Stocks rose for a third straight session on
Wednesday as the Fed statement was considered dovish enough to keep
the major indices marching toward new highs.
As expected, the Committee kept rates unchanged. Its official
stance moving forward is that a rate cut in 2019 is unlikely.
However, these things are all about language and reading in between
the lines. Investors think the Fed left itself with more than
enough leeway to cut rates much sooner than 2020… perhaps even in
July! In fact, eight members of the committee expect a cut in
2019.
After a sluggish morning, stocks didn’t exactly soar once the news
was released. Maybe it wasn’t adequately dovish, or perhaps it was
so expected that its effectiveness was limited. Either way, it was
rather anticlimactic after the buildup over the past few
days.
Nevertheless, stocks did advance and kept the rally moving.
The S&P, which crossed above 2900 yesterday and is within 1% of
its all-time high, added another 0.30% on Wednesday to end at
2926.46. The Dow increased 0.15% (or about 38 points) to
26,504.
The NASDAQ was again the percentage leader with an increase of
0.42% to 7987.32.
The major indices are going for a third straight week in the green
to continue adding onto June’s gains following a rough May.
Now the next big focus will be the G20 next week in Japan. We found
out just yesterday that President Trump and China President Xi
would be getting together to try and make some headway in the trade
conflict.
It would be unwise to expect an agreement during the summit, but
it's not too much to ask that there’s some groundwork for further
negotiations.
If progress can be made on trade, then the major indices could be
at all-time highs by the next Fed meeting in July… when the market
is fully expecting a rate cut…
Today's Portfolio Highlights:
Marijuana Innovators: The number of children
diagnosed with an Autism Spectrum Disorder has soared in the past
20 years to 1 in 59 kids. That’s way up from 1 in 150 in 2000.
There’s a tiny and very speculative pharmaceutical company that may
have a drug that can bring some relief to these children and their
beleaguered parents. Zynerba Pharmaceuticals (ZYNE) has been
granted a US patent for therapeutic treatment of ASD with
cannabidiol-based medication. While its tough to estimate how much
money such an unpredictable treatment can make for investors, there
is tremendous upside potential for this 19-year patent to treat a
growing problem. Dave is willing to take the risk and added ZYNE on
Wednesday. Read the full write-up for more.
Insider Trader: The big news this year for
Occidental (OXY) was its acquisition of Anadarko Petroleum, which
sent shares of this E&P big cap tumbling to new 52-week lows.
Shares are down approximately 17% year to date. But a recent
cluster buy shows that several insiders believe the selling is
absurd and overdone. Last week, the CEO, the CFO, a Senior VP, the
General Counsel, a Senior VP for Business Support and a couple
directors all bought shares of their own company. Such a heavy
amount of buying certainly caught the attention of Tracey,
especially coming from a large-cap stock. The editor decided to add
OXY to the portfolio on Wednesday with a 5.6% allocation, which was
all the money this now fully-invested portfolio had on the
sidelines. Read the complete commentary for a lot more on this new
buy.
Home Run Investor: The portfolio is finally as
close as possible to being full after today’s addition of Napco
Security Technologies (NSSC). This Zacks Rank #2 (Buy) focuses on
security alarm products and door security devices for commercial
and residential installations. Brian was most impressed with the
company’s chart, which shows that the stock started running in
February and, impressively, was one of the few to gain in the
otherwise horrible month of May. Read the complete commentary for
more this new addition.
Have a Great Evening,
Jim Giaquinto
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