Morning Market Update Thursday, July 21

Providing Market Insights and Returns

Equity futures are quite muted this morning, DOW FUT down 0.35%, S&P FUT down 0.21%, and NAS FUT +0.02%. Oil is getting slammed this morning, down over 4% bringing WTI well below $100. This comes as Nord Stream 1 has been turned back on and Libya’s oil output has recovered to 700kbpd. Gold is at a 1-year low and is in oversold territory, the first time entering this territory since last Aug. Eyes are on the ECB today as they are expected to raise rates for the first time in 11 years. The big question is if it will be 25 or 50bps. We are reminded of June 2011 when they last increased rates, quickly reversing 3 months later to cut them again. Announcement at 8:15EST. Italy’s PM, Mario Draghi, has resigned. We are still watching Sir Lanka, the news there has died down significantly but the problems have not. They are struggling to pay for food imports and energy. Additionally, the low water levels in the Rhine have not been covered broadly. The water level is now below critical levels and could halt barge traffic.  TSLA has been the talk of the town with decent earnings, pushing the stock higher by 2.5% this morning. They sold 75% of their BTC, I guess the future potential musk talked about for BTC isn’t quite there yet.

Yesterday the DOW & S&P closed marginally higher while the NAS gained over 1.5%. All three of them closed above their 50-day EMA, a level we have been watching. While we will not deny that there have been improvements in the markets, we still are believers in the bear market rally. Breadth was not substantial yesterday and other indications of any kind of bottom are not there. We may be wrong, but we are generally sellers of beta names.

Daily we will highlight our top 5 “favorite” stocks at the moment. Not investment advice, just the ones that are working. They may change daily to remain the same for a long period of time.

Top 5

Sysco Corp (SYY)

Booz Allen Hamilton (BAH)

Molson Coors (TAP)

DoubleVerify Holdings (DV)

O’Reilly Auto (ORLY)

We will highlight TAP today. After being in a downtrend for most of the last 5 years, TAP is nearing a long-term resistance level around $60. The stock is undoubtedly overbought but the change of trend is significant. If it breaks above $60 we bet it heads higher.