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10 Indicators To Watch In The Stock Market For The Week of May 28
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX & AAPL
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The coming week will be a big week when it comes to data, with inflation and jobs data starting on Wednesday. First, we get ADP private jobs data, with consensus looking for 186,000 jobs created in May, and then 1Q GDP comes later that morning with consensus calling for growth of 2.3 percent. Thursday is personal income and outlays, PCE y/y is expected at 2 percent, while PCE Core ex-food and energy is projected at 1.8 percent. Friday is the employment report, with estimates calling for 185,000 jobs created, and average hourly earnings up 2.7 percent y/y. You can find more at the Bloomberg calendar, a handy tool.
So, we should expect the week to have a little more volatility following the numbers, each day, but this week will most certainly be all about inflation. When you look at core PCE over the course of the last 10-years, we can see that it has been consistently low.
PCE like the other gauges of inflation, like PPI and CPI, tracks extremely closely to the price of Oil. 
By the way in case you are curious you can see the similarity with oil and PCE ex-food and energy, are not as close.
When it comes to the future of inflation and interest rates, we will need to watch the price of oil. Wages should continue to remain contained as well below 3 percent.
So is it possible that we see some huge spike in inflation worries this week, well anything is possible. Is it likely? I have a decade worth of data saying no. Additionally, one must remember that the data is backward looking, and oil is a real-time barometer of inflation, and so if oil continues to fall come Tuesday, then I suspect rates fall with it, regardless of the reports.
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Stocks To Watch
The most important stocks to watch this week, Netflix, Amazon, Apple, Micron, Biogen, Microsoft, P&G, and Coke. Yes P&G and Coke! Really. Remember if rates are falling then the staples, which have been crushed, should see a rotation back into the names. The other stocks are leads in the most important risk-on sectors around, Technology, Chips, and Biotech.
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P&G
The chart of P&G is bullish and suggests shares could rise back to $78.20 in the short-term. The relative strength index (RSI) is trending higher and has bottomed out at oversold levels now on two occasions.
Coke
The setup in Coke is quite positive too and looks to be heading back towards to $44.50
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Microsoft
Microsoft broke out, and we want to continue to see the stock rise. The relative strength index continues to trend higher as well.
Biogen
Biogen has broken out as well, and it could be looking to rise back towards $300.
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Apple
Apple has been consolidating since its post-earnings rally, and a breakout higher from the markets most valuable company, would add to positive sentiment.
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Micron
Micron is facing a potentially big breakout. Micron has been one of the hottest stocks around, so we want to see this one continue to stay hot, as it acts as a barometer for the risk appetite of the market.
Amazon
Amazon is knocking on the door of a big breakout too.
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Netflix
There is no doubting that Netflix is the undisputed champion in the market this year, and there is no stock that is more important. If Netflix continues to rise, then I suspect the rest of the market will soon follow.
Enjoy the long weekend.
-Mike
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Tags: #sp500 #inflation #oil #yield #microsoft #apple #netflix #amazon #biogen #micron
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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