Semis Soar, Translating Powell, AMD Ready to Rock? Fourth of July History Lesson
On a shortened trading day, let's chart AMD, review Tuesday's winners and what the Fed Chair said in Portugal, and look at oil, Paramount and little-known facts about Independence Day.
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Happy Independence Day Eve!
Little known facts... The Second Continental Congress passed the Lee Resolution on July 2, 1776, which concluded that the United Colonies were indeed "free and independent states" and separate from the British Empire. The resolution is named for Richard Henry Lee of Virginia who proposed that resolution to the Congress. Two days later, that same Congress would turn its attention to, and pass Thomas Jefferson's Declaration of Independence that explained the decision to separate from Britain.
Jefferson had worked on his language in that document for at least a couple of weeks, completing the final draft on June 28th, but dated the document the day that it went before Congress. The copy on display at the National Archives in Washington, D.C. was signed for the most part, on August 2, 1776. So, it is that we celebrate independence on July 4th as that is the date the Declaration was passed, but we could just as easily celebrate July 2nd as that was the first date that the Congress had passed the actual decision to separate. We could also technically celebrate August 2nd as that was when most of the Declaration's signatories put pen to paper. Regardless, the deed was done, the Colonies were on their own, and would face another seven years of war for that independence.
What would become the Continental Army would remain "in the field" from the siege of Boston in 1775 on into 1783. Think about that next time you "rough it" and go camping for a few days. It was not until President Abraham Lincoln issued the Emancipation Proclamation on January 1st, 1863, that the nation would start trying to live up to the ideals expressed in the Declaration, and not until the surrender of the Army of Northern Virginia in April of 1865 that citizens started referring to themselves as Americans rather than New Yorkers, Pennsylvanians or Virginians.
Just an FYI, Richard Henry Lee, who at one time served as President to the Second Continental Congress was a first cousin to Henry Lee II. Henry Lee II was father to Henry Lee III, also known as "Light Horse Harry" Lee of Revolutionary War fame. Henry Lee III fathered Robert E. Lee, who ultimately resigned from the U.S. Army to take a leadership role in and eventually command of the state of Virginia's military forces. Robert E. Lee would rise from there to the position of General in Chief of the Armies of the Confederate States.
Holiday Hours
U.S. financial markets will be closed on Thursday, July 4th, after closing early this afternoon.
Wednesday's closing bell will ring for stocks at both 11 Wall Street and up at Times Square at 1 p.m. ET. Bond markets will close an hour later, at 2 p.m. ET.
Tuesday's Markets
Equities had a generally nice day on Tuesday, as all of our mid-major to major indexes started to move higher around midday and kept on going from there.
The S&P 500 gained 0.62%, closing above the 5500 mark and setting a new record high close. The Nasdaq Composite, not to be outdone, gained 0.84% as capital flowed back into mega-cap tech, or at least Tesla TSLA, which was up more than 10%. The Nasdaq Composite closed above the 18,000 level, which was also a new record high close. Parteeee!
The Philadelphia Semiconductor Index led the rally at +1.24% with no help from Nvidia NVDA, which was down for the session. On Semiconductor ON and Advanced Micro Devices AMD led large-cap semis at +5.41% and +4.2%, respectively. The small-to mid-cap indexes and the Dow Transports all posted moderate gains for the day of between 0.19% and 0.4%.
Solid Breadth, Sort Of
Nine of the 11 S&P sector SPDR ETFs closed out the Tuesday session in the green as Discretionaries XLI {thanks TSLA} and the Financials XLF led the way. Health Care XLV was the day's weakest sector at -0.37%.
Winners beat losers by a rough 2 to 1 at the NYSE and by just a narrow margin at the Nasdaq. Advancing volume took a 59.6% share of composite NYSE-listed trade and a 52.2% share of composite Nasdaq-listed trade. Trading volume was at its lightest since mid-May, rendering overall price discovery less meaningful on the grand scale.
Powell From Portugal
Fed Chair Jerome Powell spoke from Portugal on Tuesday. At first, he sounded rather hawkish: "Because the US economy is strong and the labor market is strong, we have the ability to take our time and get this right." Then, he started to sound less sure of himself: "It's very much understood by us that we have two-sided risks and we have to manage them." Markets took that as dovish and the race, albeit on thin trading volume, was on.
If that was not enough, Lazard Chief Market Strategist Ronald Temple released his second-half outlook stating that his base case was for the FOMC to start cutting its target for the Fed Funds Rate by September and to squeeze in three cuts of 25 basis points each in calendar year 2024. As an economist, I think that's bananas and probably reckless. As a trader/investor, I pay attention to my environment and make decisions indifferent to my feelings.
On That Note...
WTI Crude traded with an $84 handle (per barrel) at its peak pricing on Tuesday, up from trading with a $73 handle less than a month earlier. Don't worry. Probably not inflationary.
News
Paramount Global PARA is up more than 9% overnight after reports circulated that the deal between National Amusements and SkyDance Media was back on. SkyDance is expected to pay $1.75B to acquire National Amusements, parent of Paramount Global, which includes CBS, Nickelodeon, and MTV among many other scattered assets.
Charting AMD
We've made some decent calls on Advanced Micro Devices AMD.
The cup with handle last autumn and basing consolidation last winter both worked their magic for us. Even the inverse head & shoulders early this spring worked, though less convincingly.
Tell me what you think:
Is there a giant symmetrical (or asymmetrical) triangle closing to our immediate front? That would signal a coming period of significantly increased volatility.
The daily Moving Average Convergence Divergence (MACD) appears to have flatlined. Relative Strength is relatively neutral. The last sale is above its 21-day exponential moving average (EMA), 50-day simple moving average (SMA) and 200-day SMA. That does not promise anything, but it is better than a sharp stock in the eye.
This stock may be ready to rock. I may add on weakness. Especially if that 50-day line is retested from above.
Economics (All Times Eastern)
07:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.93%.
07:00 - MBA Mortgage Applications (Weekly): Last 0.8% w/w.
08:15 - ADP Employment Report (Jun): Expecting 165K, Last 152K.
08:30 - Initial Jobless Claims (Weekly): Expecting 235K, Last 233K.
08:30 - Continuing Claims (Weekly): Last 1.839M.
08:30 - Balance of Trade (May): Last $-74.6B.
09:45 - S&P Global Services PMI (Jun-F): Flashed 55.1.
10:00 - ISM Non-Manufacturing Index (Jun): Expecting 52.5, Last 53.8.
10:00 - Factory Orders (May): Expecting 0.3% m/m, Last 0.7% m/m.
10:30 - Oil Inventories (Weekly): Last +3.591M.
10:30 - Gasoline Stocks (Weekly): Last +2.654M.
12:00 - Natural Gas Inventories (Weekly): Last +52B cf.
The Fed (All Times Eastern)
07:00 - Speaker: New York Fed Pres. John Williams.
14:00 - FOMC Minutes.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: STZ (1.33)
At the time of publication, Guilfoyle was long NVDA and AMD equity.
