Tuesday, May 14, 2024

Some Data for You

  • “Funnymentals” are in control.
  • It’s another classic short squeeze.
  • And there’s always a retail angle.
Senior Editor, StockPick Daily
MARKETS

Stocks Take a Siesta

PPI is just a preview.

Technical analysts like my friend and colleague J.C. Parets of All Star Charts would say “the funnymentals” are in control.
That’s what happens when GameStop $GME and AMC Entertainment $AMC and Trump Media $DJT lead the way higher.
Classic meme stock GME was up more than 74 percent on Monday. Its major cohort AMC was up more than 78 percent. After rising as much as 11 percent from its Friday closing price, DJT added a little more than 1 percent.
Price action in the broader market was more subdued, the Nasdaq Composite adding 0.29 percent but the S&P 500 and the Dow Jones Industrial Average losing 0.02 percent and 0.21 percent, respectively, after easing into the red late in the trading day.

The S&P 500 is up 9.47 percent year to date, the Nasdaq Composite 8.86 percent, and the Dow Jones Industrial Average 4.62 percent.
Investors, traders, and speculators – excluding meme-stock jockeys – only have eyes for inflation data this week.
And the Bureau of Labor Statistics will release Producer Price Index data for April at 8:30 a.m. ET today.
Wall Street economists say the PPI for April rose by 2.2 percent year over year, up from 2.1 percent in March. It would be the third straight increase in the annual PPI rate and the highest level since April 2023.

The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures Price Index excluding food and energy, continues to pull back from elevated levels.
Economists expect to see an acceleration in the month-over-month rate to 0.3 percent from 0.2 percent.
The forecast for core PPI is 2.4 percent year over year, consistent with the March rate, and 0.2 percent month over month, also consistent with the March rate.
Remember, PPI is the warm-up act this week. The BLS will release Consumer Price Index data for April tomorrow at 8:30 a.m. ET.
After three consecutive months of hotter-than-expected CPI prints, it’s a twitchy bunch of investors, traders, and speculators – including meme-stock jockeys.
Be careful out there.
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May 14, 2024
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DEEP DIVE

The Kitty That Roared

Keith Gill is making noise again.

GME put in its 52-week low on April 16 at $9.95. It closed at $17.46 on Friday.
On Monday, GME traded as high as $38.15, up more than 283 percent from its 52-week low in less than a month.
What’s happening here is a classic “short squeeze,” and it tightened even more after the notorious Roaring Kitty re-appeared on the social media platform formerly known as Twitter at 8:00 p.m. ET on Sunday night.
Roaring Kitty – also known as Keith Gill – made a name for himself in January 2021 during the initial GME-catalyzed meme stock craze.

GameStop $GME was up 74.40 percent on May 13, 2024, as “meme stocks” returned to market prominence.
The not-so-subtle message he delivered on Sunday – that he’s paying attention again – was received by the market almost immediately.
A former Chartered Financial Analyst charter-holder and a former registered broker with MassMutual, Roaring Kitty started posting about his GME positions on the r/wallstreetbets subreddit in September 2019.
The squeeze he triggered a little more than three years ago caused a lot of problems for multiple hedge funds and other institutions that got a little aggressive with their short bets.
Standing by for similar fallout… 
RETAIL

Sign of the Times

Just a mess or a near-term top?

Just a mess or a near-term top?Here’s one more thing about GME, a reminder from Mish Schneider: It’s in the SPDR S&P Retail ETF $XRT portfolio.
GME is the No. 4 holding, with 1.71 percent of assets as of May 10.
The meme stock’s most recent move left quite a mark on XRT on Monday, the ETF rising as much as 4.74 percent intraday and closing up 2.58 percent.
Another meme stock of days past, Carvana $CVNA, is the ETF’s top holding with 1.97 percent of assets. CVNA was down 0.09 percent on Monday.
The All Star Charts crew has been describing this as a “messy market” lately, with founder and chief strategist Parets noting on Monday that price action for GME and other meme stocks reflects the current environment.
In her Weekly Market Outlook for StockPick, Mish also points out that when GME went crazy in 2021 it also signaled a near-term top.
GME is certainly skewing XRT right now. But, as Mish explains it, the 75 level remains key for the ETF. “That’s what really has to hold,” according to Mish.
If it does hold that means the consumer, even after a dismal number from the University of Michigan confidence survey last week, is not as bad as some of those stats suggest.

The SPDR S&P Retail ETF $XRT was up as much as 4.74 percent on May 13, 2024, helped by a 74.40 percent surge for No. 4 holding GameStop $GME.
Home Depot $HD will report its first-quarter results and host a conference call today at 9:00 a.m. ET. Mish notes that HD has good support around $335, with resistance at $360.
Wall Street expects HD to report a 2 percent year-over-year revenue decline to $36.66 billion. Fourth-quarter revenue was down 3.5 percent compared to the prior corresponding period.
We’ll see how management characterizes the impact of Inflation, interest rates, and a slow housing market on results after a run of spending fueled by rising home prices and pandemic-related assistance.
“We're seeing a good start to the week, a lot of feelings about bullishness,” Mish notes. That’s a function of people thinking the CPI is not going to be as sticky as it's been.
“At the same time,” Mish cautions, “we still see those cracks under the surface. So this is an individual stock game for sure.”

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