Home » Stocks Rise and Yields Rise As Draghi Fails To Impress The Market

Stocks Rise and Yields Rise As Draghi Fails To Impress The Market
It was ECB day, and the market wasn't overly impressed by Draghi's last stand. Still, equities continued to surge with more to come.

Stocks Rise and Yields Rise As Draghi Fails To Impress The Market

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!

Subscribe to the Monster Stock Market Commentary and join the 1,905 subscribers getting it for FREE every day!

Follow Us on StockTwits

September 12 – Stock mentions: SPY, AVGO, BABA, MU, FDX, BAC

Macro

The big news today was, of course, the ECB. As I said this morning, I thought it was a disappointment. Previous QE programs were much more extensive. I realize that he left the program open-ended, but I felt as if it wasn’t enough to shock the market. The market doesn’t seem to disagree with my viewpoint, either. The German 10-year yield increased all day to finish around -53 bps, which was up from around -65bps following the ECB announcement. Additionally, the euro strengthened versus the dollar.

german 10-year

If the market had been caught off guard or the program was seen as being able to drive rates massively lower, yields and the euro should have dropped. Instead, they all strengthened, suggesting that investors do not believe rates have further to fall.

euro

Of course, this can change over the days, but based on the expectations I had been reading, Draghi didn’t deliver.

It will give the Fed a real chance to pull a fast one if their intent is to get the dollar weaker, which of course, we know is not their goal. However, inflation is, and the dollar has a lot of power over where inflation goes.

Markets

Some recent Macro videos in my SA Marketplace RTM, first 2 weeks free:

S&P 500 (SPY)

The market had a pretty solid day with the S&P 500 rising by about 30bps. It had been up more during the day but gave a good amount back by days end. You can see in the chart that the S&P 500 is rising in a channel, and it would suggest to me that more gains are on the way. My view has not changed.

In fact, it is beginning to become that the trade war may be coming to and that may be setting the next part of the rally higher. 

s&P 500, spx

Stocks

Some recent articles on Stocks in my SA Marketplace RTM, first 2 weeks free

Broadcom (AVGO)

Broadcom reported results. Unfortunately, they don’t break out their semiconductor units any more in the PR, which is a disappointment. I didn’t see anything that stood out to me. The stock is down slightly after hours to around $295. The one bright spots for the semis is that the company hasn’t the business get any worse.  $290 should continue to act as support.

avgo, broadcom

Alibaba (BABA)

Alibaba had a good day and is close to rising above resistance at $180. The next level of resistance comes at $188. Premium content: JD.Com Seeing Bullish Betting

alibaba, baba

Bank of America (BAC)

Bank of America continues to rise, crossing over resistance at $29.50. The next level comes at $31. As long as rates rise and spreads widen, the stock can work higher.

bank of america, bac

Micron (MU)

Micron stalled out today, but with earnings coming, I think the stock can work higher towards $54 still.

amzn, amazon

Federal Express (FDX)

FederalExpress is looking pretty good recently; maybe it can even get back to $185.

fdx

Have a good night!

-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.