STATE OF THE MARKETS
Stocks eased as Dollar retreated. Major US stocks indexed, except Russell (+0.34%), closed lower on Tuesday after a series of weaker economic reports hit the markets. Dow (-0.11%), S&P (-0.13%) and Nasdaq (-0.04%) were on heavy profit taking volume as Dollar (DXY) broke the 92.50 support level on weaker demand. Flows to treasuries were moderate, sending the 10Y yields back above 130 basis points.
In the commodities market, crude remains on firmed bid even after OPEC+ agreed to add 400k more barrels to daily production in response to the outage in the US gulf coast. The black gold settled around $68.50/bl as New York closed. Precious metal gold, was firmed above $1,800/oz after dovish Fed’s response sent yields seeking investors away from US treasuries. At 5.4% inflation, not even 30Y yields can hedge half of the rising costs.
In the FX space, short demand for Dollar receded after Kiwi and Aussie march to the forefront of demand in short and medium term accounts. Short term traders seemed cautious as Swiss and Euro were bid, while Loonie was sent to offers. Markets will look forward to seeing better ADP employment numbers and declining US manufacturing index on Wednesday, on top of EIA petroleum reports for energy traders.
OUR PICK – Cronos (CRON, NASDAQ)
On Accumulation. It took a little over a month for CRON to reach our short term TP2 and we noticed a bullish divergence in money flows as price fell from monthly pivot around $7.70/share. Currently undervalued by about 18% per S&P GMI which put the stock’s fair value estimates around the monthly pivot. Recent $1.8 billion investment by Altria group in Cronos, if successful, will provide Cronos the opportunity to grow higher especially when Cannabis is legalized at the federal level. Currently, this five years old IPO does not pay dividends, but we still favor a long term hold in a cash account.
Disclaimer:
This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.