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Wall Street’s Best Investments 818

After a brief decline, due mostly to the China and Mexico tariff issues, we’ve seen a decent rebound in the markets this past month.
Earnings for the quarter look like they are going to come in at a negative growth rate when all the reports are calculated. However, 76% of companies in the S&P 500 reported EPS numbers higher than estimated and 59% posted positive revenue surprises. The lack of growth in earnings is somewhat concerning, and that—plus the tariff issues—seem to be weighing on market prognosticators, turning their sentiment a bit more cautious, as you can see in our Advisor Sentiment Barometer, as well as in our Market Views. In the meantime, our contributors have been knee-deep in research and analysis, and have come up with some very interesting ideas for you this month.

Wall Street’s Best Investments 818

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Market Views

Mixed Signals

The $SPX chart is still bearish, because there are lower highs and lower lows on its chart. Oversold rallies typically carry from their lows up to and slightly above the declining 20-day moving average. That’s exactly what this rally has done so far (the 20-day MA is just below 2830).

There is clearly support at 2730 now, and that’s in the same general area as the 2720 support from early March. As for resistance, the first remaining resistance level is 2900. Above there, of course, is the massive double top at 2940-2950.

The equity-only put-call ratios have generated new buy signals, according to computer analysis of their charts.

Market breadth has seen some cross-currents, but both breadth oscillators are on buy signals at this time.

Volatility remains at very low levels, and thus is generally bullish for stocks. Recently, it seemed that $VIX might be developing a long-term uptrend, but that did not materialize.

In summary, there are mixed signals. The new buy signals from put-call ratios and breadth are somewhat at odds with a still-bearish $SPX chart. Unless $SPX can close above 2900, the bears still have a chance.
Lawrence G. McMillan, The Option Strategist, www.optionstrategist.com, 973-328-1303, June 7, 2019

Mid- and Long-Term Indicators Worrisome

June has started with a powerful rally, six consecutive days of gains by the major averages after making a low on 6/3. There has been no retracement since the low. It’s a positive sign that the Russell 2000 (IWM), is up +4.4% and Transports (IYT), are up +5.5 and participating in the rally. Short-term technical indicators of the major averages continue to improve, and they have broken their daily downtrends. However, it remains worrisome that the intermediate and long-term technical indicators are not as favorable.
Dr. Marvin Appel and Gerald Appel, Systems and Forecasts, www.systemsandforecasts.com, 800-829-6229, June 10, 2019

Cautious

The S&P 500 rallies towards resistance at 2900. The Nasdaq 100 rallies towards top of short term range at 7500. The Short Term Composite recovers to parity.

Regional Banks may now form short term tops.

Our outlook remains cautious and we continue to watch the rally of trend stocks.
John Gray, Investors Intelligence, www.investorsintelligence.com, 914-632-0422, June 10, 2019


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THE NEXT Wall Street’s Best Investments will be published July 10, 2019
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