Stock Market Outlook

Do you Want to Feel Like a Smart Investor?

The Premium Newsletter provides key information about the stock market’s trends that you need to know.

Golden insights about the Stock Market, Commodities, Crypto, Bonds & Forex, several times a week.

Upgrade to Premium at a rock bottom promotional price of $29/month.

Before we get into it, Thank You for your responsiveness to our sponsors’ and partner ads, it greatly helps us to publish this newsletter for free.

Today we have a message from:

Put your money to work in a high-yield cash account with up to $2M in FDIC† insurance through program banks.

Get started today, with as little as $10.

The News Buzz

• NVDA announces the next-generation AI chip for 2026.

• Looks like an AI chip battle. AMD announced its new Ryze AI 300 Series processors, which the company says are the “world’s most powerful Neural Processing Unit (NPU)1 for next-gen AI PCs that pave the way for a future full of AI-infused computing directly on your laptop.”

• China leads in advanced technologies like AI and brain-computer interfaces, which it plans to use in military strategies. Its Army (PLA) focuses on defeating or subjugating enemies' minds before conflict arises.

• The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, agreed on Sunday to extend their production curbs through next year, in a move to lift oil prices as demand weakens.

• Microsoft is cutting jobs at its Azure cloud unit. The Azure for Operators layoffs involved as many as 1,500 job cuts, as per Business Insider.

Value Investing

I will continue reviewing the most common trading and investing strategies, not in any predetermined order.

• Value investing was popularized by Benjamin Graham, who lost nearly all investments in the 1929 stock market crash. Subsequently, he co-wrote a research book titled Security Analysis. In 1949, Graham published The Intelligent Investor: The Definitive Book on value investing.

• At Columbia University, he mentored Warren Buffet, admittedly the most successful value investor. Other famous value investors are Peter Lynch and Ben Miller, Ken Fisher, … to mention just a few.

Value investing can be described in a few key ways:

• Buying stocks on sale: Imagine a company like a stock on a store shelf. Value investors look for stocks trading below their intrinsic value, like a discounted product. Intrinsic value refers to the company's true worth, considering its financials, assets, and future growth potential.

• Finding undervalued businesses: Value investors act like detectives, uncovering companies the market undervalues. They analyze financial metrics like price-to-earnings ratio (P/E), price-to-book ratio (P/B), and/or price-to-sales ratio (P/S) to identify potentially undervalued stocks.

• Long-term perspective: Value investing is a marathon, not a sprint. Investors buy and hold these undervalued stocks for the long term, believing the market will eventually recognize the company's intrinsic value, causing the stock price to rise.

• Contrarian approach: Value investors sometimes go against the market herd mentality. While the market might be chasing hot trends, value investors focus on solid fundamentals regardless of current fads.

Value opportunities usually arise in the following situations:

• Companies’ specific temporary problems.

• Down cycles for cyclical industries.

• Bear markets that cause overselling in companies that have good LT potential.

The two main cons in value investing are:

• “Value traps”: 1) companies' prospects deteriorated permanently (examples like Kodak, Blockbuster, …), 2) Cooking the books (Enron, and many others), which requires due diligence by investors to avoid these traps.

• Premature buying that may increase the base cost and duration of holding the stock until profitability.

How can BraVoCycles’ methodology and research enhance value investing? By identifying long-term cycle troughs and price targets for an optimal entry, using cycle turning points and price projection methods. I demonstrated the power of this approach in several financial instruments in the last several months. For example, wheat, corn, natural gas, silver, AUDUSD, etc.

Do you want to learn how to grow wealth? Subscribe to this #FREE #newsletter. Just click the image below.

S&P500 Breadth

• As of last week, the breadth composite of SPX exhibited negative divergence and will likely do so with a potential new high in the short term (ST). 

• Following a breadth composite divergence warning, the world's most benchmarked index tended to struggle over the subsequent two months. That was especially the case in the first few weeks, with the S&P 500 declining 72% of the time in both the one- and two-week periods. Over the first three months, the median maximum loss exceeded the maximum gain in each time frame.

• Although this is a good IT and LT technical indicator, it is not automatically an ST sell signal, for which other indicators and analysis may be more appropriate.

Market Summary

As of close on 3 June 2024.

What Has Been

• U.S. stocks finished mixed in a choppy session on Monday following soft manufacturing sector data. U.S. manufacturing activity had slowed for the second month, raising concerns about weakening economic growth.

• According to preliminary data, the S&P 500 gained 5.91 points, or 0.11%, to end at 5,283.39 points, while the Nasdaq Composite gained 93.62 points, or 0.56%, to 16,828.63. The Dow Jones Industrial Average fell 110.89 points, or 0.29%, to 38,575.43.

• The 10-year Treasury note is down about 8 basis points, the most in one day since December, which is another signal that investors are concerned about economic growth because they are now buying the 10-year.

• A glitch at the New York Stock Exchange triggered massive swings in the shares of Berkshire Hathaway and Barrick Gold. Due to the volatility, trading in at least 60 NYSE-listed stocks was halted before the exchange fixed the technical issue, and activity resumed.

• In summary, the stock market demonstrated resiliency despite weak data, at least in part due to pension funds inflows, as suggested in the last newsletter.

To continue reading, upgrade to premium. . .

Interested in Crypto? The more you know, the more you can earn. Subscribe to this #FREE #newsletter. Just click the image below.

Have a question? Want to leave us feedback?

Contact us at: [email protected]

Read our Disclaimer

• I expect this bounce to continue for a few more . . .