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Morning Commentary

INTERNALS CONTINUE TO IMPROVE

By Charles Payne, CEO & Principal Analyst
6/2/2021 9:33 AM

Yesterday, the session began with so much promise, with all the major indices bolting out of the gate, powered by growth names. But a rare downgrade on Apple (AAPL) with a price target 30% below the current price, the start of trading seemed to cast a pall over most Technology(XLK) names. So, the star of the session was the Russell 2000, as the S&P 500 and NASDAQ Composite finished lower.

Market Breadth

NYSE

NASDAQ

Advancing

2,434

2,755

Declining

945

1,525

52 Week High

448

281

52 Week Low

23

23

Up Volume

4.01B

2.88B

Down Volume

847.84M

1.18B

 

Energy (XLE) dominated (see red circle), capturing almost every spot in the top fifteen winners.

Manufacturing at a Glance, May 2021

The Institute for Supply Management (ISM) manufacturing number continued to reflect concerns about finding qualified workers, or simply anyone willing to work.  It’s exacerbating an already compromised supply chain. Prices edged down a little but are still near record highs.

Index

Series Index May

Series Index Apr

Percentage Point Change

Direction

Rate of Change

Trend*

 (Months)

Manufacturing PMI®

61.2

60.7

+0.5

Growing

Faster

12

New Orders

67.0

64.3

+2.7

Growing

Faster

12

Employment

50.9

55.1

-4.2

Growing

Slower

6

Customers’ Inventories

28.0

28.4

-0.4

Too Low

Faster

56

Prices

88.0

89.6

-1.6

Increasing

Slower

12

Backlog of Orders

70.6

68.2

+2.4

Growing

Faster

11

 

Commodities Up in Price


Aluminum (12); Aluminum Products (2); Brass; Coatings (2); Copper (12); Copper Products (3); Corn; Corrugate (8); Corrugated Boxes (7); Diesel (5); Electrical Components (6); Electronic Components (6); Epoxy Resin; Fabricated Metal Components; Foam Products (3); Freight (7); High-Density Polyethylene (HDPE) (5); Hydrochloric Acid; Labor — Temporary; Linerboard; Low-Density Polyethylene; Lubricants (2); Lumber (11); Medium-Density Fiberboard (MDF); Natural Gas (2); Ocean Freight (6); Packaging Supplies (6); Paper; Paper Products (6); Plastic Containers; Plastic Resins (9); Polyethylene (4); Polyethylene Terephthalate (PET) Products; Polypropylene (11); Precious Metals (2); Resin-Based Products (4); Rubber Products (4); Semiconductors (4); Solvents; Soybean Products (8); Steel (10); Steel — Carbon (6); Steel — Cold Rolled (9); Steel — Galvanized; Steel — Hot Rolled (9); Steel — Scrap; Steel — Stainless (7); Steel Bars; Steel Drums; Steel Products (9); Stainless Steel Components; Wire Harnesses; Wood for Pallets (2); and Wood — Pallets (Finished Product) (6).


Commodities Down in Price


Acetone.

 Key Charts

Gorilla

AMC Entertainment Holdings (AMC) rocked again and was higher in after-hours trading. There will be an effort to identify true shareholders and perhaps squeeze the ‘shorts’ even further.

I love these ‘apes.’  I would not chase the stock here, but I think there is a chance this could be a long-term winner. It was on our watch list, and we were too flatfooted. 

Apple (AAPL) is not getting the universal love it has become accustomed to, and the stock is looking flaccid as a result. The stock closed right at the 200-day moving average and is near a major support point. Beyond the charts and the occasional analyst trying to make a name for him or herself, I think the stock is a screaming buy.

p>Today’s Session

 

 

I like stock reaction to earnings beats, particularly Zoom (ZM), which beat top and bottom and offered guidance above consensus.  Initially, the stock got smacked but has since reversed higher.

I’m watching Materials and Industrials closer after the Senate Parliamentarian has issued an opinion that will make it more difficult for President Biden to ram through his economic agenda through multiple bites at the reconciliation apple. 

President Biden meets with Senator Capito today and it could be a more serious conversation.  I suspect an ultimate compromise would be closer to one trillion than $1.5 trillion, which is where I was leaning.  The good news is it would be mostly infrastructure.

Watch for the inflation conversation to begin to change.  A lot depends on Friday’s jobs report, but there are signs a lot of inflation will be transitory and demand could be peaking, especially for durable goods.

Portfolio Approach

We are adding a new position in Technology in our Hotline Model Portfolio this morning. If you are not a current subscriber to our premium Hotline service, email Info@wstreet.com to get started today. 

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Comments
Thanks Charles. biden,obama want minimal income for everyone so they can buy nothing, because it's to overpriced and it's not available.

Lorin K on 6/2/2021 10:13:38 AM
Thank you, Charles, for the best business/investing program on Fox Business. It is recorded daily and watched at a more convenient time. (Even though retired, mid-afternoon is too early to stop other work or play.)

Dick Hoffman on 6/3/2021 4:55:32 AM
 

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