June 9 Weekly Commentary

Hello readers,

The economy continues to show its resilience as Nonfarm payrolls jumped by 272K in May (far above April's 165K) causing the market jittering first and then reclimbing back to cover the losses. The S&P 500 recorded its 25th record close in the current year on Wednesday while Nasdaq seem to be driven primarily by Nvidia these days which has surpassed the $3 trillion mark for the first time and took the number 2 spot from Apple. Nvidia 10-for-1 split will occur on June 10th and it will be interesting to note if it keeps on marching on its singular upward trajectory. Just last week, Nvidia 10.3% while Nasdaq Composite jumped 2.4% and S&P 500 index popped by 1.3%. Dow Jones (comprising of 30 stocks only) continued to lag and increased just by 0.3% last week. An important segment which is lagging the broader market is Transportation. This is ambiguous as it could highlight underlying weakness for the economy since Transport sector is traditionally related to the strength in economy.

Energy sector by far was hard hit due to falling crude oil prices last week and its ETF XLE dropped by 3.44%. It is noticeable that energy was the only sector in the S&P 500 in May with a negative performance.

Small stocks index (Russell 2000) also retreated by 2.22% last week showing that Stock Market rally is buoyed mainly by Tech stocks and Nasdaq related stocks.

We continue to be taking on new opportunities for next two months which are historically good months the overall market especially for the Tech stocks. However, small stocks are continuously underperforming and we need to be watchful on small stocks underperformance on overall market including the Mega cap Tech stocks.

Important Events this week:

Wednesday: Core CPI Inflation report - before market open

FOMC Statement - mainly interest rate decision (most likely no change)

Thursday: PPI - Producers Price Index

Important Earnings this week:

Oracle: 6/11

Broadcom: 6/12

Adobe: 6/13

Actionable Stocks:

Long-Term View: These stocks were highlighted for long-term holdings in our last commentary:

MSFT:

Microsoft pulled back below its EMA 50 before finding support at lower end of its Bollinger Band and then turning sharply. It remains our favorite as a long-term buy and hold stock.

NVDA:

See our notes above on Nvidia above. Nvidia seems to be extended and watch out for a pullback to EMA 21 and/or EMA 50 line where potential buyers are likely to come back and push it higher again.

AAPL:

Apple will hold its annual Worldwide Developers Conference, starting on Monday. Investors are expecting a long-awaited AI push at this event and new AI tools for the iPhone, iPad and other devices including its digital assistant Siri. Since April 12 when Apple made its recent bottom, investors have pushed the stock to its all-time high and looking for a breakout beyond this point. Apple remains our long-term buy.

The difference between Nvidia and Apple this year is huger. While Nvidia surged by 144% this year, Apple is of far up by just 1%, therefore, a lot depends upon this event to continue investors' interest in Apple stock.

AVGO:

Another semiconductor bellwether stock. It is interesting to watch its behavior after earning announcement on 12th June. California based company is expected to report a sales boost amid its recent acquisition of VMware. Stock seems to have created a base and looking for a possible breakout. On good results it could easily gap up from the current range surpassing the buy point of 1445.40

Medium and Short Term Picks:

For these stocks we suggest that profits should be taken at 15-20% levels from the buying price or at least 25-50% of the position should be taken off the table to ensure profitable trades. For the rest of the holding, a further assessment will be required at that time to assess future potential.

NVO:

NVO continued to perform in line with our expectations and increased by 7.6% last week. Suggested Stop Loss at 121

AMZN:

Amazon has formed a 3 months consolidated base and looks poised to make a move higher. Suggested stop loss: 166

SPG:

Our last week suggestion for a dividend income player (5.14%) trying to break out from its recent consolidation.

New Interesting Stocks for Watchlist:

NEE:

For those who are interested in Utility players, we are adding NextEra Energy to our Buy watchlist. NEE operates the largest electric utility company in Florida. Its dividend yield is 2.8% and it has been continuously growing its dividend over the last five years. The total return in 2024 so far is 20%. Stock is currently testing its 20-day EMA and is likely to get some support here. Suggest stop loss is just below EMA-50 at 70.

HOOD:

The popular stock broker Robin Hood has performed outstandingly well during last year (136%). Stock is likely to continue its current trend but a pullback to its 20 days EMA at 20.44 will make it more attractive to buy.

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Happy Trading and best regards,

Disclaimer:

The information provided here is for educational / learning purposes only and should not be taken as purchase or sell recommendations. Trading / Investing in Stocks and derivatives is highly risky and could result in a substantial or complete loss of invested capital.

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