Sell in May and Go Away? Depends on Trade War.


Market Pulse.


"Sell in May and Go Away" says the popular phrase, which is also a well-known adage in Wall Street. Last week the stock market closes in a moment of grace: the SP500 SPX in all-time highs and great numbers in economic events, especially the recent Employment data with great jobs numbers, with a 50-year record unemployment rate and flat average hourly earnings. That's the perfect combination for bull investors: the U.S. economy is strong and with growth without inflation. Also Wall Street is closing an amazing Q1 Earning SeasonThe only divergences are some market overbought signals (not critical yet) and the recent Powell speech, that Wall Street disliked, especially when he told that only a "persistently" low inflation would make the FED consider a rate cut. 

Finally, the Trade War is a separate chapter in this story: could finish (or not) with an agreement in the next weeks, nobody knows, probably neither Trump. As I always said, its resolution is key for the future rise (or drop) of the markets in the short-term.


Update: Today, May 5th. 

Trump in a tweet: Trump vows higher tariffs on Chinese goods.
Answer from Chinese: China considers skip trade talks.
Consequence: now, 22:40 EST, sell-off in world futures markets  SP500 /ES -2%,  Oil /CL -2.5%, DAX -2%, HangSeng -4%, VIX /VX +16%.







"Main15" Stock Watchlist for May


Some brief technical notes and forecasts of the stocks that make up my watchlist "Main15" for May. As usual, remember, they are NOT buying suggestions, only my personal ideas.

1. Cree CREE: after a successful earnings report, continue strong its bull rally, more than 10% in April. As it's trending, I'm only checking weakness signs in its MACD (and its financial news, of course) for taking profits and entry in the pullback. Great stock for all 2019.
2. Cognizant CTSH: its recent Q1 earnings report disappointed Wall Street traders, closing down 11% the session. It seems an entry short is the best play for the short-term.
3. Facebook FB: great performance in April, far overcoming all resistances, now going towards the $200, despite the usual uncertain news about its privacy and data management of its applications. His next resistance at $198, the 78.6% Fibonacci retracement of its fall since August.
4. Fiserv FISV: last weeks returns to its ranging channel between $82.5-87.5, due to its earnings report that beat EPS, flat guidance, but miss sales. I prefer to stay neutral in this stock, but checking carefully the level $87.50 for a possible breakout.
5. General Electric GE: trading now at $10.50, is again its an interesting stock for the short-term, as recently beats earnings and overcomes many resistances in April: the three daily SMA (50, 100 and 200), and the Ichimoku cloud. I'm long here.
6. Illumina ILMN: this health-sector stock came here from my Radar watchlist, after a good earnings report, beating EPS and sales, with flat guidance. Technically is now above all its daily SMA, touching the upper line of an important downtrend channel that could send this stock to $350 levels. Waiting for a more clear breakout: it's my entry signal.
7. Lennar LEN: Housing sector is recovering this year from a disappointing 2018, and Lennar is a key stock in this sector with its 35% YTD gain. Stock mainly for long-term investing, its next important resistance is in $54.68, the 50% Fibonacci retracement of its 2018 drop.
8. Netflix NFLX: the popular FAANG stock is now in my Main15 list due to its recent good earnings and nice world subscriptions numbers. Disney DIS new streaming service was a tough jab that I'm sure Netflix could assimilate well in the future, due to Hastings abilities. Now the stock is in a ranging channel $340-380 all the year, that yesterday overcomes. Probably a breakout is near here.
9. Paypal PYPL: same as in April, technically is unstoppable. One of the few stocks that did not suffer the market correction at the end of last year. Permanent member of my watchlist, I continue long here, with a tight stop loss now.
10. Roku ROKU: as an stock in a ranging phase (ADX<20) rebounding in a channel, it moves well according to the Stochastic indicator. I twitted that two weeks ago, for a nice rebound and next profit-taking. Today is near the upper line of its downtrend channel. I'm neutral, due to its huge volatility, waiting for signals and next Earnings Report.
11. Snapchat SNAP: as I remark always, it is a stock only for short-term speculation, never for a long investing. It's approaching its real valuation, I presume near $12-13. Probably recover to that levels in May due to upgrades because it slightly beats its recent earnings.
12. Atlassian TEAM: another stock winner, in my watchlist since January. I'm long here since it broke the psychological $100 level. Sank after its recent earnings but now is filling that gap, breaking its SMA50. Good pullback for an entry long.
13. Tesla TSLA: continue being the most hated (and the most loved) stock in Wall Street, due Elon Musk personality. Its fundamentals, news (as recent capital raise), and Musk tweets are key in its performance. Technically, the same as ROKU, is rebounding fine in a downtrend channel all 2019. Technical signs in MACD and Stochastic indicate some days in bullish bias.
14. Twitter TWTR: the bird breaks its 9-month resistance at $35, due to its good earnings report, and now the sky seems is the limit. Many bank upgrades confirm that. Long.
15. US Steel X: in April sank near 30% from $20 to lowest 2-year levels ($14.39) due to a Credit Suisse downgrade to $13 that make this a good stock for shorting it that month. Now, after an amazing earning report, it seems the gap could be filled in the next weeks. News of its new billion-dollar plant, a +17% day-recover and also an indirect Trump tweet are very good signals. Interesting stock if it increases volume because it usually takes off strongly.


Images were taken on May 4th, 14:25 EST