Markets looked like they wanted to start strong, but quickly fell apart. It looks like they’re sort of hanging out in this area, biding time. Is the next move higher or lower?
Right now, everything looks like it wants to push higher. However, a rally led entirely by technology isn’t sustainable. The biggest areas we’re missing are the financials and transportation sectors. Liquidity will only help us so much. At some point, stocks need earnings and growth to support these valuations.
Otherwise, we’ve got a similar story to the last few days. QQQs lead, IWM lags, and a smattering of momentum names continue to soar.
Bonds finally stages a little rally, but I’m not holding my breath yet. However, I really like the look of gold.
GLD Hourly Chart
This is a beautiful consolidation pattern that looks like it wants to push higher. With the 200-period moving average as a base, I think it’s getting ready to break out, which could be a nice trade.
The VIX is slowly starting to come in. While the VVIX is hanging around $120, which is high historically, The VIX is now comfortably under $30. I expect that once we get the next move higher in the market the VIX will drop below $25.
Coming back to China Xiangtai Food Co., Ltd., (PLIN), as per the report issued by Goldman Small Cap:
Goldman noted, “Since our initial report in late May, PLIN has not only executed a highly profitable and accretive complementary business acquisition, but closed on a major joint venture which provides the Company with unrivalled positioning through vertical integration. The Company PLIN acquired a 51% controlling interest in Chongqing Ji Mao Cang Feed Co., Ltd.(“JMC”), a private enterprise specializing in feed raw material sales and providing feed formula solutions. The deal enables PLIN to expand the southwest market in China but also adds roughly $70 million, or a 70% in annualized sales.”
“Meanwhile, the recently announced 10-year joint venture with Chongqing Fengjie County Rural Ecological Agriculture Development Co., Ltd. (“FEA”) increases PLIN’s vertical integration by immediately adding hog breeding capabilities,” commented Goldman. “Pork is a major food staple in China and PLIN is a leading provider throughout the food chain.”
“Given the recent events, we have raised our forecasts and our price target is under review for a potential upgrade as well. Plus, it appears additional business development opportunities are in the offing later this year, enabling PLIN to establish a stronghold in this sector. Publicly traded pork companies such as Hormel are near year highs as this category serves as a popular defensive group during these difficult economic and market conditions. As a US-traded pure play on this sector in China, PLIN could follow a similar path,” concluded Goldman.