To The Moon

We saw major indices closed on Thursday (06 June 2024) either slightly above or slightly below Wednesday’s closing levels. The S&P 500 with market-cap weighted closed about one point lower, and the equal-weighted S&P 500 logged a 0.2% decline.

There was not a lot of conviction today following fresh all-time closing highs for the S&P 500 and Nasdaq Composite on Wednesday, and in front of Friday's release of the May Employment Report. The market continues to show nice resilience to selling efforts, which has acted as an upside driver in recent sessions.

Stock Larger Moves On Specific Catalysts

On earnings and/or guidance, we saw $Lululemon Athletica(LULU)$ rose to 323.03, up 4.8% on its pleasing results. J.M. Smucker (SJM) increased to 115.37, up 4.6%, also on positive earnings and/or guidance.

LULU and SJM were among the top-performing S&P 500 components and contributed to the outperformance of their respective sectors. The consumer discretionary sector jumped 1.0%, and the consumer staples sector logged a 0.4% gain.

NVIDIA (NVDA) dropped to 1210.45, down 1.1%, under some profit-taking pressure after its record close yesterday. This loss, along with declines in Apple (AAPL) at 194.50, down 0.7%, and Broadcom (AVGO) at 1400.74, down 0.9%, contributed to the weakness in the information technology sector which fell by 0.5%.

Treasury Yields Remained Little Changed

Following some volatile action in response to the first rate cut by the ECB since September 2019 and a mixed batch of economic data, we saw treasury yields ended little changed.

The 10-yr note yield settled one basis point lower at 4.28%. The 2-yr note yield fell one basis point to 4.72%.

Uptick In Initial Jobless Claims. Loosening In Labor Market Expected

The economic data of weekly Initial Claims was 229K higher than the consensus of 216K. The prior was revised to 221K from 219K. Weekly Continuing Claims was 1.792 million with prior was revised to 1.790 million from 1.791 million

The key takeaway from the report is the uptick in initial jobless claims, which will be seen as a sign of some loosening in the labor market.

Q1 Productivity-Rev. cames in at 0.2%, lower than consensus of 0.3% and prior was 0.3%. Q1 Unit Labor Costs-Rev.was 4.0%, lower than consensus at 4.7% with prior at 4.7%.

The key takeaway from the report is the downward revision to unit labor costs. Although a backward-looking report, that revision will take out some of the labor cost inflation sting seen in the advance report.

Uptick In Both Exports And Imports In April -> Increased Global Trade Activity

April Trade Balance was -$74.6 billion higher than consensus at -$76.5 billion). The prior was revised to -$68.6 billion from -$69.4 billion

The key takeaway from the report is that there was an uptick in both exports and imports in April, which is a reflection of increased global trade activity. However, with imports exceeding exports, that will create a drag on Q2 GDP.

Stocks To Watch

$CVS Health(CVS)$ recorded gains for the seventh consecutive session, rising 0.46% to close at $60.98. Despite underperforming the S&P index year-to-date, CVS has seen a positive reception from analysts, with a mix of Buy and Hold ratings. The stock received high marks for profitability and valuation.

From the technicals, we could see that CVS is trading on the upper band in the Fibonacci Zone, and with the last BUY signal given by KDJ on 30 May 2024, we are seeing CVS trending upwards.

There are more upside expected and the price now at around $60.95 would be a potential BUY before we see CVS go back to its previous highs.

$GameStop(GME)$ will report its earnings next week with increased market cap and heightened Google search interest. Retail investor Keith Gill, known as Roaring Kitty, has shown renewed interest in the stock. GameStop is expected to report revenue between $872M and $892M, with EPS projected at -$0.09.

If we look at how GME have been trading over the last few days, are we supposed to look at it from the technicals?

If we look closely how the price have been moving since its decline to around $20, presenting a good buying opportunity, we could see that it has moved to the middle zone of the Fibonacci, this would mean that there is a chance that we are going to expect higher stock price as bullish engulfing is forming, and KDJ is trending upwards.

$Taiwan Semiconductor Manufacturing(TSM)$ is considering increasing its production fees for Nvidia (NVDA). Nvidia CEO Jensen Huang supported the potential price hike, citing TSMC's significant contribution to the tech industry. Nvidia accounts for 10% of TSMC's 2024 revenue.

Chinese companies like ByteDance are reportedly seeking ways to bypass U.S. sanctions by renting Nvidia's high-end AI chips from Oracle (ORCL). The move highlights ongoing efforts by Chinese firms to access advanced technology despite regulatory hurdles.

Bank of America reported that only 39% of actively managed funds outperformed the MSCI AC World Index in May. The firm noted that market cap-weighted benchmarks driven by a few large stocks have made it challenging for funds to outperform.

$Snowflake(SNOW)$ hosted its annual investor day, but concerns remain about long-term revenue growth from new products. KeyBanc Capital maintained its Overweight rating but lowered its price target to $168 from $200.

Summary

If we looked at how the indices are performing this week, there have been some volatile movement, Wednesday we saw good gains and yesterday (06 June) we saw only slight gains or S&P 500 lose 0.2%.

With Friday’s economic data, we could expect another volatile movement in the stocks, mega caps might see some interesting movement. Not forgetting GME, this stock might make some adjustment ahead of its next week earnings.

Appreciate if you could share your thoughts in the comment section whether you think some volatility expected on Friday (07 June) trading?

@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.