ($AMBA) is a semiconductor play related to HD video. I like this namea lot and I love their earnings they posted last week. We saw this make a wild green to red move the day it posted earnings and now its sitting about a delow below where the stock was before they released the strong earnings. $40 is the big breakout level here and we should see $43 by end of week. Be patient, these swing set ups have been money, as long as markets are decently rational, which of course is never a guarantee.
Penny Stock Picks
Written By: CQB – Penny Stock Moderator
Tilray, Inc. ($TLRY) is a Cannabis Manufacturing & Distributing company in the Healthcare sector. This company received a nice sympathy move from its coupled news catalyst with $NEPT on Friday. Neptune Wellness ($NEPT) signed a multi-year extraction & purification deal with Tilray, which is why we see the upward action from both companies. As Cannabis stocks heat up ahead of earnings, I expect this stock to continue its momentum on Monday. I plan to day trade this over the $39.00 natural resistance level!
Senseonics Holdings, Inc. ($SENS) is a Medical Appliances & Equipment company in the Healthcare sector. This company got a boost earlier last week from news of FDA Approval for its “Non-Adjunctive Indication For Eversence CGM System.” Since the fresh momentum faded away, it has sold off, down to lows of $1.85 on Friday. During after-hours though, it began reversing out of its downtrend and testing the $2.00 whole dollar resistance level. The resistance points are a bit choppy between $2.00 – $2.05, so I plan to day trade this over the $2.05 level for the confirmed trend reversal!
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Quote of the Week
“Zeal is a volcano, the peak of which the grass of indecisiveness does not grow.”
– Khalil Gibran
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