Fed Week Begins in the Green

The market ambled higher to begin the week as we all wait breathlessly for the Fed statement on Wednesday.

Stocks have gained for the past two weeks and are now up approximately 5% for June, which is a nice about-face from dropping throughout most of the previous month.

Now it’s up to the Fed to keep these good times going. Chair Jerome Powell is not expected to announce a cut this week, but the market is planning for at least a couple of them before the year is out.

And we all know how much of a tantrum the market can throw when it doesn’t get what it wants!

So investors will be paying close attention to the language of the statement. Will it sound like they’re preparing for a cut? If it does, then the market should have enough fuel to keep marching toward new highs.

In the meantime, stocks seem content to just run in place with low volume until they know what the Committee has in mind. Such was the case on Monday as the major indices survived a late session pullback to close with slight gains.

Tech had a good day with all of the FAANGs in positive territory. Facebook was out front with a 4.2% gain as the social media giant has a big cryptocurrency announcement tomorrow. Netflix was up 3.2%.

Based on this news, the NASDAQ rose 0.62% (or about 48 points) to 7845.02. The index is coming off a week in which it advanced 0.7%.

The other two major indices each increased 0.09%. The S&P continued its slow but steady trek back to 2900 by adding a little less than three points to 2889.67, while the Dow improved almost 23 points to 26,112.53. These indices each improved about 0.5% last week.

Today's Portfolio Highlights:

Healthcare Innovators: When uniQure (QURE) pulled out of a Goldman Sachs conference earlier this month, Kevin smelled that a deal might be coming for this biotech. Well, today we got news that this company is looking into a potential sale as pharma companies scramble to get a bigger piece of the growing gene therapy space. The editor will keep you abreast on any potential deals moving forward. But for today, the news meant that QURE jumped 11.8% to become one of the best performers among all ZU names. It also got help from another deal in the healthcare space as Pfizer bought Array BioPharma for about $11 billion. The stock is currently up nearly 139% in the portfolio since being added in July of last year. By the way, the portfolio actually had three of the top five performers today thanks to strong sessions from CRISPR Therapeutics (CRSP, +8.8%) and Invitae Corp. (NVTA, +6.7%).

Black Box Trader: Three positions were swapped out this week and all of the names leaving the portfolio were positive. The stocks that were sold today include:

• WellCare Health Plans (WCG, +6.4%)
• American Int’l Group (AIG, +4.5%)
• Flowers Foods (FLO, +1.1%)

The new buys that filled these spots are:

• Axalta Coating Systems (AXTA)
• Costco Wholesale (COST)
• PACCAR (PCAR)

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

Surprise Trader: "The consolidation continues as the broad market traded water again to kick off the week. This could be a monumental week for equity markets. Looming this Wednesday, the FOMC rate decision. Over the last several months, the FOMC has basically been a non-issue. However, recent dovish commentary coupled with a market beginning to expect rate cuts this year rather than the tightening cycle we’ve been in now sets this week up as an important one.

"Volatility coming down ahead of the FOMC tells me the market is not worried about what comes out of this announcement. Overall, I think most market participants are looking for the status quo to continue. I am having a tough time mapping out a scenario where the Fed catches the market off-guard and the market sells off because of it. We know they’re not hiking rates. What we don’t know is if they’ll cut or how aggressively they may cut in the near future. Expect the summary to be parsed as usual.

"A very thin market ahead of the FOMC meeting this Wednesday. I suspect we see the same sort of action tomorrow. The main event for the week could be exactly what the market needs to breakout of this consolidation. With stocks holding north of the 50-day moving average, things are leaning bullish." -- Dave Bartosiak

All the Best,
Jim Giaquinto

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