July 3, 2019

07-03-2019 BuyLine

As you can see from the chart above, the HCM-BuyLine Alpha is firmly above any area of concern. The market looks like it is building up steam to break into new highs. We expect the next two weeks to see the market push up and bounce back a few times, with a high probability that the market will break out in the third quarter.

The markets are trading almost spot-on with our analysis, with a somewhat choppy market as seen on the S&P 500 chart below. We are currently working through a period of being overbought in a very nice way.

07-03-2019 SP

 

After the fourth-quarter meltdown, where U.S. stocks dropped nearly 20%, the U.S. stock market returned to its low volatility ways in the first quarter of 2019. By early May, the market had gone 87 trading days without a 3% correction, the second-longest streak since the March 2009 market low. However, by month-end, trade war concerns spooked investors, sending the S&P 500 down 6.6% to 2752.06. Sectors and companies with exposure to China were hit the worst, some down double digits.  Keep in mind that stock market corrections are normal. The S&P 500 averages 3.4 corrections of at least 5% and 1.1 corrections of at least 10% in any given year. Drops of 15-20% or more happen less frequently.

07-03-2019 NEDSA

 

The third and final estimate of the first-quarter gross domestic product revealed the economy grew at an annualized rate of 3.1%. The fourth-quarter GDP increased by 2.2%. Real gross domestic income increased by 1.0% in the first quarter, compared with an increase of 0.5% in the fourth quarter. The average of GDP and GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.1% in the first quarter, compared with an increase of 1.3% in the fourth quarter. Consumer spending (personal consumption expenditures) increased by only 0.9% after climbing 2.5% in the fourth quarter. On the other hand, nonresidential fixed investment (business spending) grew by 4.4% compared with 2.3% in the fourth quarter.

  • For the week ending on June 22nd, there were 227,000 claims for unemployment insurance, an increase of 10,000 from the previous week's level, which was revised up by 1,000.
  • According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended June 15.
  • The advance number of those receiving unemployment insurance benefits during the week ended June 15 was 1,688,000, an increase of 22,000 from the prior week's level, which was revised up by 4,000.


This week’s HCM Optimized Trend Indicator (OTI) stock of the week is Mastercard Incorporated (MA). Yahoo Finance says, “Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services.” As you can see from the chart below, we think the OTI has done a fantastic job with this stock, going back to 2014. The three signals that stand out the most are the buy in late 2016, the sell in late 2018, and the buy earlier this year. OTI users that followed these recommendations would have captured an enormous chunk of the gains on this stock, all while being confident that the OTI is monitoring for any significant changes in trend. Way to go OTI!


07-03-2019_MA

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