Dear Reader,
Apologies for the delay today in Midday Momentum.
I spent the entire morning with members trading ChatGPT stocks, reversions on Foot Locker Inc. (FL), and watching the Fed fumble its prepared remarks. It was awesome - and I'm going to start doing this on Fridays so that we can maximize our options trading and improve our risk management.
Markets bled off Friday afternoon, largely on the "Third Friday" vibes, Treasury Secretary Janet Yellen warned of more instability in the banking sector... while Fed Chair Jerome Powell was assuring everyone that the system was stable.
And the GOP called off its debt ceiling negotiations, signaling the odds of an actual government shutdown just soared. Gold prices popped on the news.
The next five trading days are set to be very eventful, to say the least.
I'm getting ready to head to Switzerland in two Mondays, so I'm sure that chaos will reign while I'm gone. Maybe the shutdown will be so "painful for Americans" that they'll slow down Customs agents at the border when I return.
I wouldn't put that past the bureaucracy...
But let's discuss what to expect.
Monday: Market trading will resume with a nagging fixation on today's (Friday's) events. With Third Friday in the rear-view mirror, there will be less movement in the options markets, meaning that stocks will need to sink or swim. The shiny objects in artificial intelligence (AI) world continue to dominate - especially names like Meta Platforms Inc. (META), NVIDIA Corp. (NVDA), and even... Snap Inc. (SNAP)? Let's keep a close eye on the shipping sector with ZIM Integrated Shipping Services Inc. (ZIM). Next, Ford Motor Co. (F) holds its big Capital Markets Day, and it will talk about its ongoing business strategy and goals for electric vehicle (EV) development. St. Louis Fed President James Bullard will speak before the Monday bell. You also have a few other speakers in Thomas Barkin and Raphael Bostic. Let's see if they can all resist the temptation to be quiet about rate hikes.
Tuesday: Retail sales are in focus, with Lowe's Companies Inc. (LOW) reporting earnings. In addition, we're looking at DICK'S Sporting Goods Inc. (DKS), Palo Alto Networks Inc. (PANW), and AutoZone Inc. (AZO). AI will lead the way with the Microsoft Corp. (MSFT) developers conference - and sure enough, we'll have sessions involving Nvidia. There's a chance NVDA stock sells off Monday... then roars back after presenters say the words "AI" 200 times in an hour.
Wednesday: That awful company with that awful board of directors called Kohl's Corp. (KSS) will report earnings. Imagine if they had just taken the $65 offer last year (shares are at $19.00). Guess who else reports that day? NVIDIA, that's who. It's like I moved into a house, and this company is just dragging chains through the hallways all night. The company holds its earnings call at 5 pm. I want you to watch Advanced Micro Devices Inc. (AMD) and Synaptics Inc. (SYNA) the following day, as both stocks are highly correlated with NVDA. Finally, the Fed releases its minutes from the May meeting at 2 pm. I'm not trading the Fed that day. It's all too much.
Thursday: Big day for retail earnings: Best Buy Co. Inc. (BBY), Dollar Tree Inc. (DLTR), and Costco Wholesale Corp. (COST). Keep a close eye on Virgin Galactic Holdings Inc. (SPCE), which will have a launch window open for the first time in two years. This is also the day that cancer drug companies release their abstracts ahead of the 2023 American Society of Clinical Oncology Annual Meeting in three weeks. That's a huge deal - even for biotech.
Friday: By that rate, I'll be asleep under my desk by 12 pm, but I'll be trading the open and focused on the ChatGPT stocks for two hours. That day, we really only have Big Lots Inc. (BIG) as an earnings report. Durable goods for April are really important that day. We're staring down the barrel of a 1% decline month-over-month - and Boeing Co. (BA) is the primary driver. We must be looking at US industrial production numbers. Economist Peter St. Onge (Ph.D) just offered a brutal breakdown on the state of the New York Manufacturing Index, and the numbers are worse than the 2020 COVID crisis and the worst since 2008. This looks terrible.
Today's Momentum Reading
WORLD'S BIGGEST INDICATORS
Broad Market: Green
S&P 500: Green
Recap: The World's Biggest Indicator (Momentum) is Green... The sudden debt ceiling news has pushed this market lower on Friday, fueling speculation that we might be heading in the wrong direction. For all the bullish chatter - we saw three negative catalysts today: Janet Yellen warned about bank stability, Jerome Powell couldn't confirm no rate hike in June, and the debt ceiling talks are falling apart. I continue to exercise caution in this environment.
This is the biggest US oil story of the decade
American oil production is through the roof right now.
In fact, the U.S.'s biggest shale basin - the Permian oil field - is set to produce a record-breaking 5.71 million barrels per day this month.
You see, the Permian is one of the cheapest - and easiest - oil fields to drill on in the country. It's great for maximizing profits - making it the hottest ticket in town right now...
Which is why it's the focus of an enormous buyout boom involving 400 cash-rich oil behemoths. In fact, oil firms are flocking from across the globe to scoop up prime locations across these 86,000 square miles of oil-rich land in West Texas.
And when buyout booms of this magnitude start to ignite... Investors can walk away with a boatload of cash.
A slew of money-spinning deals have already begun to hit in the last few weeks including a landmark $18.8 billion takeover involving ONEOK and Magellan.
But we're set for a ton more deals in the coming weeks. And these five companies are strong takeover targets for just about every oil major on the planet.
Today, I want to show you how to play it. Because the rewards for fast-moving investors could be second to none.
Have a great weekend,
Garrett
The post This Hot Market Will Get Hotter - Let's Look at Next Week appeared first on Midday Momentum.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.