Here's Why July 31 Just Became The Biggest Day of 2019
July 31 will prove to be one of those days that sets the tone for the market over the next 3 to 6 months for the stock market.

Here’s Why July 31 Just Became The Biggest Day of 2019

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July 31 – Stock Mentions: SPY, AAPL, AMD, CRM, NXPI

Michael Kramer and the clients of Mott Capital own AAPl and NXPI

July 31 will prove to be one of those days that sets the tone for the market over the next 3 to 6 months. Seriously.  I talked about more in this premium video: Why July 31 May Be The Most Important Day Of The Year

Inflation Falls

The market is expecting three rate cuts by January 2020. The Fed will need to communicate this to the market somehow, correctly. The good news is that the Fed got some more ammunition today to call for lower rates with PCE reading of +1.4 versus last year. The current path of PCE doesn’t look very encouraging either.

Core PCE wasn’t any better at 1.6%. Based on the Fed could cut much more than 25 basis points, and to be honest, I’m not sure it would be enough to get the prices in the US rising.

Will It Be Enough?

The dollar has been strengthening since June 24, rising from 96 to 98. Meanwhile, the Euro has plunged from 1.14 to 1.12, and the Pound has dropped from 1.26 to 1.21. The yen has been unchanged.

It would suggest to me that whatever action the Fed takes tomorrow it is not going to be enough, at least the market doesn’t think so.  The dollar should be falling in the face of lower rates, not rising.

Spreads

The German 10-year yield fell to near its lowest level ever, at negative 41 basis points.

germany ten year

Meanwhile, the falling yields in Germany are causing the spread for the US 10-year and German 10-year to start rising again. It tells me at least that market is expecting the ECB to be far more aggressive in its monetary policy than the Fed.

spread

Borrowing Dollars

Meanwhile, the cost to borrow dollar overseas is rising, with eurodollar rates up. Somebody wants to own more dollars and less local currency. It would indicate to that foreign investor believe the dollar will continue to strengthen and their local currency to weaken versus the dollar.

eurodollar

Good luck to the Fed.

S&P 500 (SPY)

Stocks fell on July 30 by roughly 25 basis points to around 3014.

spx, s&p 500

Salesforce (CRM)

The chart for Salesforce doesn’t look all that strong. I also saw some bearish options bets on the stock. I think $144.50 is possible based on it. Salesforce Seeing Bearish Options Betting

crm, saleforce

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NXP (NXPI)

NXP Semi put together a good day rising to resistance at $106. The stock fell sharply to start the day, but once the market realized the recently were pretty good, the stock reversed higher. A break out sends the stock to $115.50.

nxpi, nxp

AMD (AMD)

AMD reported results after the close that where inline on both the top and bottom line. Revenue guidance appears to be a bit light, but it doesn’t seem like a major shortfall on the surface. The company guided 3Q revenues to $1.8 billion at the mid-point versus expectations of $1.94 billion.  Resistance will remain at $34.50, meanwhile, support is $32.30 then $31.40.

amd

Apple (AAPL)

Apple’s stock is rising after hours after topping analysts earnings and revenue forecasts. Also, the revenue guidance for the fourth quarter came in higher than expected at $61 to $64 billion. $217.50 will continue to be resistance for AAPL.

Wearable had a big quarter rising by around 48% to $5.5 billion from $3.7 billion last year. Premium content: Apple Powers Higher On Service And Wearable Sales

Apple, aapl

-Mike

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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.