Hotline Sample Report
This report is a sample for information purposes only. These recommendations are closed.
8/30/2019 9:58:50 AM Eastern Time
Laboring Big Breakout
It was another solid session on light volume ahead of the big Labor Day weekend. These kinds of sessions are always difficult to discern, and more so with the trade war and all the efforts to talk down the economy and stock market.
My best assessment over the last couple of sessions is the market resolve is good, but it could have been great. The most important thing for investors is the development of clear winners and losers in individual sectors and industries.
Moreover, beware of this urge for media and executives to blame tariffs for any and all shortcomings. Best Buy (BBY) was down because it was a bad quarter and Dollar General (DG) rocketed to an all-time high on a great quarter.
I began writing about a potential bond rotation years ago, and that still hasn’t happened, but we got a glimpse of what it could look like yesterday.
We also got a glimpse of rotation within equities - which could happen a lot sooner than bonds – as the biggest winners the last couple of sessions have been the biggest losers of 2019.
To be clear, sometimes stock do well from macro actions like flight to safety and sometimes they rock on great news. That’s the case with Real Estate and Consumer Staples. There have been great earnings reports making these safe havens even more attractive.
The question is where funds should go from here? Is it into momentum names in Technology and Communications Services or laggards like Energy and Financials?
I’m not going to force the issue on the laggards, but there are sectors and names that aren’t disasters, nor overbought crowded trades, that look inviting.
The major indices are all in the green again this morning, but August is still on track to finish the month lower.
On the economic front, personal income increased 0.1 percent in July, the smallest gain in nearly a year, following an 0.5 percent in June.
The largest component of personal income, wages and salaries, increased 0.2 percent in July on after increasing 0.5 percent in June.
Consumer spending was hefty in July, rising 0.6%, while inflation remained low.
The Personal Consumption Expenditure (PCE) price index, was up 0.2% in July, taking the annual rate from 1.3% to1.4%.
Long Idea: Jabil Inc. (JBL) @ $28.68
BACKGROUND: Jabil Inc. provides electronic manufacturing services and solutions worldwide. The company operates through two segments, Electronics Manufacturing Services and Diversified Manufacturing Services. It offers electronics design, production, and product management services. The company provides electronic circuit design services, such as application-specific integrated circuit design, firmware development and rapid prototyping services; and designs plastic and metal enclosures that include the electro-mechanics, such as the printed circuit board assemblies (PCBA). It also specializes in three-dimensional mechanical design comprising the analysis of electronic, electro-mechanical, and optical assemblies, as well as offers various industrial design, advance mechanism development, and tooling management services. In addition, the company provides computer-assisted design services consisting of PCBA design, and PCBA design validation and verification services; and other consulting services, including the generation of a bill of materials, approved vendor list, and assembly equipment configuration for various PCBA designs. Further, it offers product and process validation services, such as product system, product safety, regulatory compliance, and reliability tests, as well as manufacturing test solution development services. Additionally, the company offers systems assembly, test, direct-order fulfillment, and configure-to-order services. It serves automotive and transportation, cap
SKINNY: Estimates are increasing, and the stock just broke above its 200-day moving average. The stock is breaking out, we see room to $34, the longer term.
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