Big Picture

Our overall Primary Trend Indicator has moved one notch higher to its highest level of Bullish.  The G20 results were bullish for the stock market and the $SPX will hit new all-time highs.  Investors will next focus on the upcoming Q2 earnings season which begins reporting on July 15th.   Sebright Capital expects stocks to trade higher in anticipation of earnings which will likely show upside potential on forward looking statements, now that the US and China are talking again.

Changing Fundamentals

Australia June inflation at 1.6% YoY versus prior 1.7%

China Caixin June manufacturing PMI at 49.4 vs 50.1 expected and prior 50.2

South Korea exports fell 13.5% YoY in June

Australia Markit manufacturing PMI for June at 52.0 versus prior 51.0

Eurozone May M3 money supply YoY 4.8% vs consensus 4.6%

Eurozone June final Manufacturing PMI 47.6 vs preliminary 47.8

German June final manufacturing PMI 45.0 vs preliminary 45.4

France Manufacturing PMI 51.9 vs consensus 52.0

Italy June Manufacturing PMI 48.4 vs consensus 48.7

Switzerland June Manufacturing PMI 47.7 vs consensus 49.0

UK June Manufacturing PMI 48.0 vs consensus 49.5

US June Markit Manufacturing PMI 50.6 vs consensus 50.1

ISM June Manufacturing Index New Orders 50.0

Focus List

**TSX Canadian Markets closed for holidays**

 

Global Stock Markets are surging in pre-market action with technology and energy related shares outperforming.  News over the weekend form the G20 between US and China putting on hold additional trade tariffs and restarting negotiations.  We also noted an agreement by OPEC+ to extend the current rate of output by another 9 months and support from many members to reduce the rate of production even further.   While the entire market should benefit from the weekend outcomes technology and energy shares will benefit the most.  Overseas markets in Asia and Europe are posting solid gains between 1.5-2.5%.  DOW30 futures are up 250 points and the $SPX S&P500 is going to open at new all-time highs.

Ally Financial $ALLY – The diversified US financial company is breaking out to new all time highs beating the performance of the XLF Spider Financial Sector ETF by a wide margin.  Fundamentals are in favour for Ally, which services and offerings include full service banking, personal and commercial lending, as well as online self directed investment.   Its online investing business is winning marketshare, was awarded with top industry accolades for 2018 and 2019, and is charging the lowest transaction fees amongst the big banks on both equity trades and options trades.  Technically, the stock is breaking out from resistance of 3 years towards $31 and targets upside potential into the high $30’s over 6-12 months.  See chart below.

Technology Stocks – Will be moving higher this morning on the news that US Semiconductor companies are allowed to sell to Hauwei.  Some of the US semiconductor companies receive a significant portion of revenues from Huawei, but all US semi companies have some sort of exposure.  This is a bullish setup for names like Advanced Micro Devices, Nvidia Corp, Xilinx Semiconductor, Intel Corp, and many others.  The level of increase should be commensurate with the amount of weakness since the Huawei ban has come into effect.  In many cases we could see 10-15% moves higher, likely not all today but the extension of the move.  Todays move are highly probable in the 5-7% range.

 

Notables:

Geneseee & Wyoming – The railroad company is confirming it is being taken over by Brookfield Infrastructure at $112 per share.  We highlighted the stock last week at $96.   It closed Friday at $100.