To The Moon

The first session of June on 03 June 2024 saw the stocks experiencing mixed action, with the S&P 500 closing +0.11% and Nasdaq Composite logged a 0.56% gain, while Dow Jones Industrial Average settled lower with a negative 0.30%.

Significant Movers Helping Nasdaq and S&P 500

$NVIDIA Corp(NVDA)$ managed to gain 4.90% after introducing new products, limiting downside moves in the major indices. It has helped Nasdaq and S&P 500 to stay in the green on the first trading session of June 2024.

Economic Concerns. Impact On Bond Yield.

Concerns about economic growth kept the broader market in check. The ISM Manufacturing Index for May showed a faster pace of contraction than expected (actual 48.7%; expected 49.6%), indicating a contraction in activity.

The US 10-yr note yield fell by 9 basis points to 4.386%

The US 2-yr note yield recover slightly with two basis points to 4.818%.

Dropping market rates had recently supported equities, but worries about an economic slowdown affecting earnings prospects drove stock market action today.

GDP Forecast Down. Oil Commodities Fell Sharply.

The Atlanta Fed GDPNow model estimate for Q2 real GDP growth is now 1.8%, down from 2.7% on May 31, in response to the soft data. WTI crude oil futures: Settled sharply lower at $74.29/bbl, down 3.6%, reflecting slowdown concerns and potentially weaker demand for oil.

S&P 500 Sector Performance. Energy Sector Saw Selling.

This price action contributed to selling in the S&P 500 energy sector, which dropped 2.6%. The industrial sector declined by 1.24%, with utilities dropped by 1.2% to come in as next worst performers.

Meanwhile, we saw the information technology sector led the positive gain with 0.98%, followed by the health care sector with 0.74% gain.

Energy stocks lagged on Monday as crude oil futures fell to their lowest levels since early February. OPEC+ agreed to maintain production cuts into 2025, but the market reacted negatively due to concerns over potential discord within the group. Analysts view the decision as bearish, anticipating challenges in maintaining low production levels if market conditions soften.

Meme Stock Space Speculative Buying

Following"Roaring Kitty" posted a screenshot showing a big position in GameStop (GME), there was speculative buying activity in the meme stock space. We saw heavy buying in FFIE and AMC.

Nonresidential Spending Down. Expect Drag On Q2 GDP Growth

May S&P Global US Manufacturing PMI came in at 51.3 with the previous figure recorded as 50.0. May ISM Manufacturing Index was lower at 48.7% with consensus at 49.6%, the previous was at 49.2%.

The key takeaway is the faster pace of contraction in manufacturing activity, raising concerns about the economy missing its mark with a soft landing.

April Construction Spending came in negative at -0.1% with consensus 0.2% while the previous was -0.2%.The key takeaway is that nonresidential spending was down in both private and public construction markets, which will be a drag on Q2 GDP growth.

Stocks To Watch

Morgan Stanley's (MS) E*Trade is considering removing meme-stock trader Keith Gill from its platform due to concerns over potential stock manipulation. Gill, known as Roaring Kitty, recently disclosed a significant position in GameStop (GME), including $115.7M in stock and options. Executives at Morgan Stanley are debating the risks of his actions and the potential backlash from his followers. GameStop stock surged 21% on Monday, continuing its upward trend.

GameStop continues to experience buying pressure, forcing short sellers to reconsider their positions. The stock is up 109.41% from a month ago and 32% year-to-date. Short sellers have faced over $1B in losses due to the recent surge. Keith Gill's significant holdings in GameStop have contributed to the stock's rise, leading to increased volatility and short-covering activity.

$GitLab, Inc.(GTLB)$ saw its shares rise 1% in extended-hours trading after reporting fiscal first-quarter results that exceeded expectations. The company earned an adjusted $0.03 per share, with revenue increasing 33% year-over-year to $169.2M. GitLab's CFO highlighted strong top-line growth and positive cash flow for the first time. The company also provided an optimistic outlook for the next quarter, expecting adjusted earnings between $0.09 and $0.10 per share.

If we looked at how GTLB have been trading, there were sell-off or rather profit taking at around $59 on 21 May 2024, since then, the stock price have declined below $49.

With earnings outlook for next quarter optimistic and the current earnings have also beat expectations, the price around $47-$49 looks like a potential BUY for GTLB as we can see that the highs hover around $59.

$CrowdStrike Holdings, Inc.(CRWD)$ is set to report first-quarter earnings, with analysts expecting strong results driven by high demand for its cybersecurity solutions. The company is projected to post earnings per share of $0.89 on revenues of $904.82 million. Morgan Stanley predicts CrowdStrike's valuation could reach $100 billion within the next 12 months, driven by advancements in artificial intelligence.

Similar to GTLB, CRWD has a SELL signal on 21 May 2024, if CrowdStrike earnings were to beat expectations and the outlook guidance provided for current quarter and 2024 is positive.

I would think the price to go in would be around $308 before the earnings release.

Summary

Market have been showing mixed action, but with strong tech stocks showing, I believe NASDAQ and S&P 500 could stay in the green, but I would not expect high percentage gains, because the market is concerned of what the economic data have shown.

A drop in Q2 GDP might also have an impact on some of the stocks which are sensitive to GDP data, energy stocks might still see decline, and mid-caps could see some positive movement.

Appreciate if you could share your thoughts in the comment section whether you think market would still present mixed reactions with big tech holding the fort and some mid-caps might present positive movement?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.