Chances of a Rate Hike: 99%!

Wall Street rallied higher yesterday, the S&P 500, the Dow Jones and the Russell 2000 all recording historic closing highs, while tech stocks bounced back and investors made the final adjustments in their stock portfolios before today’s interest rate announcement.

The tech sector (XLK) rose 0.9%, recovering from its 2 sharpest days of losses in almost a year. Large tech stocks, the likes of Microsoft (MSFT) and Facebook (FB) pushed the S&P 500 higher. The tech sector has prompted a 9% rally on the S&P 500 year-to-date, the latest declines in the sector igniting speculation that investors were moving funds out of the sector and into other market areas that have lagged behind this year, like financial and energy stocks.

The financial sector (XLF) rose 0.4% on Tuesday, while the energy sector (XLE) jumped 0.7%.

When push came to shove, investors rushed to capitalize on the losses at the end of last week, and stock up on the same securities but at a cheaper price. As of now, the market’s earnings multiplier has only been higher in the years 1929 and 2000. A Bank of America fund manager survey found that the percentage of investors who believe that the stock market is overpriced is at a peak, while those surveyed designate the NASDAQ as being the most overpriced. At the same time, the rebound over the last few days proves that no one wants to be the sucker who gets out too soon and misses out on the next round of gains!

In Summary for the Day: The Dow Jones rose 0.44%, the S&P 500 climbing 0.45% and the NASDAQ shooting up 0.73%. Gold ended unchanged, crude recovering with gains of 0.8%.

Two stocks that stood out in yesterday’s trading were rental car companies, Hertz (HTZ), which soared 8%, and Avis Budget (CAR), which rallied 3.3%; they benefitted from a new report that pointed to higher valuations for used cars in the secondary market. Tesla (TSLA) soared 4.7% after receiving an upgrade from Berenberg.

On the negative side, the restaurant chain, Cheesecake Factory (CAKE) fell 9.9% after releasing a Q2 sales warning.

About 6.4 billion shares changed hands on U.S. exchanges, substantially beneath the 6.8 billion average over the last 20 trading days.

Wednesday: All eyes are now turned to the interest rate announcement that will be released at 14:00 N.Y. time. Future contracts signal that a rate hike today is almost a done deal, chances placed at 99%. Investors, though, will be waiting to see whether the Fed responds to the mixed economic environment, unemployment low at 4.4%, inflation above 2%, while economic growth and retail chain sales have still come out lukewarm.

Traders will also want to see how Fed Chair, Janet Yellen, relates to the large gap vis a vis the market’s rate expectations. As of now, the Fed expects interest to hit 3% by 2019, while the market expects a far lower rate of just 1.75%.

After the release of the PPI yesterday which saw core inflation rise past Fed’s expectations to an annualized pace of 2.1%, presuming that today we get strong consumer inflation and retail chain sales figures it will be hard for Yellen to justify the Fed’s current rate forecast.

Also, before today’s rate hike announcement, investors will focus on consumer inflation figures, i.e. the CPI, which will be released at 8:30 N.Y. time, retail chain numbers likewise coming out at the same time.

Index Last Daily change
DJX 0.44% 21,328 Up
SPX 0.45% 2,440 Up
Nasdaq 0.73% 6,220 Up

Wednesday’s Hot Stocks:  HRB, ALXN

IPOs: ATNX, CGBD

Have a great trading day!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Tuesday 8:30 PPI High
Wednesday 8:30 Retail Sales Medium
Wednesday 8:30 CPI High
Wednesday 10:00 Business Inventories Medium
Wednesday 10:30 Crude Oil Inventories Low
Wednesday 14:00 FOMC Rate Decision High
Thursday 8:30 Philadelphia Fed Medium
Thursday 8:30 Export\Import Prices ex-ag. Medium
Thursday 8:30 Initial Claims Medium
Thursday 8:30 Empire Manufacturing Medium
Thursday 9:15 Industrial Production Medium
Friday 8:30 Housing Starts Medium
Friday 8:30 Building Permits Medium
Friday 10:00 Mich Sentiment High

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Earning Calendar

 

Symbol Company AM/PM Day
HRB H&R Block, Inc. PM Tuesday
JBL Jabil Circuit, Inc. PM Wednesday
KR The Kroger Co. AM Thursday
FNSR Finisar Corporation PM Thursday
ALR Alere Inc. AM Friday

 

 

 


 

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
TSLA 376.87 OMER MYL
Z 45.85 DD  
DOW 65.42 XPO  
DISH 66.44 RMD  
HCN 74.50    
WYNN 135.26    
CLDR 17.73    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 1.5.2017 AAOI Long Close 2.5.2017 +0.54%
2 3.5.2017 SCSS Long Close 9.5.2017 -1.71%
3 4.5.2017 CRZO Short Close 5.5.2017 +0.30%
4 8.5.2017 WTW Long Close 16.5.2017 +6.09%
5 15.5.2017 AAN Long Close 16.5.2017 -1.70%
6 16.5.2017 CCL Long Close 17.5.2017 -0.41%
7 17.5.2017 AMAG Short Close 24.5.2017 +5.38%
8 17.5.2017 AAN Long Close 24.5.2017 -2.59%
9 19.5.2017 TRCO Long Close 23.5.2017 -1.45%
10 19.5.2017 GIMO Long Close 26.5.2017 +2.05%
11 1.6.2017 BF.B Long Close 6.6.2017 +0.95%
12 7.6.2017 LULU Long Close 9.6.2017 -2.24%
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Today’s Picks – Swing “New-York Strategy

No.1 –    SBUX

Company Name Starbucks
Entry Point 61.26
Stop Area 60.48
1st Target 61.90
Swing Target 64.87
Avg. Volume 8.58M
Sector Services | Specialty Eateries
Earning Date
Risk Rate Normal
Risk\Reward Ratio 4.63:1

No.2 – SIG

Company Name Signet Jewelers Limited
Entry Point 58.88
Stop Area 61.15
1st Target 57.55
Swing Target 46.09
Avg. Volume 1.70M
Sector Services | Jewelry Stores
Earning Date
Risk Rate High
Risk\Reward Ratio 5.63:1