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US Trading
- S&P 500 Futures +1 point
- US 10-year yields 2.6%
- Oil 58,39
- VIX 13.66
- Dollar 96.44
International Trading
- Japan Nikkei +0.20%
- Hong Kong HSI -0.49%
- China Shanghai -0.01%
- South Korea KOSPI -0.2%
- German Dax -1.33%
- UK FTSE -0.05%
FOMC Meeting
Stocks will attempt to rebound from yesterday’s late day sell-off, and by the looks of the futures, a flat opening is a good start. The headline news event of the day will be the conclusion of the FOMC meeting. The odds of a rate cut later this year or early next year continue to increase. But most important will be the commentary centered around inflation expectations and the balance sheet.
Yields
Recent trends in the velocity of MZM do show that the pace of money changing hands has started to trend higher in past quarters, but are still at very depressed levels and indeed continue to call for the low-interest rate environment.
We can probably continue to argue that rates on the on US bonds can likely continue to fall given the low levels of inflation, and wide spreads with global yields.
Economic Headwinds
FedEx arguably confirmed to some extent what we already knew; that the economy was slow and was likely to stay sluggish over the next quarter.
However, when we think about this commentary, it would continue to suggest that economy in the US slower, but not at the recessionary type of levels some had feared in the December and early January.
Additionally, when we couple this commentary of a slower global economy with the outlook Broadcom provided on its outlook for the semiconductor business, we can begin to get a sense that we may be at the trough in the slowdown and will soon be re-emerging from it.
I spoke about Broadcom’s results in a video commentary the other day. The drawing below is where I think we are in the cycle about.
FedEx (FDX)
The good news for FedEx is that support for the stock comes around $167. Not what I was thinking would happen, but I think the hope of a positive outlook may have swayed me.
Broadcom (AVGO)
Broadcom, however, has risen sharply, and I think this one can advance further to around $315. Why Broadcom May Climb Higher
Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
Volatility In Focus
Strong JOLTS Report Sends Inflation Expectations Higher
Low Realized Vol Has Trapped The Stock Market
Amazon (AMZN)
Amazon is moving up in the pre-market and rising above the $1,770 level of resistance again. It is probably the most important stock to watch today. If Amazon can continue to its positive momentum higher, then I think the market can rally behind it.
Micron (MU)
It will also be a big day for Micron. They report results after the day’s end, and the chart continues to show that the stock is in a very tough region of resistance between $40 and $42. Additionally, according to data from Trade-Alert this morning the latest open interest changes continue to show many bearish bets yesterday with an increasing open interest for expiration on May 17, at the $35, $38, and $40 puts. The calls saw an increase open interest rise but for expiration on Oct 18 at the $45 strike price.
Have a great day!
-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. March 20