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

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

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

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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

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

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.