Market Briefing For Tuesday, July 18

Exceptional opportunities - generally are behind for large-cap leaders, while money managers increasingly seek-out small and mid-cap stocks that have not been so exploited.

Freepik

That's fine, and exactly what we required (momentum for S&P and NDX leadership waning while 'breadth' actually improved.

While I don't endorse the new-found optimism some analysts & technicians at last are embracing, I of course would be pleased if they come aboard smaller stocks and assist their efforts not only to survive, but to thrive with upside. As to S&P, it grinds slightly higher as we outlined, but not much unless the lesser capitalization stocks 'back-fill' as I've described necessary in recent weeks.

There are some warning signs, besides my view of risk risking for a setback as we get past mid-July. The hesitation on that relates to 'improved' Chinese relations (even as they struggle economically, but reduced military tensions), and of course cost-cutting spirals (like Ford shows and they have high labor costs compared to Tesla and others).

On the negative side you have the ramifications of Bank earnings responded to by sell-offs before they stabilize, which may be an early omen but unclear. The Ford story brings front-and-center the profit-margin squeeze concern. We tend to be favorable to Ford, but from 11 or so, and GM also at lower levels. I note that even VW warned they have to cut costs...this is Chinese competition and some from South Korea, both of which easily undercut Western costs.

EV's will make money but not for all companies. Detroit automakers have one problem Tesla (TSLA) does not. They aren't trying to 'straddle the era's transition' with a combination of ICE (internal combustion engines), EV's and even hybrids. It is interesting, and oddly enough (barely showing signs of life) an American EV struggling that has a shot (not much more) with strictly EV's at competitive low price levels, might turnout to be Canoo (GOV), but boy have they had a struggle.

You might not recall, but while my 'benz was in the shop after the accident, on the way to look at a BMW, I happened to stop and checkout a Ford Mustang EV. Media said they were all sold out, the dealer had 3 for immediate delivery, I was not interested (frankly I disliked the visibility out the rear, which is poor in so many cars these day).

 

In-sum: 

This market is a resumption pattern and struggling a bit. Friday was a light consolidation, Monday mostly higher as expected, but signs of struggling.

There's no change in our viewpoint, and we're open minded regarding many earnings reports, guidance usually means more than rearview mirror reports.

AEHR acts like it could be in-play, and I point-out too many have thought the periodic insider selling would inhibit future progress. It didn't, and likely won't. I concur with the 60 target, I'd say 58-65 short-term, even higher later in time.

On speculative SoundHound (SOUN) I have 'not' had requested background on what is going on there, and hope that's forthcoming. I can't clarify what remains as far as mystery around their activity, other than believe they are working to get what their CEO talked about, which is positive cash-flow by this year's end.

 

Bottom-line: 

Tuesday might well dip to start then rise anew, but given many new 'pseudo' bulls, we may well see signs of short-term exhaustion soon.


More By This Author:

Market Briefing For Monday, July 17 '23
Market Briefing For Thursday, July 13
Market Briefing For Wednesday, July 12

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can follow Gene on Twitter  more

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