Stocks Head Towards Record Highs As Fed Signals Rate Cut”S”

June 19 – Stock Mentions: SPY, AAPLWealth Strength IndexAAPL is Extremely Up and trending Up, NVDAWealth Strength IndexAAPL is Extremely Up and trending Up, AMZNWealth Strength IndexAAPL is Extremely Up and trending Up, TSLAWealth Strength IndexAAPL is Extremely Up and trending Up, ROKU

Michael Kramer and the clients of Mott Capital own AAPLWealth Strength IndexAAPL is Extremely Up and trending Up and TSLAWealth Strength IndexAAPL is Extremely Up and trending Up

Very quietly there are now more than 1,700 people getting the Monster Stock Market Commentary sent to their inbox, not 1, but 2 times a day.  Pretty amazing! Thank you all for being such a loyal fan base!

Fed Hints At Rate Cut

Well as expected the Fed did nothing today but took a big step towards signaling as many as TWO rate cuts. The good news from this meeting is that the Fed may be leaning on a weak inflation outlook for the future cuts and not slowing GDP growth. Had a slower economy been the reason the equity market may have taken the view differently.

In the chart below, we can see what that GDP outlook looks stable and unchanged.

But you can see the drop in PCE Inflation for this year and next.  Those are pretty big reductions.

As a result, the 10-year yield fell to its recent lows of around 2%.

yields, 10-year

yields, 10-year

The dollar weakened too.

dollar index

dollar index

S&P 500 (SPY)

Equities price increased on the S&P 500. To this point, everything seemed to work out as it should.

S&P 500, spx

S&P 500, spx

Don’t Get Complacent

It leaves the S&P 500 near its all-time, and it would seem as if the market is locked and loaded on hitting those all-time highs. Could something derail the rally? As we have learned in previous weeks, all it takes is one tweet. Does the risk for a surprise tweet rise as we approach all-time highs? Yes, I believe it does. Remember the last time we reached all-time highs in May? Trump pulled the tariff car on China.  Is something else looming? Well, the President already said he isn’t happy with the Euro, and it has an unfair advantage, wink-wink, nod-nod! Of course, I have no clue.

That being said…

I think the S&P 500 continues its advance to a new record high. There is confirmation of G20 China/US meeting; the Fed has confirmed it is on an easing path, earning seasons doesn’t start for a few weeks, and even the economic calendar is quiet. It could be the perfect setup.  At least for two weeks or so.

Apple (AAPLWealth Strength IndexAAPL is Extremely Up and trending Up)

AAPLWealth Strength IndexAAPL is Extremely Up and trending Up is breaking out; it is trading right at resistance around $198.

apple, aapl

apple, aapl

Nvidia (NVDAWealth Strength IndexAAPL is Extremely Up and trending Up)

NVDAWealth Strength IndexAAPL is Extremely Up and trending Up rose above resistance at $149 and may be on its way to $160.

nvidia, nvda

nvidia, nvda

Tesla (TSLAWealth Strength IndexAAPL is Extremely Up and trending Up)

Tesla has been consolidating nicely at $225 and is at another one of those do or die moments. There is a bullish rising triangle pattern that has formed, suggesting that the stock rises. However, there is a massive downtrend standing in the way at $237. That downtrend has been a severe source of resistance since December.

I think TSLAWealth Strength IndexAAPL is Extremely Up and trending Up does break out in a significant way, this time around. The RSI has already broken its downtrend that also started in December, and I think it foretells of a big breakout for Tesla and push to $250 and potentially higher.

tesla, tsla

tesla, tsla

Amazon (AMZNWealth Strength IndexAAPL is Extremely Up and trending Up)

AMZNWealth Strength IndexAAPL is Extremely Up and trending Up is getting ready to break out and rise to $1966.

Amazon, amzn, aapl, stock

Amazon, amzn, aapl, stock

Roku (ROKU)

Roku continues to grind higher, but I hope you can see the pattern that is forming in the chart. To me, it appears to be a rising wedge, a bearish reversal. It is taking longer to happen than I thought, but it seems ROKU is heading for a pullback.

Roku, ROku, stocks, aapl

Roku, ROku, stocks, aapl

-Mike

This article appeared first on Mott Capital Management.

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 results.