THE BULL MARKET REPORT DAILY
• The Ides of March Bring New 2016 Highs for U.S. Equity Indexes
• The Fed Backs Dovish Interest Rate Stance
• Oil Slips; Gold Remains a Cruel Mistress
• Tesla Decelerates Before Model 3 Launch
Key Market Measures (Wednesday’s Close)
Dow Jones 17,716 +0.5%
S&P 500 2,064 +0.4%
NASDAQ 4,869 +0.5%
Crude $38 Unch.
Gold $1,226 +0.1%
Happy Days Are Here Again; Market Disconnects from Oil
From the way U.S. equities have traded in March, you’d be hard-pressed to know that January and February combined to be one of the worst performing periods in market history. Thankfully, the gloom and doom created by China’s faltering economy, cratering oil prices and a moderately aggressive interest-rate hike schedule outlined by the Fed has receded dramatically, with the Dow and S&P 500 trading up 1.7% and 1% on the year, respectively.
During the early year bludgeoning experienced by U.S. stocks, almost every bad trading day up until this week could be measured by losses in Crude, with U.S. equities moving in virtual lockstep to the downside. This week may mark a turning point in that phenomenon, as stocks have shaken off a pullback in oil prices and marched higher to their best levels of the year.
Interest Rates to Remain Tame; Gold Fluctuates Wildly
With few significant economic data points on the calendar mid-week, market participants focused their attention on the resurgent accommodative interest rate posture of the Fed. Janet Yellen’s follow-up comments in the wake of last week’s FOMC policy statement, along with statements from other Fed governors, have pretty much guaranteed that there will be no rate bump in April. While that may signal good times ahead for stocks, gold bugs may start feeling the pinch.
Gold is currently sitting just above key support at $1220. If you follow the yellow ore, and make bets on related stocks, many technicians believe that $1220 must hold for the precious metal’s rally to have legs. If $1200 falls, it could trigger more selling.
Company Thoughts & Commentary
Tesla (TSLA: $227, down 1.4%) On the eve of the highly anticipated debut of Tesla’s new Model 3, the stock struggled to find buyers during Wednesday’s bullish market move. Tesla shares slumped more than $3 Wednesday, as shorts put up a valiant fight against Elon Musk’s wealth-creation machine. As one of the best stocks of the decade, I still wouldn’t want to be on the short side of the issue this week, or any other for that matter. But especially not now! As we keep saying, fasten your seatbelts, and expect fireworks.
PayPal (PYPL: $39, down 0.5%) There was an article in Barron’s that came out this morning that mentioned that Square (SQ, $15) is escalating the war against PayPal. It is the first time that Square has offered sellers the ability to put a Square checkout page on any website. This puts some pressure on PayPal, which already is facing stiff competition from Apple Pay and Google’s Android Pay. Google is a unit of Alphabet (GOOG, $751). Square has more than 2 million merchants and PayPal has more than 13 million merchants, so we are watching but are not overly concerned.
LinkedIn (LNKD, $114, up $4) had a good day yesterday. This stock is so beaten down that it has had a nice rebound, just as we expected. Take the S&P 500 to new highs and this one is going to $120 and then higher. We added the stock in early February at $101 and we are now up over 13%.
Good investing,
Todd Shaver
Editor in Chief