Dow Stays Positive Amid G20 Jitters

Just as last week was all about the Fed, this week will be focused on the G20 meeting in Japan when President Trump and China President Xi will be talking about trade.

While the market was pretty sure that the Fed would keep its dovish tone and leave the door open for rate cuts later this year, it’s much less encouraged that something good will come out of the summit.

Therefore, the major indices were sluggish to start the week. They all had somewhat positive mornings, but finished the session right around the lows of the day.

The Dow still managed a positive close… but just barely. It was up 0.03% (or about 8 points) to 26,727.54.

The S&P slipped 0.17% to 2945.35, while the NASDAQ was off 0.32% to 8005.70.

Stocks have enjoyed three straight weeks of gains, which included the S&P reaching a new record last Thursday and the Dow coming within 1% of its own milestone.

So the silver lining of today’s sluggish market is that these indices remain in striking distance of new all-time highs. With a rate cut expected to be on its way, the Trump/Xi meeting that begins on Friday could be a big factor in when those new records are made.

The bar really isn’t that high for the summit. The odds are not in favor of a breakthrough that puts a swift end to the trade conflict. Investors would be content if the two guys had a nice photo op and promised to get back to the bargaining table. They would be thrilled if any additional tariffs were postponed during the talks.

The market heads into the final week of June with the makings of a strong month, which is a welcomed change after May. The only problem is that we may be in store for a slow week since the G20 meeting won’t happen until Friday. So this solid month may end with a yawn.  

Now would be a good time for a couple of those positive trade headlines…

Today's Portfolio Highlights:

Counterstrike: Last week’s FOMC meeting has sparked a gold rush, but Jeremy doesn’t want to chase the precious metal. Instead, he notes that silver is once again being ignored even though it tends to move along with its flashier counterpart. The editor decided that the right move was taking a 10% allocation in ProShares Ultra Silver ETF (AGQ). The plan is to hold onto this fund for a month or two and enjoy the ride higher should the Fed continue its dovish sentiment. By the way, the editor also added 5% to the portfolio position in former market darling Xilinx (XLNX), which is challenging its 50-day moving average and seems ready for a breakout. The service now has a total allocation in this programmable devices developer of 14% to 15%. Read the complete commentary for more, including a chart on silver.

Surprise Trader: The Food – Confectionary space is in the top 5% of the Zacks Industry Rank, so Dave is interested in the upcoming report for Simply Good Foods Company (SMPL). This Zacks Rank #2 (Buy) consists primarily of nutrition bars, ready-to-drink shakes, snacks and confectionery products marketed under several brand names including Atkins®. It reports before the bell on Tuesday, July 2 when analysts expect year-over-year earnings growth of 40%. The editor added SMPL with a 12.5% allocation. He also decided to sell Synopsys (SNPS) for a 10.4% return in less than a month after this computer software company recently continued its string of positive earnings surprises. Read the complete commentary for more on today’s moves.

TAZR Trader: Splunk (SPLK) is an $18 billion provider of a software platform that collects and indexes data and enables big customers like Home Depot, Adobe, and Coke to harness their “big data” in real time. Kevin eyed the stock last week as a potential buy as it’s trading under 8X sales that are still growing at 25% and just busted through the $2 billion annual mark in Q1. New bullish coverage this morning keeps the average Street price target over $150 with BofA/ML and Wells Fargo at $166 recently. Kevin smells a great opportunity here to pick up an innovative and growing name in the lucrative data analytics space at a great price. Therefore, the editor added SPLK on Monday. Read the complete commentary for a detailed look at this new buy. 

Black Box Trader: All three of the stocks that were sold this week brought profits to the portfolio. The positions that left the service today are:

• Arconic (ARNC, +9%)
• Costco Wholesale (COST, +2.3%)
• Dollar General (DG, +2.2%)

And here are the new buys that filled these open spots:

• HP Inc. (HPQ)
• RH (RH)
• Synchrony Financial (SYF)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

All the Best,
Jim Giaquinto

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