 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Wednesday's Headlines 1. Market Rally Falters Despite Trade Talk Optimism 2. These 5 Stocks are 'The Market' Markets Closed
 U.S. Markets Tepid on Trade Deal Optimism
Optimistic words from U.S. Treasury Secretary Mnuchin this morning on the U.S.-China trade negotiations put the buyers back in the drivers seat today, but the rally wouldn't stick. Specifically, Mnuchin told CNBC that the U.S. and China were about 90% of the way to a deal when talks broke down in May. He did not specify what the remaining 10% entailed, but we can surmise that it had a lot to do with intellectual property theft, forced technology transfer and China's alleged manipulation of its currency.
Mnuchin did say that he sees a 'path', to getting close to a deal at the G20 meetings in Japan this weekend, which investors took as a positive sign.
The recent rallies in U.S. markets are peculiar. The S&P500 hit a record last Thursday, but has not been able to break through its record close of $2,954.18. That's what technical analysts like James calls 'resistance'.
Here's the S&P500 over the past 5 trading sessions.  It's not just the S&P500. Our buddy, JC Parets, founder of AllStarCharts.com and one of our technical analysis instructors on the Investopedia Academy, points out that the Russell 1000 is also unable to break through resistance.
The Russell 1000 tracks the top 1000 U.S. large cap stocks, so it covers more stocks than the S&P500, which we call the 'broad market.' JC and his team note that the Russell formed a triple top, which is a rare occurrence for an Index, but has been unable to break out to new highs following those rallies.
Put another way, these large cap stocks, which have led the market rally, are stuck in a range, and there is not enough momentum to carry them to new highs after they hit a certain level, aka 'resistance'.
Here's JC's chart:  To Sum it Up... U.S. markets are stuck in a range. Trading volume has been low, and will probably be that way through the July 4th holiday in the U.S.
Small cap stocks, which we have covered in recent newsletters, have lost their momentum and are in a downtrend. Growth stocks, as we just noted, have hit a wall of resistance.
The trade talks may be the antidote for stocks to break out or break down, but we may not see any resolution to them in the G20 meetings this weekend.
We may be here for awhile, so get comfortable with your risk, and allocate accordingly.
5 Stocks to Rule them All We often say that it is a 'market of stocks', and not just a stock market. That expression is timely, as we look at the market's performance as the second quarter comes to a close on June 30th.
The S&P500 is up close to 3% for the quarter and 16% for the first half of the year. But, as CNBC points out, those gains are not evenly distributed.
The S&P 500 may be up 2.9%, but an equal-weighted index of the S&P 500 is up only 1.8%, suggesting the largest companies are pulling the averages up.
For the quarter, five of the largest stocks contributed 30% of that S&P 500 gain:
S&P Global Market Intelligence notes that in the second quarter, 313 of the 500 stocks in the broader market were up, while 188 were down. But some very large companies had some big losses, like Intel, Alphabet and Exxon Mobil, which combined to drag down the S&P 500 by 7.4%.
As an investor, you need to decide for yourself whether you want to be a stock picker or an index investor. You can be both, but if you choose to be a stock picker, realize how hard it is to pick the winners on a consistent basis.
Here are the 5 stocks that ruled the 2nd quarter via www.koyfin.com  Oil Spouts Higher
Oil futures are not having resistance problems. The commodity continues to churn higher due to geo-political tensions and good old fashioned supply and demand issues. We've written about the geopolitical events surrounding U.S. sanctions on Iran, the attacks on two oil cargo vessels in the Strait of Hormuz and the downing of a U.S. drone by Iranian forces. Those tensions have abated, for now.
Today, The Energy Information Administration said that U.S. crude inventories fell by 12.8 million barrels last week. Last week was the biggest drawdown since September of 2016, when inventories fell 14.5 million barrels.
Lower inventories mean less supply, which usually drives up prices. As we've noted, the U.S. has become a net exporter of oil in the past decade. It's also one of the biggest oil consumers of any country on the planet, and we are heading into the busy summer driving season. OPEC is meeting next week to decide on further production cuts to keep crude oil prices on the rise. All the forces are in play to keep supplies low and drive prices higher.
Here's a chart of West Texas Intermediate over the past month. It's the most commonly used and traded oil in the U.S.  U.S. Democratic Presidential Primary Debates - A Guide For our U.S. readers and those of you who follow U.S. politics, Democratic primary candidates will take the stage in Miami to kick off the 2020 election's first round of debates. Ten candidates will face off on night one, followed by the remaining 10 on night two. The debates will be broadcast and streamed by NBC, MSBC and Telemundo at 9 p.m. ET on both nights.
chart courtesy www.koyfin.com  Micron gained more than 13% today, as the company posted an earnings report that was better than expected, which in this case means better than feared. The report is helping to raise chip stocks more broadly, too. Nvidia was up more than 5% today. Oil stocks are up today, too, on news of U.S. crude inventories falling.  General Mills fell more than 4% today on disappointing quarterly numbers. The same can be said for Paychex.  Word of the Day As we mentioned, the Democratic Primary debate is this evening, and there are some economic terms you might want to be familiar with. Seeing as there is a self-described socialist running in the Democratic primaries, becoming familiar with the idea of socialism might be helpful.
"Capitalism and socialism are the two primary economic systems used to understand the world and the way economies work. Their distinctions are many, but perhaps the fundamental difference between capitalism and socialism lies in the scope of government intervention in the economy. The capitalist economic model relies on free market conditions to drive innovation and wealth creation and regulate corporate behavior; this liberalization of market forces allows for the freedom of choice, resulting in either success or failure. The socialist-based economy incorporates elements of centralized economic planning, utilized to ensure conformity and to encourage equality of opportunity and economic outcome."  Today in History June 26th, 1992 - Starbucks went public at a price of $17 per share and closed trading that first day at $21.50 per share. At the time of the IPO, Starbucks had 140 outlets, with revenue of $73.5 million.
https://www.starbucks.com/about-us/company-information/starbucks-company-timeline Chart of the Day: Bitcoin Shoots to New Highs  The parabolic rise of Bitcoin in the past few weeks and months is arguably even more dramatic than its steep tumble throughout 2018. One of the key factors driving the surge in the original and largest cryptocurrency (as well as most of its smaller crypto brethren) has been a resurgence of interest in cryptocurrencies due to Facebook's recent announcement of its own crypto project, Libra. While Libra's formal launch is not expected until next year, the company has already attracted a great deal of hype for the project, and it has added a certain degree of legitimacy to the cryptocurrency market due to its own involvement along with such payment industry giants as Mastercard and Visa as partners.
In addition, although Bitcoin is not yet established as a safe haven asset, like gold, some investors may be treating it that way. With fears of a global economic slowdown and trade conflicts foremost on investors' minds, safe havens like gold have been boosted dramatically (though there are other key reasons for gold's surge). Bitcoin may be experiencing some similar safe haven flows as economic risk concerns increase.
The chart shown above speaks for itself. Bitcoin reached a value approaching $14,000 on Wednesday before pulling back sharply on high volatility in the late afternoon (New York time). This dramatic move has been pure momentum with little in the way of past price action to dictate key technical levels or guidelines. From a price perspective, pretty much all that can be said is that Bitcoin's rise from December's low has been over 300%. And now, the percentage distance up to late-2017's all-time high (just short of $20,000) is less than 60%. If cryptocurrencies see a sustained resurgence of popularity with investors, we could potentially see those record highs sooner rather than later.
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Wednesday, June 26, 2019
The Path of Resistance
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