OP Wire 7/22
Biden Bows Out of Presidential Race; Harris to Replace?
President Joe Biden announced on Sunday his decision to withdraw from the 2024 re-election race, citing concerns about his age and health. Biden endorsed Vice President Kamala Harris for the Democratic nomination, positioning her as the frontrunner ahead of the Democratic convention scheduled for August 19-22.In her statement, Harris emphasized her commitment to uniting the Democratic Party and defeating Donald Trump. The Democratic National Committee will soon announce the next steps in the nomination process, possibly considering a virtual nomination ahead of the convention.
Goldman Sachs does not anticipate significant shifts in the Democrats’ fiscal and trade policy agenda with Harris as the nominee. Her potential nomination could consolidate Black support and highlight differences with the Republicans on issues such as abortion rights.
Futures Edge Higher, With Tech Earnings to the forefront.
U.S. stock futures edged higher Monday, recovering from recent losses as investors shifted away from major technology stocks. By 04:15 ET (08:15 GMT), Dow futures rose 60 points (0.2%), S&P 500 futures climbed 23 points (0.4%), and Nasdaq 100 futures increased by 125 points (0.6%).
The S&P 500 and Nasdaq Composite fell nearly 2% and 3.7% last week, respectively, marking their biggest weekly losses since April. The Dow Jones Industrial Average, however, advanced 0.7%.
This week’s earnings reports, including Tesla and Alphabet, will be closely watched. IBM, Ford, General Motors, and Verizon are also set to report.
Nvidia Developing Al Chip for Chinese Market –
Nvidia Corporation is developing a version of its flagship Al chips for Chinese markets, complying with U.S. export restrictions. Partnering with Inspur, Nvidia’s new chip, tentatively called the “B20,” aims to address weak demand amid competition from local chipmakers like Huawei.
Nvidia’s revenue has surged due to increased Al development, boosting its valuation to make it one of Wall Street’s most valuable companies.
PBOC Cuts Rates to Boost the Chinese Economy
The People’s Bank of China (PBOC) unexpectedly cut its benchmark loan prime rates on Monday to support the slowing economy. The one-year loan prime rate was reduced to 3.35%, and the five-year LPR, used to determine mortgage prices, was cut to 3.85%.Despite these measures, concerns remain over China’s economic growth, especially if Donald Trump wins a second term as U.S. president, which could lead to renewed trade tensions. Looking for BABA and BIDU to be good entries again for us.
Crude Market to Return to Surplus Next Year.
Crude prices rose Monday, aided by China’s interest rate cut aimed at boosting its economy. However, Morgan Stanley forecasts that the crude market will shift to a surplus next year, with Brent prices declining into the mid-to-high $70s range.While the current market tightness is expected to persist through the third quarter, equilibrium will return by the fourth quarter. The bank anticipates OPEC and non-ОРЕС supply to grow significantly in 2025, outpacing demand growth.
SPY/SPX-
Last week we said “The main watch will be how price trades versus the recently established near-term range. The main level of interest will be 5625, which served as a significant area of support for the prior week… If price fails to hold 5625 as support, it can test the July 5th breakout point at 5585 and 5535.” On Monday and Tuesday, price continued to trade within the near-term range.
Wednesday, price broke decisively lower, and Thursday showed follow through with a move through the 5625 support zone. This resulted in a weekly low of 5542, just shy of our final weekly downside level of interest at 5535. Sellers have finally shown themselves this week – Will they continue?
For this week, the main watch will be how price trades versus the prior near-term range. It is expected that the selling pressure will slow, as the high volume node in this zone will serve as a downside magnet. The primary level of interest for this week is the prior near-term range high at 5585. if price continues to hold below 5585, it would target the volume point of control at 5530, then 5510 which is the prior near-term range low. If price breaks down from 5510, there is a volume void below and price would like trade into 5430 where buyers should be expected. If price breaks above 5585 and holds, it would target 5620, 5645, and the all-time high at 5720.
Notable Economic Data
- Thursday: GDP
- Friday: Core PCE, Michigan Consumer Sentiment
Great job OP on the SBUX alert play. It paid HUGE as it popped $5 Friday. Chat plays and OP course system plays continue to stack. See you all in chat with today’s upgrades and downgrades.
Watch the latest What’s Next Wall Street Show episode here (link below)
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