To The Moon

Stock market saw another lacklustre day on Tuesday (09 July 2024), with the three major indices traded slightly higher or slightly lower than previous close. At the end of trading session, we eventually saw that the market closed in the mixed.

Tuesday price action has helped both S&P 500 and NASDAQ gained +0.1% to move yet into a record high. But there was not a lot of conviction either from advancers or decliners, ahead of key and influential economic data releasing this week.

Key June CPI and PPI Happening Thursday and Friday

We have the NFIB Small Business Optimism Survey released which rose to 91.5 in June from 90.5. Another significant event is Fed Chair’s testimony before the Senate Banking Committee on Tuesday (09 July).

That did not trigger much big reaction from the stock or bond market. Fed Chair will be appearing before the House Financial Services Committee on Wednesday (10 July).

Fed Chair’s remarks did not provide any surprises yet provide an acknowledgment that the "likely next direction" of policy will be a loosening of policy, indicating a rate hike is not likely. The June Consumer Price Index and Producer Price Index will be released Thursday and Friday, respectively.

Ahead of the start of earnings season, we are seeing muted action.

Bank Stocks Performing

We saw $JPMorgan Chase(JPM)$ gaining +1.2%, Wells Fargo (WFC) gain +1.5% and $Citigroup(C)$ gain +2.8% to be among the top-performing names in the heavily-weighted financial sector which gained +0.7%.

These bank stocks will be releasing their quarterly results on 12 July (Friday). The $SPDR S&P Bank ETF(KBE)$ closed 1.7% higher, and the $SPDR S&P Regional Banking ETF(KRE)$ jumped 1.8%.

S&P 500 Financial sector was the winner with 0.65%, this performance could be from the bank stocks assisting.

Yield Up From Strong Demand On 3-Year Note Auction

Tuesday’s $58 billion 3-yr note auction, which met strong demand. This demand help the 10-yr note yield settled three basis points higher at 4.297%, and the 2-yr note yield rose one basis point to 4.63%.

Used Vehicle Sector Does Not Do Well

Wholesale used-vehicle prices fell in June compared to May, with the Manheim Used Vehicle Value Index dropping 8.9% year-over-year. The seasonal adjustment resulted in a 0.6% month-over-month decline, with major market segments experiencing price drops.

Stocks To Watch

Investor and fund manager Bill Gross remarked that $Tesla Motors(TSLA)$ is "acting like a meme stock" due to its "sagging fundamentals and straight-up price action." Despite being up about 6% year-to-date, the stock has surged 49% over the past month. Gross also mentioned $Chewy, Inc.(CHWY)$ and Zapp Electric Vehicles (ZAPP) as other examples of volatile meme stocks.

If we looked closely on how Tesla stock price movement looks like on the technical (e.g. KDJ), we could see that Tesla has been making a consistent upside move since 13 June when there is a bullish MACD crossover happened.

There have been some adjustment on the KDJ J value but on the overall trend, it is on the upside, and this is confirmed by the nice upward movement on the MACD chart.

Whereas on the Chewy chart, there was a buy signal from KDJ, and then a bullish MACD crossover on the 18 June, but that did not continue, it frizzle out on the 27 June.

So if we were to compare these 2 chart, there is no adjustment on the KDJ J value on Chewy when it is on the upside, this mean that there is only keep pumping, and the the MACD does not stay strong enough.

Hope this helps to explain why Tesla rally is not the same as meme stock rally.

Procter & Gamble (PG) declared a quarterly dividend of $1.0065 per share, maintaining its forward yield at 2.43%. The dividend is payable on August 15 to shareholders of record on July 19. This announcement comes amid discussions about the company's stable yet slightly overvalued business model.

This should give investors some sentiment improvement on PG as their business model should be stabilizing despite being slightly overvalued.

MetLife (MET) declared a quarterly dividend of $0.545 per share, maintaining its forward yield at 3.12%. The dividend is payable on 10 September to shareholders of record on August 6. This stock should do well on the back of the rise of the financial sector, following the release of PPI and CPI later this week, we should be able to see clearer signal.

Shares of Alzheimer’s drug developer Cassava Sciences (SAVA) rallied on above-average volumes, ending a multi-session decline that followed fraud allegations against a company advisor. The stock saw its best intraday gain since October, with about 4.7 million shares changing hands.

Summary

I would expect the market to continue trading in a mixed movement, but allowing the indices to still create new highs. There are some sectors that we could look out for before and after the CPI and PPI.

Mega cap stocks and financials stocks might be in favour from investors, and not forgetting Gold, where some investors might opt for safe haven.

Appreciate if you could share your thoughts in the comment section whether you think market could still be trading in a mixed movement, but indices still able to create new highs?

@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.