KATHERINE ROSS: Welcome to the August monthly Members Call. With inflation weighing on consumers and July coming in as a strong month for the markets, there's a lot to cover here. So let's get to it.
Now, have earnings expectations been far too bearish? And what does that mean for the next quarter as we await the revised GDP read, Chris?
CHRIS VERSACE: Well, when we look at the June quarter, it's been fast and furious in terms of the number of companies reporting. That continues even this week. But I would say that, for the most part, those numbers have been better than fear. There's clearly some pockets of weakness out there in the marketplace, PC market, for example. But there continue to be a number of areas of strength. And so far, the consumer is holding up better than expected.
And I think even though we've seen earnings expectations for the S&P 500 come down in the back half of the year, the data, again, so far, seems to be holding up better than expected, suggesting that the market could probably weather continued interest rate hikes by the Fed. So far, Katherine, I'd have to say, better than expected.
KATHERINE ROSS: And how does the technical landscape look to you, Bob?
BOB LANG: Well, the technical landscape is starting to look a lot better than it was about 6 and 1/2 weeks ago. And it looked like we were on a road to nowhere back in the middle of June. But since then, we've seen a nice series of higher highs and higher lows in the NASDAQ, the S&P 500, and the Dow industrials, the Russell 2000 also picking up the pace as well, too.
So it's very encouraging to see, for instance, the NASDAQ 100 at levels we haven't seen since the early part of May. Now, if you recall, when the markets sold off in June to hit those lows that were-- maybe perhaps those were the lows for the year. The NASDAQ, for instance, was about 12,700 or 12,800.
So this week, we've seen the NASDAQ floating around the 13,000 level, flirting with it for about the last 2 and 1/2 days. And today, we see the NASDAQ 100 substantially higher, up to near 13,200 and probably making a run towards that 200-day moving average, which comes in at around 14,100. So that's another 1,000 points higher than where we're at currently.
So it's encouraging to see such broad strength, which means that we have stocks in technology, health care, financials, discretionary, builders, and so forth, such broad strength here. And let's not forget energy, which has been the one strong group for the past quarter and a half.
So again, it's good to have this nice, broad spectrum of gainers throughout the markets, not just one or two sectors carrying everything going forward. But with volatility down right now, there doesn't seem to be a lot of fear in the markets. And so far so good.
KATHERINE ROSS: Now, before we go to stock by stock, I do just want to, obviously, show you guys we are live from the NYSE. So there might be a little bit of background noise as we go through each stock. But with that said, let's start with Applied Materials. With most analysts rating AMAT a buy, what do you want to see from it going forward, Chris?
CHRIS VERSACE: Well, look, we know that there's continued pent-up demand for chip equipment. We know that because most chip companies remain capacity constrained, particularly in the auto sector. But what we need to see is for the supply chains to continue to improve so that bookings start to match shipments. That's going to deliver the margin improvement that we're looking for with Applied Materials.
And based on what we heard from Lam Research recently, it looks like that progress continues to be had. We continue to remain bullish as a result on Applied Materials, both in the near term and even the longer term, as we start thinking about other data-rich applications that are going to continue to drive further chip demand.
KATHERINE ROSS: With AMAT below its 200-day moving average and since semis have been kind of punished lately, what kind of technical theses do you have on the name, Bob?
BOB LANG: So I'm going to say the theme across many of the names that we have in the portfolio is how these stocks have done since supposedly bottoming out in the middle of June. And frankly, I look at Applied Materials with a glass-half-full approach here. And the stock is up strong, with making higher highs and higher lows.
Yes, it's below the 100-day moving average and the 200-day moving average here. But it was severely below those moving averages just about 6 and 1/2 weeks ago. But the stock has made a nice move upwards, along with its competitors, as Chris mentioned, ASM Lithography, Lam Research, and KLA-Tencor, KLAC. So this stock is moving right along.
This among those four has not-- they have not produced earnings yet for this last quarter. I think they're coming out next week or the week after. So I'm really excited and encouraged with Applied Materials. Today, it's making a move that it hasn't seen, levels above the June lows, again, for quite some time. It's almost 6 and 1/2, 7 weeks.
So I like the fact that this stock is making a nice run here. Good volume strength. Relative strength is good. And it all means that the stock is going to make a run towards that 200-day moving average sooner or later. That comes in at about $127.
KATHERINE ROSS: All right. Sticking with semis, let's go to Advanced Micro Devices. Now, this one did report earnings last night. Now that we've gotten that earnings report, Chris, how do you feel about the name?
CHRIS VERSACE: I feel pretty good about AMD shares. And I'll tell you why. When we size up what they reported, size up their guidance, which was widened out but not really chopped the way that Intel's was, it tells us that the company is continuing to take market share from a number of players, most notably Intel, particularly in data center, but most likely in other areas, too.
So it's shaping up to be what we would say is a best-of-breed company. I a lot of people throw that around. But when we compare the quarterly results that we're seeing, it's very clear that AMD falls into that camp.
KATHERINE ROSS: And what are you watching post-earnings, Bob?
BOB LANG: I'm really excited about AMD here. I think the stock has got some legs here. 200-day moving average comes in at about 113. Currently, the daily chart shows AMD making an inverse head-and-shoulders pattern. That's a bullish pattern. And it just recently broke the neckline of that. So this stock actually projects about another 12, 13 points higher, which takes us right to that 200-day moving average.
So I like this name here at $97, $98. I even tell our subscribers, back up the truck. This is the time to get on board to add some more AMD shares.
KATHERINE ROSS: Now, speaking of earnings, we do have NVIDIA on tap later this month. What do you expect to see from that company, Chris?
CHRIS VERSACE: I think we're going to see a very similar earnings report to what we saw with AMD, just by the numbers, robust data center, which is now NVIDIA's largest market. So that, of course, will be a positive for it. I think they, too, will admit that they're seeing some slowdown in the gaming business and the PC-related business. But overall, I think they're going to maintain their guidance. And I think that will have people taking another look at AMD again vis-a-vis what Intel said in that guidance chop. And I think that these two will continue to be the cream of the crop.
KATHERINE ROSS: And, Bob, what kind of move do you want to see from NVIDIA post-earnings?
BOB LANG: Well, the obvious, logical move is to get above that 100-day moving average, which comes in right now at around 100 and-- let's call it 194 right now. So above 194, then the stock will make a run towards that 200-day moving average. Call it about 232 right now. The stock is in the cloud right now, which is the ichimoku cloud, which is somewhat bullish. If it gets through that cloud, only a few more points above here right now, about 191, 192, we'll see the stock make a run towards that 200-day moving average, even before earnings come out.
KATHERINE ROSS: Now, I want to go from semis to some of our tech companies, starting with Amazon. Within the earnings report last week, the ad business really stood out to me. When you look at Amazon long-term, Chris, can the company build out ad revenue enough to offset the large debt losses?
CHRIS VERSACE: Well, it's totally understandable that advertising would kind of jump out at you. It grew double digits year over year. It's clearly an area of strength for Amazon as they leverage their overall platform. I think the bigger question is, when we look at that business, can the profitability of it offset any near-term pain that we're going to see on the overall online shopping business and its operating income generation?
And it's a tough call to make. And I say that because Amazon does not disclose the operating profit generated by its advertising business. But do we think that Amazon is going to continue to do well in cloud? Yes. Are they going to continue to leverage that advertising business? Yes. And they'll probably pick up share, even though advertising spend could see some pressure during a recessionary environment. So two positive checks there.
And if we do head into a recession, I continue to think that Amazon will be a beneficiary, as consumers continue to look to price comparison and price shop. There's no betting against the deflationary Death Star that is Amazon, especially during the holiday shopping season.
KATHERINE ROSS: Now, Bob, post-split, when you look at the chart of Amazon, you are seeing it climb a bit. What kind of action would you like to see with this name and would you take?
BOB LANG: Well, the action from last week and into this week is just spectacular. And the stock made a huge run last Friday and held that gap up. It gapped up over 10%. And it's moving in to try and fill the gap from back in April, when the stock cratered and came back down. That gap comes in at around, let's say, about 140, 142, so we're only a couple of points away from there.
Stock is having a tremendous day today on good volume. We've seen some good call action on the options side of this as well, too. We are overbought on the relative strength and a couple other metrics, too. So I'd use a little bit of caution here. But the fact that the stock didn't give up any ground these last two days after that huge gap up on Friday tells me a lot, tells me a lot of strength in this name.
Buyers are coming in to this. Big institutional buyers are coming in. They're not selling the stock here. And I think this certainly has a better run on this going forward. And the 200-day moving average is not too far away from here. That's about $146. We get up there, and even more institutional players are going to be coming in and buying Amazon.
KATHERINE ROSS: Now let's go to Apple as our next stop. With the quarter under our belts but possible headwinds still on the horizon, would you look to take some more chips off the table with Apple, Chris?
CHRIS VERSACE: So we've got a 175 price target for Apple. The shares, as we're streaming today, is around 164, 165. And I think if they traded up towards through that 175 level, we would look to do the prudent thing and probably trim some profits back.
Would we see a major revision in the position size? Probably not because we've got that big refresh cycle that's coming, not just with iPhone in September, but also a number of new products across its overall lineup in the coming months. So we definitely want to stick around with Apple and continue to pick up that product refresh, as well as the continued growth in the overall 5G market, which has really been a key driver for them in their iPhone business.
KATHERINE ROSS: And, Bob, what upside are you looking at?
BOB LANG: Well, again, another stock like Amazon is having a tremendous day today and some really strong volume. It is overbought right now on the relative strength and a couple of other metrics as well. But I'd be looking for the stock to make a run to the all-time highs, which is back in the late part of March. Call it at about $180, $181.
I know some people were disappointed over the last earnings report. But you know what? We listen and pay attention to what the stock price is doing. And the stock price is going up, regardless of what the earnings report was doing. So again, the big institutional names are going to be coming into a name, into a stock like Apple before everybody else does. And we're seeing a lot of that institutional volume coming into Apple. So I like this for more upside.
KATHERINE ROSS: Alphabet is our next stock. And it's actually warned that it could see a further slowdown in advertising spend. If that is to happen, what action would you take with this name, Chris?
CHRIS VERSACE: I don't think we would take any major action with Alphabet shares. And the reason for that being is we continue to see that structural shift in spending away from what we call traditional media, radio, TV, and print. And I think that what you're going to see is select advertising spend increasingly, as we like to say, where the eyeballs are, or where the consumers are.
And we look at search. People are going to continue to use Google to search the internet no matter what the economic environment is. Increasingly, they're seeing better take-up rates with YouTube and their short programming format. So odds are that even though overall advertising spend might get pared back from an industry's perspective, I think we're going to continue to see Alphabet pick up incremental share. We want to stick around to see that through.
KATHERINE ROSS: OK. And let's go to Microsoft next. After a slightly disappointing quarter from this name, do you reiterate your thesis? Or are you rethinking your approach on this one, Chris?
CHRIS VERSACE: So when we commented on Microsoft's earnings, look, there are definitely some weak spots in there. I alluded to it at the top of the program regarding the PC market. Clearly, Microsoft is going to see some of that. But the initiatives that we're seeing with its cloud business and it's moving to subscription, that, I think, is going to allow people to really notice through a slower period of economic growth, a downturn in the PC market.
But see the power that Amazon-- sorry, the power that Microsoft continues to have and drops to the bottom line. That is going to lead to what we're thinking is a rethink on how people are going to value Microsoft. And whenever we see that prospect and we see confirming data points, we definitely want to stick around for that.
KATHERINE ROSS: Bob, this name is roughly $40 above its 52-week low, though it has not bottomed yet. Is that a positive for this stock?
BOB LANG: Sure, absolutely right now. And I look at the price action here, and I compare what's going on today to what happened at the end of March and beginning of April. So we're going to isolate on the 100-day moving average here. This stock cratered back in the late part of March, early April, and came back down. It was about $318.
And at the time, 100-day moving average was right there. It struggled with that moving average. And it faltered badly and came back down and hit those lows at about 235, 240 at the early part of June. So a really rough 2 and 1/2 months that we were holding on to that Microsoft.
Now, fast forward to today, where the last couple of days, the stock made a big run through that 100-day moving average. It went up through there on Friday, tested back down the 100-day moving average yesterday and Monday. And now it's powering right through it today.
So this is a really positive chart right now. It's forming what's called a morningstar pattern, which is a traditionally bullish pattern for candlesticks. And one more update over here, and I think this stock has got some legs to it. It's going to make a run to that 200-day moving average. Let's call it about 294.
KATHERINE ROSS: OK. Let's go to our ETF CIBR. Chris, with Thoma Bravo picking up paying for $2.8 billion, what does that mean for cyber?
CHRIS VERSACE: Well, it tells us that there's a lot of undervalued companies that are out there, whether it's data privacy, digital identity, or cybersecurity. We've seen a number of companies report, and we have a lot more to go from cybersecurity this week. And then the results have been good.
And look, make no mistake, the cybersecurity market will continue to be a growth market, whether it's a new type of attacks that are being developed, continued ransomware usage, or even continued growth in the number of attack vectors. Thank you, 5G. Thank you, IoT and some other things there.
So I think Thoma Bravo is doing exactly what we were doing, sitting back, looking over the long-term opportunity vis-a-vis where some of these shares are trading-- in this case, Ping Identity-- and saying, you know what? The growth prospects are fantastic. The shares are undervalued. We're going to take it out. That just reinforces our bullish stance on cyber.
KATHERINE ROSS: I feel like we're going to hear from you a lot that some names are stuck in the middle of its 52-week range. And that is the case for CIBR, Bob. Is this a wait and see moment for the ETF?
BOB LANG: Well, we've been talking about CIBR basically stuck in a box here and the range being around about 43, 42 and 1/2 level, all the way down to about 40, 39 and 1/2. So today, it's actually breaking out of that box. So if we get a follow-through day tomorrow, I think this stock's got some more upside here.
And we have a gap to fill up at about $45 right now. And I think that's going to be an easy one to fill. We're at 44.20 on CIBR. I do like this stock going forward. 200-day moving average comes in about $47, $48. And I think if subscribers are light on the name, they need to add some more shares. This is a good time to do it.
KATHERINE ROSS: Let's go to CBOE next. Can you update us on your thesis for CBOE? And how do you plan to continue approaching this name, Chris?
CHRIS VERSACE: So when we added CBOE, we really did it for a couple of different reasons, first being the far greater use of options during the volatile market that we were seeing. Investors want to use those different products to insulate their portfolio or try and profit from the volatile market. So that was the first thing. The second thing is just the overall expansion of products that they're bringing to market. And then the third was the growth in their data business.
So we might see, as the market finds some firmer footing, some slower growth ahead in the options business. But when we step back and we look at where the share price is, having traded off over the last couple of days, we continue to see good upside with those three drivers of the business, even as they are today, even if we see some slowing growth in the use of options. So I think we're going to stick with this name for the time being.
KATHERINE ROSS: And, Bob, with the earnings out of the way, what level are you washing with CBOE?
BOB LANG: So just yesterday, the stock bounced off the 50-day moving average. Of course, this is a name that had a tremendous run from the middle of May to recently, just to last week. It was up about 25%. And I defy you to find any name from the middle of May to that level to be up 25% or 30% in that short period of time. It's really hard to find.
But the stock pulled back sharply earlier this week. Monday was the down day. And listen, obviously, there's going to be profit-takers there on a stock that make a big run like that. So I'm looking for the stock to continue holding this 50-day moving average, which comes in at about $114, $115, and make a run back higher above that 200-day moving average, which is just below it right now. And I think that this stock is going to make another run back into the high 120s and 130s in short order.
KATHERINE ROSS: Let's get to our inverse ETFs. And, Bob, we're going to start here with PSQ. When would you look to sell PSQ?
BOB LANG: So PSQ is one that's inverse NASDAQ, NASDAQ 100. Of course, the NASDAQ's been strong. And we hold this as insurance against the NASDAQ names that we have in the portfolio. We have several of them. In case the market goes down, we're insured against that with this PSQ.
It's a small position. It's held its own pretty much for us when the market has been dipping and volatility has been increasing in the markets. And we'll continue to hold this until we feel that it's not necessary. We are still in a bear market. We'll talk about that later on today. But we are still in a bear market here. And caution is warranted, and insurance is imperative. It's mandatory.
KATHERINE ROSS: All right. Let's go to SH, then, Bob. Can you update us on your thesis around that position?
BOB LANG: Basically the same theme as we were with PSQ. SH is the inverse for the S&P 500. And it's worked wonders for us. We've done pretty well with it. I know we're flat right about now. But we were up about 10%, 12% on the SH earlier in the summer.
And it was doing its job. It was protecting us against higher volatility in the markets. And in a bear market, that's just what you need. You need protection. You need lots of cash, which is what we have. And be prepared for the next move, whenever that-- when the bull market regenerates again, we'll be ready for that. But for the time being, we needed to do something to control the portfolio's volatility. And the SH has done just that.
KATHERINE ROSS: All right. Let's go to XLE next. Now, this one is interesting, Chris, because, obviously, we did get the OPEC meeting today. But with oil proving to be a decent bet so far this year, does your thesis change if oil prices stabilize or even fall?
CHRIS VERSACE: So the key to XLE is really going to be the earnings stream from the underlying constituents in that ETF. So when we step back and think about, what are the prospects for those earnings, we really have to pay attention to the price of oil. And the level that we have to watch where things could start to turn relative to expectations is around the $85 level.
You mentioned OPEC. That's really more of a symbolic increase in production. I don't think it's going to have any major impact on oil prices. And near-term, I think oil is going to be kind of push-pulled, if you will, between the data that we get on the economy and the fear that the economy is slowing and/or we might hit a. Recession
But remember, remember, this is key that later in the year, we're going to see the curbs put in by the eurozone against Russia really start to take a bite. At the same time, fingers crossed China really puts the pandemic-- or the latest round of the pandemic, I should say-- into its rear view, meaning that oil demand should incrementally be higher. Production will still be relatively tight.
Odds are that says that oil prices don't have much room to fall. If anything, they could tick higher. So I think the outlook for XLE is going to be rather positive through the balance of the year.
KATHERINE ROSS: One of the newest positions in the portfolio is GLD. Now, Bob, I know this is one of your picks. So what made it stand out to you?
BOB LANG: Well, gold has been actually poor action all year long. And actually, it made a good run in the beginning of March, I think at all-time highs. GLD up to about 192. Now it's around about 160 or so. So it's off about 30% from those highs.
We often like to have gold when times of uncertainty, times of war, which we have going on right now, when the dollar is starting to weaken, and inflation is starting to rise. So we know that inflation is not starting to rise. But it's going to be persistent for a long period of time. And we know that the dollar had been on a huge run and is starting to come down again versus other currencies.
So we do like gold here. It looks like it's probably made a bottom at about $157, $158. It's up a few dollars from where we bought it. And we think that if it makes a run past this 50-day moving average-- let's call it 167-- it's going to make a run higher. Again, it's not the most bullish chart in the universe here. But we do like gold as a nice diversifier and a nice way of playing antidollar and anti-inflation.
KATHERINE ROSS: Our next stock is AMN. Now, it has been dropping, Bob. It's been going from 123 to just over 115 today. What is working against this stock?
BOB LANG: Well, I think that much like CBOE, the stock had a huge run from the middle of May. Stock was around $84, $85, and it ran all the way up to 124. So that's a 50% gain in the stock in about 2 and 1/2 months.
You have to believe that some investors are going to want to take some profits. And especially in a bear market, you get a stock that runs up 50%, you have to realize that people are going to take some profits. We even took some profits in the stock before it went up to the $124, $125 range. Person I talked about it said, look, we've got to be prudent here and show that we can take some profits when we have them.
So I think that's pretty much what we saw with AMN for the past couple of weeks. It did pull in a little bit. We are still in the green on the stock. And we still think that the stock is going to make a good move up to 130, 135 over the next several months. So we're still positive on AMN.
KATHERINE ROSS: Chris, with Bob's explanation there, how do you know that your thesis is still strong with a stock that has seen a price decline?
CHRIS VERSACE: It's day-to-day data. And with regard to AMN, one of the key indicators we look for is the monthly JOLTS report. The most recent one for June really reaffirmed the notion that there is a supply shortage in the health care services arena when it comes to contract labor. Openings continue to be running almost twice the size of jobs filled. Quit rates also continue to be high. So that speaks volumes for AMN's business.
The other side, though, is when we listen to earnings conference calls during the current season, whether it's from HCA or Tenet, the others, they continue to have needs for contract labor. And although it's softened a little bit, as we would expect given the push forward and move past, if you will, for the pandemic, we are seeing another round of variant hospitalizations continue to climb. Monkeypox has been an increasing thorn, if you will, with state of emergencies now in a couple of different states.
It tells us that the demand for health care staffing is going to continue to remain at high levels. So even though we see that sell-off that you're alluding to, the data is overwhelmingly positive. And I think it's going to point to a positive earnings report and good guidance when AMN reports their quarterly results later this week.
KATHERINE ROSS: Our next stock is Deere. What do you want to see from Deere going forward, Chris?
CHRIS VERSACE: So similar to what I said about Applied Materials, demand continues to remain strong for ag equipment. The big issue for Deere has been the supply chain, the inability to really ship as much product as they can relative to the demand side of the equation. So we want to see the supply chain continue to improve.
Candidly, we heard from two of its biggest competitors, AGCO and CNH, industrial and demand for ag equipment remains strong. We know that fertilizer is going to be capped based on some actions in the chemical market. That's going to put a lot of pressure on the upgrade cycle for precision ag. And again, Deere is the company to own in that environment. So assuming that they can continue to churn out more equipment and recognize more efficiencies, we're going to continue to stick with Deere.
KATHERINE ROSS: Now, Deere, Bob, is in the middle of a 52-week range. It is up 16% in the past month. Does that mean that it's overbought?
BOB LANG: It might have gotten overbought last Friday and has pulled back a little bit here this week and consolidating and settling down above that 50-day moving average. But I do like the stock. It's made a huge run here since the middle part of July. It was about 290 or so. It's run up about a little more than 10% over the past 2 and 1/2, 3 weeks.
Real good, strong volume. Relative strength is good. MACD has crossed over for a bullish buy signal. And it makes a run-up to that 200-day moving average, which is kind of crossing in with a 100-day moving average. Let's call it 359 to 361 right now.
It makes a good run-up towards that area, we may consider taking a little bit more off the table. But we do like Deere here over the long-term. The chart is real constructive. And earlier this year, all-time high, 440. So it's got lots of runway.
KATHERINE ROSS: Our next stock is United Rentals. With the stock up nearly 30% in the past month alone, how are you approaching URI, Chris?
CHRIS VERSACE: URI shares have been a beast, 242 to around 310, 313. Very, very happy that we added the shares when we did several weeks back, really capturing that very robust move. And, look, make no mistake. There is going to be more upside ahead as the Biden infrastructure law and related spending just continues to ramp, really over the next not just 2, 3 quarters, but the next several quarters. Remember, it's a 5-year program.
Having said that, though-- and Bob just alluded to this-- we need to be prudent investors. And if that means taking a little bit of chips off the table, recognizing to members that, look, we're not afraid to take profits when we have them, that's something that we're likely to do. And I will share that that is a conversation that Bob and I are having.
KATHERINE ROSS: Now, speaking of prudence, that leads me right into American Water Works. I was trying to avoid saying this word, but there's just no choice here. Is American Water Works the right play if we do enter recession? And are you starting to think about recession-proof stocks, Chris?
CHRIS VERSACE: So over the last, I'd say, several weeks, even longer, we've waded into a number of, as we've talked about, defensive, inelastic business models as part of our concern that, if we go into a recession, what names are going to work? And American Water Works is one of those names.
Look, it's very simple. Even though we're in a seasonally strong period of demand for the company right now, the spring and summer months, no surprise, the reality is that it's probably one of the most inelastic businesses that we have. Because no matter what we do, we are going to continue to consume water every day. It's a very simple fact.
The company continues to push through working with state regulators, price increases, and recoupments of investments. And that's going to continue through the balance of the year and into 2023. So I think American Water Works is extremely well-positioned for any type of slowdown we might see.
KATHERINE ROSS: Now, AWK is below its 200-day moving average. And surprise, surprise, it's smack dab in the middle of that 52-week range. How does the chart look, Bob?
BOB LANG: This is a very exciting chart right now. I'm telling you, this is the one that I really embrace here. On the bullish side, this has got an inverse head-and-shoulders pattern. And the shoulders actually go back to the lows put in back in February. So it's very interesting.
That is some really good support there. Let's call it $142 to $144. The inverse head-and-shoulders pattern-- it's now working its way past the neckline here. Boy, this stock has got some upside here. I would say, from the bottom of the head, which is about $130, to the right shoulder, which comes at 143, $12, $13 above here, that takes us up to about 170 to 173. And voila, that was the highs back in early April.
So I'm very excited about this name. The chart patterns are very reliable here. Inverse head and shoulders, one of the most reliable bullish patterns out there in the technical analysis universe. So, again, I'm going to tell subscribers, if you're a little bit light on this stock right here, back up the truck. This is the one that want to get on for a run higher.
KATHERINE ROSS: All right. Let's go to Nucor. Now, the stock is up roughly 24% in the past month. Would you consider taking some shares off of the table, Chris?
CHRIS VERSACE: So for consistency's sake, I have to say that we would be thinking about that. But at the same time, this isn't a very large position for us. And I have to cop to members, like, to be candid, we missed the sweet spot of picking up these shares around that 105, 110 level. And it's a name that, similar to United Rentals, we do see a stronger market environment ahead.
Again, as infrastructure picks up, you really can't do a lot of infrastructure building without steel. So we do want to actually build out this position. It's more likely one that we're going to sit on the sidelines, look for a pullback, and start adding to the position rather than exiting it.
KATHERINE ROSS: Now, with Nucor bouncing above the 200-day moving average, what's next for it, Bob?
BOB LANG: So when the company reported earnings a couple of weeks ago, the stock popped above that 200-day moving average. It came back down and tested it the following day. Markets were down that day. And then it accelerated right back up through it into that 100-day moving average. So we're flirting with that 100-day moving average right now, consolidating around that let's call it about 131 to 133.
I'd like to see a move above 137, 138. Let's get the stock going again right back up towards that 150 range. I think it has plenty of energy, plenty of volume, good indicators on the MACD, and the relative strength are all pointing upwards. So I think that this stock-- among all the other ones that we have, this one probably has the best chance to make it up to the old all-time highs. let's call it about 185.
KATHERINE ROSS: Let's go to UPS. Now, last week, the company did note that the volumes fell short of expectations, but earnings did beat. Of course, we have to talk about the holiday season, which is upcoming. So what do you want to see from this company, Chris?
CHRIS VERSACE: Well, when we dig into UPS, there are a couple of things that really benefited the bottom line. One was pricing. And that really explains why volumes down, earnings up. But also, the company does have a robust balance sheet. And they upsized their buyback. So we know we've got a lot of support there.
But what we want to see for the company is going to be in the monthly data. Whether it's from the Mastercard SpendingPulse or the monthly retail sales report, we want to see that continued acceleration back to online shopping. Last year, as we reopened from the pandemic, comparisons got a little tough in online shopping. We're going to look for those to reignite. Again, going back to my comment earlier about cash-strapped consumers, recessionary behavior, people looking to stretch their dollars, we think they're going to increasingly shift back towards online shopping, a positive for UPS.
KATHERINE ROSS: I do want to keep this economic activity in mind as we go to Ford because the question of the hour, Chris, is, if we continue to see a decline in economic activity, what happens to Ford?
CHRIS VERSACE: So in the past, what we have seen is during recessionary times, consumers tighten their belts. They stretch their spending where they can. And it means that the upgrade cycle for cars is probably getting extended.
Well, a couple of things-- one, we know that over the last few years, the average age of the car on the road has topped over 12 years. So it's near the higher end. We will see some continued spending. What we're going to want to watch, though, is, what are consumer balance sheets looking like?
To the extent that they continue to have firepower-- and so far, the consumer is holding up better than expected. The demand for Ford products could be better than expected as well. So I think what we want to see from Ford is continued consumer reception, just like we saw today with their most recent monthly sales that surprised to the upside.
But we also want to see the company internally continue to see further improvement in their mix shift, not just towards the higher-margin products, SUVs and trucks, but continue to see the steady climb in EV sales. Because that is what's going to lead people to rethink how they value Ford. And that is the crux of our investment thesis when it comes to the shares.
KATHERINE ROSS: Now, Ford has had a strong month. And by strong, I mean it's up nearly 42%. But can it continue to maintain this momentum, Bob?
BOB LANG: Well, we're pushing right up against the 200-day moving average now. Let's call it about 16.50 right now or a little bit below there. I think we get a push up to that 200-day moving average. And we can probably stall out a little bit.
So let's take a Fibonacci retracement level. Let's take it from about the 16.50 level all the way down to the recent lows at about 11 or 10.75. That takes you down to about 13 and 1/2 or so, where you probably went to step in there and start buying some shares. So I think up at this level, around 16 and 1/2, if you have some shares, if you bought some recently, you certainly want to take some money off the table.
We haven't been up this level since back in the middle part of April. And that's where we continued the slide that we had on the stock from the beginning of the year. So I certainly think that this would be a time to start taking some chips off the table right here. We're talking about it as well, too.
KATHERINE ROSS: All right. Let's go on over to ChargePoint. Now, we've got both GM and Ford that have reported earnings. So it makes me wonder, Chris. What kind of read-through did you get to ChargePoint?
CHRIS VERSACE: Well, I'm not going to focus so much on the earnings from those companies. Just getting back to what I said about Ford, with that company, we want to continue to see the mix shift towards EVs. We want to see that with GM. We want to see that with other companies as well, particularly in the US and European footprints, because that's where ChargePoint is instilling its EV charging stations.
So as that continues to happen, that's going to say, wow, more EVs on the road. We continue to need more EV charging stations and EV charging ports. Natural. But remember, too, the larger thesis for us is the infrastructure bill that contains significant monies to states for building out the EV charging footprint. That is by far the bigger driver for the story behind ChargePoint and one that keeps us bullish on the shares longer-term. But put them both together, it's a win-win.
KATHERINE ROSS: Now, Bob, this stock has also had a strong month, though it's only up about 28%. What do you want to see from this stock?
BOB LANG: Well, I was recently in the Cape and drove around and happened to see some of these ChargePoint places and saw-- two or three of them I saw were completely full with charging with electronic vehicles that were being charged up. So that made me feel a lot better being in this position.
But as far as techincal's and the chart's concerned, look, the stock's made almost a 100% run-- 100%-- since the early part of May. And we saw the stock really took a-- it took a beating in April and May. I know most people remember that because I was getting a lot of emails about it. But the stock's made almost 100% run in about 2 and 1/2 months.
A 200-day moving average comes in just above where it is right now at about 16.60 or so. And that might be an area where I'd take some chips off the table here. But I do like the stock here. It's been making higher highs and higher lows, strong volume on the up days. That's what's been really notable here.
We've had some call option volume being pushed around here as well, too. That is positive. That's a bullish sign. We've seen some puts being sold as well. That's also bullish for options. Relative strength is kind of just hanging in there right now.
But I do think that this stock has got some run to it. Old all-time highs in the 20s. And more recently, again, in March, April, it did hit $21 pretty much in just about a month and a half's time. So this stock is volatile. It moves a lot. And just be aware of it, subscribers. It's going to move for you.
KATHERINE ROSS: Now, let's go to Chipotle. During the Chipotle quarter, we did learn that consumers are visiting less often and trading down. But Brian Niccol, CEO, also said that they're focused on the higher-income customer. If we see economic activity-- I know I sound like a broken record-- trend down, would that be enough for you to keep this stock in the portfolio, Chris?
CHRIS VERSACE: So it's interesting because Starbucks reported last night, and they seem to suggest that they're not seeing any trade down. And I think what we have to recognize is that both of these companies are quick-service companies. They're not sit-down restaurant type of companies, which means that they'll tend to pick up incremental spend in a slowing economy because people want to cut back or, as you said, trade down.
I think the key here for Chipotle is even though we think they will continue to be a consumer wallet share gainer over the long-term, we're going to want to simply watch the monthly retail sales numbers, whether it's, again, the official report from the federal government or other indicators from Black Box, from Mastercard, what have you, to really see that consumers are spending on restaurants year over year. If we start to see that contract, fall closer toward 0, we'll probably give Chipotle a rethink. But as long as consumers are spending, we continue to think Chipotle is going to be a beneficiary.
KATHERINE ROSS: Now, Bob, Chipotle's chart does show that the stock is trying to push higher. But can it maintain that momentum?
BOB LANG: Yeah. It seems to be doing just that. Stock bolted higher after earnings came out. I think it was stock was up about $200 post-earnings. And it's followed through nicely. And it may be cresting here just under 1,600. And it may be due for a bit of a pullback, check back to the 200-day moving average, which it crossed the day after earnings came out last week.
That comes in at about 1,520. So we could see a pullback. 40, 50, 60 points would not be a surprise. Come back down and test that level, bounce off of there, and come back up and make a run towards that 1,625, 1,630 level, where the highs came in from April.
But this is very constructive. The stock is overbought right now. So again, a pullback would not be a surprise. It just continues to run, grabbing buyers and cutting the shorts off right now because they're having to cover their short positions. But I do like Chipotle down the road here.
KATHERINE ROSS: Our next stock is Costco. What is the bear case for Costco, Chris?
CHRIS VERSACE: That's a wonderful question. I say that because the shares have simply been a beast from around 420 to 540 or so, simply a monster performer. But as we look forward to, again, that economic environment that you're talking about, whether it's a slowing economy or perhaps a recession, again, consumers are going to continue to stretch the disposable dollars they do have. We see them continuing to move towards Costco.
And the great thing about the company is they report their sales on a monthly basis, giving comp sales, so we can continue to track the degree to which they are taking consumer wallet share. And as long as they continue to expand their warehouse footprint, something we think they're going to continue to do, they're continue to be poised to outperform because of that membership business model. So I'm just rethinking the things that I've ticked off, Katherine. I can't see a better case for Costco, to be candid.
KATHERINE ROSS: All right, Bob. If you have one thing that stands out to you in the chart, what is it with Costco?
BOB LANG: Oh, it's just the tremendous price pressure upwards, the strong volume, and good relative strength in the stock. I see this thing making a run to the old all-time highs-- call it about 610-- in short order here.
KATHERINE ROSS: OK. Our next stock is McCormick. Now, Stifel in late June was unimpressed with McCormick's quarter. They lowered the price target. They put a hold rating on the stock. And according to FactSet, most analysts have either a hold or a sell rating. Why continue to hold this name, Chris?
CHRIS VERSACE: A couple of reasons. One, the company is in almost everybody's household. Two, they have fantastic pricing power for their products. And probably most importantly, we are gearing into what we-- that is, Bob and I-- affectionately call "seasons eatings." So this is the time of the year when you simply want to own McCormick shares as people get ready for the holiday season.
Whether it's going to be Halloween, whether it's going to be Thanksgiving, Christmas, or other year-end holidays and the new year, all the way through Easter, this is the seasonally strongest time of the year for McCormick shares. Typically now or right around now is a great time to pick the shares up. And if we look at the chart really over the last 5 years, but even back further, they tend to significantly outperform into the end of the year. And that's what we want to capture for members.
KATHERINE ROSS: Bob, McCormick is about $11 above its 52-week low. What is your approach to this name?
BOB LANG: Yeah. I'd like to see the stock make a continued run. It's been kind of a slow-and-steady pace for the past couple of weeks after reaching a low, about $80, $81. And again, it's back up to near $90. The 200 and the 100-day moving average are almost about ready to intersect. And it's coming in at about $91, $92. It's only about $2 or $3 higher than where we are right now.
So I'd like to see a move up to there. And then if we pull back a little bit, maybe to about this area, maybe $87, $88 would be a spot for subscribers to pull the trigger. But as of right now, I would wait, at least get a move up to that those two moving averages before buying.
KATHERINE ROSS: Let's go to PepsiCo. Pepsi is making another bet in the energy drink sector with its investment in Celsius. Now, Chris, you called this a shrewd investment. What other moves would you like to see from this company as the consumer stays in focus?
CHRIS VERSACE: Well, consumer-- PepsiCo is one of those defensive names. And what we like about it is they continue to evolve their product portfolio to meet the changing landscape of consumer preference, whether it's on the beverage side. You referenced Celsius. They also inked a deal this week with a Romanian water company, but also in its snacks business, as they continue to revisit the ingredients that they're using, trying to, where they can, bring healthier snacks to-- excuse me, healthier snacks to consumers. So we like that.
What do we want to see? We want to see them continue to deliver, not only good volumes across those two businesses, but where they can, we would like to see them really leverage the inelasticity that they have with perhaps another round of price increases, which would drop to the bottom line. So that is probably the next catalyst for the shares. They've teased that. We've heard something similar from Coca-Cola and other companies, really putting those price hikes in in the second half of the current quarter. We'll look for Pepsi to do the same.
KATHERINE ROSS: Now, looking at the chart, it's pretty interesting, Bob. We're seeing this really rub up against the 52-week high. Can it keep this momentum up?
BOB LANG: Not just a 52-week high. It's an all-time high, actually. On Monday, it achieved that above $178. And it had some resistance just a little lower than that back in April, before it came down hard with the rest of the market. But right here, it seems like it's stalling right here about 175 to 178. I'd like to see it consolidate a little bit.
Stock had a really nice run over the past couple of weeks. After earnings came out in the beginning of July, it had a nice little run from about 166, 168 call it, to about 177. It's got to cool down a little bit. And we think the stock's going to make a good run up towards 200 over the next several weeks and months. So we like Pepsi here. Constructed, the chart is real strong.
KATHERINE ROSS: All right. Our next stock is Mastercard. Chris, analysts overwhelmingly have this stock as a buy, as consumer spend does hold up for now. So what is your current thesis on this name?
CHRIS VERSACE: Well, there's a couple. One, obviously, we're going to have to monitor what the consumer activity is. But even in a slower economic environment, we would see consumers probably shift from credit to debit. But what that means, though, is that we continue to see the shift away from cash check. That's always been the long-term thesis for us with Mastercard. It remains unchanged, simple as that.
KATHERINE ROSS: All right, Bob, let's go to you. Can Mastercard push higher?
BOB LANG: Yeah. You know what? It just seems to be repeating the theme that we've been mentioning for about the better part of a year now. And Mastercard has been trading in a range of 300 to 400, has been a wide range. You can basically sell it at 400 and buy it near 300 or 305. So we're right smack in the middle of that range right now, 356. It's been making a nice series of higher highs and higher lows since the middle of June.
And if we can get a push above 365, 370 here, I think we've got some legs to make it back to the old highs. But there is some resistance coming in, even a little bit higher than that, about 380. But we do like Mastercard here. The chart is very constructive. And the indicators are starting to point higher.
KATHERINE ROSS: Let's go to Morgan Stanley. Now, IPO activity has yet to rebound. And if the economic environment continues to deter companies from taking the path to being public, is it time to consider cutting this name, Chris?
CHRIS VERSACE: Yeah. So we continue to like the asset management business in the growing fixed-fee business. Longer-term, that's where we think the leverage is. But look, the investment banking business, notably IPOs, has really been lacking. And that's weighed on the company's performance. We've seen it reflected in the shares.
And even though they've rebounded nicely of late along with the market, from 75 or so to about 85, this is something that we're watching rather closely. And particularly if we hit some strong technical resistance, this could be a name that we start to lighten up on.
KATHERINE ROSS: And, Bob, to Chris's point, it is up nearly 13% in the past month. But it is below the 200-day moving average. So do you agree with Chris? What's next for you?
BOB LANG: So you can take a glass-half-full or glass-half-empty approach here. The glass-half-full approach says that there's a nice double bottom that's placed in the shares back in June and July and has bounced above there. And it's made a nice W pattern. Now, the glass-half-empty approach would say the stock is trading in a box, which is coming in around the range of about $72 to right around where it is right now. It looks like $85 to $87. So we're at the top of that range.
So if you're bearish, you're taking that glass-half-empty approach. You'd say, I want to sell it here, and write it down. If you're bullish and looking at that glass-half-full approach, you'd say it's going to continue to fall through, make a run to that 200-day moving average. Call it about 89, 89 and 1/2. And then figure out what to do with it then.
But I think right now, I think I'm going to take the glass-half-full approach and say that this is a nice W pattern. It's made a nice double bottom here. And it's got a little bit more run to go to the upside.
KATHERINE ROSS: Now, our final stock in this segment is Verizon. It is hovering above its 52-week low. And you haven't finished building out the position yet, Chris. So what do you need to see to buy the name?
CHRIS VERSACE: I don't think that we need to see much more than we've already seen. The company reported its earnings. The shares sold off. And if members look at what we've done in the past, whether it's with ChargePoint, American Water Works, PepsiCo, or a bunch of other names, what have we done?
Where we have strong conviction-- and we continue to have that with Verizon, given its business model, mobile, which is increasingly important in today's connected society more often. And we'll point out that consumers are willing to sacrifice in other areas to keep their connectivity intact. It's very important for us to recognize that.
What we've done, again, with the thesis being confirmed, we would use these pullbacks to build out the position, as we like to say, at better prices. And what we mean by that is lowering the portfolio's cost basis. And I will share that this is one of those names that we've been talking about. And members, I wouldn't be surprised if in the coming days-- not today, but if in the coming days-- we actually took advantage of this pullback in Verizon shares.
Remember, too, with the pullback-- and it's got a wonderful, wonderfully high dividend yield. We do want to continue to capture more of that in the portfolio as well.
KATHERINE ROSS: Bob, let's put a number to that pullback. What level would you pull the trigger on for Verizon?
BOB LANG: Yeah. Again, the stock, as you said, got punished here after earnings came out. It dropped sharply. It bounced a little bit. And I'd like to see it consolidate over here, at least stay above the more recent lows, about $44. If it travels around and consolidates between $44 and $48 for a couple of months, I'll feel good that the stock is based long enough to make a run to the higher level.
So I wouldn't want to touch it just yet. If it comes back down, maybe that $42, $43 level might be an area to add some more shares, if we get lucky enough to get down there. But for the most part, I'd like to see it consolidate a little bit. If it's making a run back up past $45, $46, I'll feel even better that we could add some more shares.
KATHERINE ROSS: All right. And that concludes our stock-by-stock segment. Now that we've gone through each stock, let's look ahead. With earnings and economic data in focus, what is the key for the markets for the rest of this month, Chris?
CHRIS VERSACE: Well, I mean, some of it is going to be what we've seen in the past, really understanding what the true speed of the economy is and what that's going to mean for the Fed as it continues to fight inflation. It also means continuing to watch inflationary indicators to see not only has it potentially peaked, but how quickly or not is it coming down.
And the indications that we've seen-- while there has been some improvement in various forms of inflationary pressure, by and large, it still remains rather sticky at elevated levels. We saw that just this week in the PMI reports, both for manufacturing and for services, the latter of which was out today.
I think the other thing that's going to be very crucial is-- and we've alluded to it several times over the last hour with members-- the consumer. Remember, the consumer is directly and indirectly 2/3 of economic power as it relates to GDP in this country. So we need to know, are consumers still able to spend? Are they still willing to spend? We're going to have to watch a variety of indicators there.
The last thing that I would say that is going to really start to make or break-- I think August is going to be when the mix of earnings reports pivots towards retailers. Remember what Walmart said, what it was doing to really work down those bloated inventory levels and the impact it was going to have on its margins and its bottom line in the near-term-- i.e., the next couple of quarters.
Walmart is not the only retailer that's going to suffer through that. So we're going to have another round of potential pain to deal with in the market. In the bottom line, through all of this is all eyes aren't so much going to be on the month of August. It's really going to be on what we learn between now and the Fed's next meeting in September. That, what we learn, will really indicate what's next for the market.
KATHERINE ROSS: And, Bob, are we seeing a bear market rally?
BOB LANG: Well, I was thinking about that this morning. And it seems like we're at the intersection of a wall of worry and a bear market rally. So what does that mean? So basically, markets tend to rise up sharply when the wall of worry is up, and people are worried about markets going up. They're skeptical that anything is going to go higher.
But then again, we've also had a spectacular bear market rally. Certainly over the past couple of months, we've had big, huge rallies that have ended up failing. I think we had a period between April and July where we had eight different occasions where the market ran up sharply and gave it all back either the next day or the next day and a half.
So I think we're really at one of these points where it's difficult to get in. It's almost impossible to get out. That's the psychological part of the markets right now. But I do think that, yes, we are in a bit of a bear market rally here. I think the market is trying to turn. Psychology is trying to turn here.
I did write an article a couple of days ago that said, I think the Fed is much closer to the end of rate hikes than they are at the beginning. We've already raised interest rates to 2 and 1/4. And as Chris alluded to, this next month's meeting, which comes in in September, is going to be an important one to watch. Because currently, right now, the odds are favoring-- it's about 50/50 between a 50-basis-point hike and a 75-basis-point hike.
And we know with either one of those rate hikes, it's going to invert the term structure of interest rates. So that's a whole other challenge that the market's going to have to deal with here. But basically saying, as it inverts the curve, we often end up going into a recession if we already aren't in one.
So I think that this bear market rally has been impressive. It's been strong. It's been better than what we saw back in late May. But if all the indicators for inflation coming out stronger than it would be, and then if the economy is starting to weaken, we're going to come right back down again and test those lows from back in June.
KATHERINE ROSS: All right, members. Thank you for tuning in this month. And we will see you next month.