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6/24/2022 10:04:33 AM Eastern Time

TINY SIGNS BUT SIGNS NONETHELESS
By Charles Payne, CEO & Principal Analyst

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NASDAQ Composite

There were 2,862 advancers, 1,733 decliners, 3.73 billion up volume, and 1.45 billion down volume on the Nasdaq yesterday. It almost closed a gap. But it has a much larger gap ahead, which coincides with a big test of resistance.

S&P 500

The defensive nature of the market and tepidness of investors’ herded buyers into Utilities (XLU), Health Care (XLV), Real Estate (XLRE), and Consumer Staples (XLP). So, I’m somewhat perplexed over the action in Industrials (XLI) and Materials (XLB). 

Once again, the glaring decline in oil stocks, offset by strength in mega-cap stocks, suggests fast money investors are leaking back into the names that made them rich.                                  

Key Charts & Trends

S&P 500

Like the NASDAQ Composite, the chart reflects cautious hope and stealth efforts to gain traction. There are two large gaps to fill (usually, after gaps are filled, there is a reversal, so these are de facto big-time resistance points).

There is a fair amount of resistance at 3,900, but the big test is 4,200. It seems a million miles away in an atmosphere where most of the experts on the Street are calling for the S&P 500 to hit 3,000. In fact, those only looking for a move to 3,200 are considered raging bulls.

It’s too early for such talk, but upon clearing 4,200, the index probably races to 4,600+.

Turn Signals

The Invesco DB Commodity Index Trading Fund (DBC) has been a juggernaut, but suddenly, they look mortal. The good news is the corresponding moves in stocks and bonds is encouraging, if not very premature, to break out the pom-poms.

The 10-year is yield edging lower. However, under 3.00% will get the attention of stock buyers on the sidelines.

Portfolio Approach

This morning, we added a new technology position.

Today’s Session

The market edging higher today on hopes for a better future beginning in 2023.   Five-year breakeven are coming down fast and five-year forward breakeven are in the two percent range the Fed desires.

In addition, positive comments from FedEx on their earnings call for fiscal 2023 (which began this quarter) and strong guidance $22.50 to $24.50 with midpoint $23.50 significantly higher than Wall Street consensus of $22.21.

And there is a feeling the Fed will pause or pivot early next year.

Long Idea: Coupa Software Incorporated (COUP) @ $64.29
Industry: Technology; Internet Software & Services
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BACKGROUND: Coupa Software Incorporated provides cloud-based business spend management platform that connects its customers with suppliers worldwide. The company provides visibility into and control over how companies spend money, optimize supply chains, and manage liquidity, as well as enables businesses to achieve savings that drive profitability. Its platform offers procurement, invoicing, expense management, and payment solutions that form the transactional engine for managing a company's business spend; and specialized solutions, including strategic sourcing, contract management, contingent workforce, supplier risk management, supply chain design and planning, treasury management, and spend analysis. It serves businesses in various industries, including healthcare and pharmaceuticals, retail, financial services, manufacturing, and technology. The company markets its platform primarily through a direct sales force. Coupa Software Incorporated was incorporated in 2006 and is headquartered in San Mateo, California.

SKINNY: COUP results for Q1 were impressive given the current scenario, revenues rose almost 18% and earnings easily beat consensus and raised guidance. The cloud company is executing well in a choppy macro environment, solid data indicated signs of stabilization. Fundamentally, estimates are trending higher. Our target $75.