June 27, 2019

06-19-2019 buyline

The HCM-BuyLine Alpha is still nicely above any change in trend, but with that said, we are mildly overbought. A modest pullback is warranted, and we do expect one. Look at the chart below of the S&P 500. You can see our outlook over the next few weeks to mid-July showing the possibility of a choppy market. The Dow Jones Industrial Average looks set for a lower open as investors wait for U.S. President Donald Trump and Chinese President Xi Jinping to meet at the G-20 gathering later this week.

06-19-2019 XCG

 

Let’s take a look at China with the (CQQQ) China technology ETF and see how their markets have fared in all the turmoil over the trade war. Looking at the HCM-BuyLine Alpha, we are still in a downtrend, telling us negotiations between President Trump and Prime Minster XI have not fared well. However, it does look like it could turn. Historically, you can see how well the HCM-BuyLine Alpha has caught the turns from a very nice run-up to a very dramatic drop.

WW-Web-June27

 

Dividend payers have outperformed non-payers one year after the first Fed rate cut. The Fed has signaled that it is prepared to lower its target fed funds rate at the July 30-31 meeting for the first time since 2008. Our U.S. strategy team focused on one area that could be especially impacted by changes in Fed policy: dividend stocks.

Dividend stocks have tended to outperform around the first rate cut. The ratio of Dividend payers to non-payers has rallied in the three months before the first cut, traded off during the first four months after the cut, and rallied for another five months, on average.

  • Durable goods orders fell 1.3% in May, down in three of the past four months, and worse than the consensus of -0.3%.
  • Transportation equipment orders declined 4.6%, led by civilian aircraft still reflecting the grounding of the Boeing 737 MAX jet.
  • Excluding transportation, orders were up 0.3%.
  • Nondefense capital goods orders ex-aircraft, or core business orders, rebounded 0.4%, partially reversing the 1.0% drop in the prior month.
  • Individual core categories were mixed.

On a y/y trend basis, durable goods orders declined 0.9%, down for the first time since January 2017. Core goods orders rose 2.1% y/y, but that was the slowest pace also since early 2017. Additionally, the core book-to-bill ratio slipped to 99.0%, near its lowest level since June 2016, and below 100% for the fifth month in a row. Inventories rose 0.5%, while unfilled orders dropped by 0.5%. All these indicators suggest reduced capex demand and slower factory activity.

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