Market Thoughts

Samantha has returned from her trip to NYC but upon starting up her computer this morning experienced technical trouble. She has a nice new gaming keyboard and will be posting The Week Ahead tonight! Trading Room will be open Tuesday and with it,  “Samantha Says” will return tomorrow.


@WallStreetJane here filling in with some thoughts:

The S&P, Nasdaq and Dow finished flat for the day, but the Russell and Transports lagged, closing below all key averages.

Although the major averages didn’t reflect it, there were some undercurrents around.

Retail seems to be taking turns getting whacked after having some nice moves higher.  Last week we had names like Wayfair taking a hit, and today we have ULTA and Shopify taking their turn. ULTA was hit with the news that Amazon is starting their own beauty products store for professionals, while Shopify received a rare downgrade by Roth Capital (buy to neutral).

CRM and WDAY also took a hit today – closing down 2.73% and 3.36%, respectively. CRM has been in consolidation mode but WDAY has been fire for months. Just a casual reset before a move higher or something more…

All that glitters remains in favor with another move higher today – closing at 1423 and holding that resistance breakout.  Bitcoin hanging tight with gold ‘s parabolic move:

Black gold (oil) also continues its climb higher. From a technical perspective, oil has some work to do if it wants to prove its downtrend is ending. From a practical perspective, weekly oil inventory reports, middle east tensions, and the upcoming OPEC meeting (July 1-2) all factor in to continuation higher. The current discussion with respect to OPEC indicates there is about a 70% chance they will look to further cut output, likely increasing the price of oil.

Stocks of Interest in the News

Caesars (CZR) has agreed to a deal with Eldorado (ERI) worth $8.7B

Eldorado Resorts Inc. is buying Caesars Entertainment Corp. for about $8.58 billion in a deal backed by activist billionaire Carl Icahn that will create the largest U.S. gaming operator. The agreed equity value of $12.75 a share — in a mix of cash and Eldorado stock — represents a premium of about 28% to Caesars’s Friday closing price. Including debt, the deal is worth approximately $17.3 billion, the companies said in a statement.

Canopy Growth Corp (CGC) traded lower after earnings disappointed. The larger than expected loss and slim gross margins caused the stock to trade at the lowest level since December.

Disney Co. (DIS) stock took a bit of a hit after its Toy Story 4 movie beat franchise records, but fell well short of forecasts.

Macro Matters

The irony award for the day goes to President Trump for tweeting the Fed is “like a stubborn child” their apparent unwillingness to cut rates. According to Trump:

….Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!

Farm Deluge Starts to Seep Into America’s Fragile Rural Economy:

From 100 feet up in the air, Indiana crop duster Robert Sneberger gets a better view than most of how cornfields are faring. This season, the picture is bleak. Instead of the stretching green stalks he normally sees at this time of year, there’s water. The wettest year in memory has stalled planting and stunted crops in the U.S. Midwest at a time when farmers are already struggling with low prices and a trade war with China.

But they’re not alone. The communities they live in and the businesses that supply them with seeds, fertilizer, equipment and services are struggling as credit conditions steadily deteriorate in a fragile rural economy. At Burrus Seed in Arenzville, Illinois, employees spend as much time trying to lift farmers’ spirits as they do selling to them, according to the owner.

With the exception of the Chicago Fed national activity report, which rebounded from April, today was quiet on the economic report front. That changes tomorrow with Case-Shiller Home Prices, Consumer Confidence Index and new home sales. Fed heads also speak with a Powell speech at 1pm. It will be interesting to see if new homes sales, like existing sales last week, can beat expectations. @Marketwatch

 

Trade Wars and More

Perhaps a conciliatory tone prior to the G-20 from China:

Both China and the United States should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said on Monday, ahead of a much anticipated meeting between the Chinese and U.S. presidents at this week’s G20 summit in Japan. China and the United States last week said they were reviving talks ahead of the meeting between presidents Donald Trump and Xi Jinping. Hopes that it will lead to a de-escalation of a trade war that is damaging the global economy has cheered financial markets.

President Trump threatened more sanctions against Iran in response to the drone attack last week. However, there may not be much left to sanction. Per Bloomberg:

President Donald Trump is threatening Iran with additional sanctions on Monday, but there’s not much left for the U.S. to target because most of the Islamic Republic’s economy has been crippled by earlier penalties. The U.S. is already sanctioning significant sectors including oil, banks and steel, leaving smaller targets including certain exports and government officials. Trump could also hit Iran’s central bank with secondary sanctions, at the risk of hurting humanitarian trade.

Palestinians rally against Kushner’s economic peace plan:

Palestinians burned portraits of President Donald Trump as they protested in both the Gaza Strip and the Israeli-occupied West Bank on Monday against U.S.-led plans for a conference on their economy in Bahrain. “Down with Bahrain, down with Trump, down with the Manama conference,” chanted crowds in Gaza, which is ruled by the armed Islamist group Hamas. Some burned large paintings of Trump marked with the words: “Deal of the devil”.

Samantha Says

Market Commentary from Samantha’s Live Trading Room and StockTwits Premium Chat Room

Samantha has returned from her trip to NYC but upon starting up her computer this morning experienced technical trouble. She will be back with “Samantha Says” tomorrow.

Wall Street Jane’s Journal

Jane is not only Samantha’s Live Trading Room moderator, she facilitates client engagement and relays Samantha’s trade ideas into the LaDucTrading StockTwits Premium Room. A former banking VP during the GFC, she now actively trades full-time and actively shares her trading ideas, plan and process.

Trade Idea: Last night I posted in the StockTwits room an idea for a long trade on $VZ. It broke out higher this morning and closed nicely, holding above the trend line breakout.  Looks good for continuation higher.

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