STATE OF THE MARKETS

Stocks face headwinds ahead of FOMC. US stocks closed lower on Tuesday as more long term investors were taking profits off the table ahead of the FOMC meeting on Wednesday. Dow (-0.19%), Nasdaq (-2.33%), S&P (-1.22%) and Russell (-1.45%) finished in the red, though gains were seen in energy, financial, and communication sectors. Demand for Dollars remained as the index (DXY) spiked to 96.25 although yields were little changed. The 10Y benchmark was stalled around 178 basis points.

In the commodities market, crude rebounded to settle higher at $84.79/bl as Russia-Ukraine tension escalated that could lead to supply disruption. Gold continues to climb past $1,850/oz as investors await the Fed’s decision on interest rate. Elsewhere, iron ore pulled back to $128.75/tn as Dollar strength continued to weigh on the commodity.

In the FX space, Aussie seemed to be well bid across the board as gold prices continue to climb. Short term traders continue to bid high beta Kiwi and Loonie while sending Yen and Swiss to the back burner.

On Tuesday, markets look for earnings reports from Abbott Lab (ABT), AT&T (T), Boeing (BA), Anthem (ANTM), Tesla (TSLA), Intel (INTC), Automatic Data Processing (ADP) and Lam Research (LRCX) as well as the much awaited FOMC rate decision. EIA crude oil inventories will be in the spotlight for energy traders.

OUR PICK – No New Picks

No new stock picks as we are at maximum equities exposure. Currently we are holding 8 stocks – 7 longs and 1 short. We are long AUY (20% undervalued) with dividends yielding 2.82%, COG (CTRA) (17% undervalued) yielding 2.56% and averaged down on T (11% undervalued) at 7.90% yields. CLVS is currently 23% overvalued with -8.20 z-score but Tudor Investment had stepped in recently and we decided to hold. We remain bullish with VIPS (46% undervalued with 5.98 z-score), GT (38% undervalued with 1.40 z-score) and CRON (20% undervalued with 9.18 z-score) while bearish GE (15% overvalued with 1.43 z-score). We have also locked profits for GE, GT and CTRA.

For high probability stock picks, please use our Trading Central services.

Note: Cabot Oil & Gas (COG) recently merged with Cimarex Energy to form Coterra Energy (CTRA).