Weekly Newsletter from 22-26 July
Commodities are coming back for the short period…
Dear Members,
Last week sudden weakness in the USA market on Friday created some uneasiness among the investor community. Microsoft and SKX pushed higher but was unable to bring positive sentiment, in fact Microsoft gave away all gains but SKX held value very well. Both these stocks were in our buying list on earnings.
Earning session started, and in the next two weeks most of the frontline tech companies will announce their earning. so far there was no major weakness in earnings even after trade war situation, but surely many are concerned about tech stocks especially chip/semiconductor stocks, so let’s wait for these stocks to announce earnings.
Next week the FED will meet for rate decisions, and future policy which is one of the key events for the market. The Fed meeting is one of the key events for the market, and if the FED cuts rates by half a point, then the market can move crazily higher, if the FED cuts 25 basis points and shows commitment of taking action in the future if required, than the market can move higher. If the FED fails to cut rates then the market can tank big because investors already discounted FED cuts in their trading book.
In the last six months financial stocks performed sideways, and many big companies in transport like BA, UPS, and FDX lost big value during 2019. Tech stocks are doing well, and most of the tech stocks bounce back strongly since early this year. The Market tested an all time high but many stocks struggle to test all time highs expect for a few frontline tech stocks.
I still believe that China/USA trade war is a bigger issue than the FED rates and earnings, because if China and the USA are not coming to the table for a deal, then a disaster situation will develop in the global economy. Surely many small Asian countries will be winners like Philippines, Taiwan, Thailand, Malaysia, and Indonesia. India is struggling at this stage due to lack of economic policy from the Modi government.
On the other hand, Brexit is hanging with no clear path. European countries are not performing that well economically so everyone is looking at the US to keep performing well, so that the markets can sustain globally.
Emerging market currencies gained value during the last four months, but frontline currencies are also struggling, and the US dollar is also struggling to breach the upper side level.
On the other hand metals are coming back, gold has been performing well, and if dollar moves lower then gold will keep doing well, and it can easily move towards $1575 to $1655. Silver moved higher at last as predicted, but it will still struggle to move above $17.88 on the higher side so keep this in mind.
Bitcoin came back from the lower level during this year. FB announced that it will lunch libra crypto currency, but the masses still don’t understand how to use crypto in their daily lives or how to invest in it. I will wait until 2027 to move into crypto and other forms of digital currency.
Overall the USA market is still hot, S&P above 2945 is in a safe zone. I still believe that 2975/2968 is a key important short term astro support level. On the higher side S&P failed to move above 3027 as predicted, so this will be a crucial astro resistance level. If S&P moves above 3027 then expect 200 to 800-point rally in S&P.
Currently Mars in Cancer and Retro Mercury are the only two negative astro combinations which are making me nervous for the short term, until the 9th of August, but so far both these planets haven’t been able to damage the markets trend in the last three weeks, so I am keeping this point in mind.
This week many big names will announce earning so expect market to trade volatile. If the market holds 2945, then get ready for a major rally.
Most merchant payment and online payment companies are doing amazing well. Many of stocks have moved in multi folds including a few of our favorites like PAYC, PYPL, GPS, TSS, FDC, SQ and very small company like PAYS which we recommended buying at $8.80 recently in a stock report, and it went to $18.00.
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Thanks & God Bless
Mahendra Sharma