Two Themes For This Week
Market
Trend: Oscillating With Chance of Reversal to Downside
Market
Outlook: Bearish
Sector Watch: Broad market movements, No Sector Breakouts
David’s
Pick: Housing Stock Basket
Peter’s
Pick: Trinity Biotech
(
TRIB |
Quote |
Chart |
News |
PowerRating)
The Broad Market Outlook:
Window Dressing and Fed Watch
It’s the end of mutual fund window-dressing this week, and decision time for the Federal Reserve. It’s difficult
to imagine any bullish push from either of these events, particularly the Fed.
Regarding the Fed, the bond market
has already priced in a 100% chance of a 25 basis point cut and is signaling
about a 60% chance of a 50 basis point cut. Presumably, these probabilities are
already built into stock prices. So you get NOTHING with a 25 basis
point cut and just a little bump with a 50-basis point cut.
BUT if the Fed goes
the full 50, inquiring minds gotta ask: So just how bad are things? And round
and round the talking heads go.
Enough of this garbage
speculation. The reality is that the market got way ahead of itself, lots of
folks understand that, no one wants to admit to being a bear (if for no other
reason to keep others in the market until they can get out), and now The Big
Chill may well envelop a long hot summer as the profit-takers take their money
off the table and wait to see if recovery is, in fact, in the cards.
The Week’s Macro Data Market Movers:
The
Macroeconomic Calendar
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It will be a very big week on the
macro data front and an even bigger Wednesday. On Wednesday, we not only get
the Fed’s decision on interest rates. We also get more numbers from the white-hot housing market. Absolutely blowout numbers could yet save the housing stocks
from a big pullback — but don’t bet the farm on that.
Tuesday and Friday, we get a double dose of consumer
psychology, with the monthly conference board report on Tuesday and the fresher
University of Michigan twice-a-month data on Friday. The Tuesday
consumer confidence report will jolt the markets IF
it confirms the unexpected downward move that we got in May with consumer
sentiment. Any further decline in the University of Michigan number on Friday would hit like a freight train.
Macroplay of the Week:
Trinity Biotech (TRIB)
Last
week’s stock pick,
(
IIJI |
Quote |
Chart |
News |
PowerRating) doubled within the space of a few days and then
fell back just a tad. Nice move. I bailed immediately just shy of 5 bucks but
am looking to reload on a further pullback. It remains a good long term play —
just a little frothy in the mid-4’s.
This
week, check out Trinity Biotech, which makes and markets rapid diagnostic test
kits both for labs and self-testing. I like this one because it has a decent
revenue stream and a diversified portfolio of kits. Technicals look good (for
now).
Be
careful, however, as the biotech sector seems to be in a pullback phase and this
one has pull back slightly from a June 10 52-week high. This is strictly a
longer term, penny stock play.
Peter Navarro
If you have a favorite macroplay
or stock you would like us to consider in this column, send an e-mail to
peter@peternavarro.com or go directly to
https://www.peternavarro.com. We’d love to hear from you.