(…) The bouts of risk-on spurred by any dollar retreats (no matter how modest) are likely though to disproportionately power real assets up after their latest beating (think a decent retracement) together with cryptos rather than stocks – and I mean chiefly cyclicals.
Q2 2022 hedge fund letters, conferences and more
Oil is to remain the main winner here. The key event to watch remains solid bid materializing in long-dated Treasuries – we aren‘t quite there yet. Summing up, the stock market bear isn‘t over, and I am looking for Jun lows to break, especially on more confirmation that the U.S. can‘t really avoid hard landing.
Given the jubilation in bonds (long-dated Treasuries finally caught a bid), it‘s reasonable to expect that the bulls won‘t give up this easily – so far, we‘re getting the consolidation, right in the premarket, and it‘s accompanied by a decent but not stellar USD comeback.
That makes for a little muddied picture of today‘s regular session, where the bulls are likely to struggle at yesterday‘s intraday highs (if they can get there today at all).
Squaring the bets before tomorrow‘s PCE deflator data while commodities rather than precious metals mostly keep their Wednesday‘s gains, seems most probable action for today – yesterday‘s long SPX profits had been cashed in before the decline anyway.
Let me feature an interesting question I got yesterday about dividend stocks – really interesting for those of you looking for promising, long-term vehicles of capital preservation and decent growth.
Q: Of the large-cap growth names, what are your thoughts on e.g. Microsoft, APPLE, Google, Amazon, and even Verizon or AT&T long term? For us Baby Boomers, aren‘t they risky now in light of the macro climate ? Or do you think it makes sense to barbell these names with the dividend stocks such as PEP and ? For a 5-10 year horizon.
A: As for the tickers mentioned, I understandably like CVX, PEP, KO, and of course XOM, SLB and PG. I don't like certain parts of JNJ business, and think telecoms are to underperform (VZ, T). I think you would do better with energy than with tech in the years ahead, and within a few short months with mining stocks too.
Energy is to turn within 4 weeks latest (it did nicely already yesterday) while miners' better times would come in 2023 (I am not sounding all clear on them just yet - it's good that $1,610 in gold held).
The key in your due diligence is to look for companies that have proven track record of raising dividends like clockwork over the past say at least 3 years. They also must be in industries which face bright prospects, and I mean essential resources (and agricultural stocks) including oil as well.
Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox.
Plenty gets addressed there, but the analyses (whether short or long format, depending on market action) over email are the bedrock, so make sure you‘re signed up for the free newsletter and that you have Twitter notifications turned on so as not to miss any tweets or replies intraday.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
Daily reprieve that must get follow through – otherwise this S&P 500 rebound is suspect. Thus far, the bulls have the benefit of short-term doubt, but the resistance level mentioned in the opening part, applies.
Credit Markets
Bonds rose, finally catching a solid bid – the TLT turn is especially significant, and must be maintained as part of the bottoming process in stocks. Just as in the preceding weeks and months, first cracks in the dam are likely to be seen here first (alongside the dollar of course).
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice.
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