The strong start | 02 June 2023

#SP500:

The S&P 500 is up more than 9.5% for the year to date and now trades at nearly 19 times its forward earnings, at the high end of its historical range. Megacap technology and growth stocks, which benefit from lower interest rates, have led the market's advance. Democratic President Joe Biden and a Republican negotiator said they were working on a deal to raise the U.S. government's $31.4 trillion debt ceiling after the Treasury Department warned that a June 5 default loomed without action. Negotiators are discussing a deal that would lift the limit for two years, but remain at odds over whether to stiffen work requirements for some anti-poverty programs. Since 1960, in years when the S&P 500 has been up at least 8% through the first 100 trading days, the average gain over the rest of the year has been a robust 9.4%, with the median slightly better at 10.0%. That compares to the average gain of 5.4% in all years from trading day #101 through year end. In general, strong starts tend to be followed by solid finishes.

Trading recommendation: buy 4195 and take profit 4295.

#NVIDIA:

NVIDIA pleased traders with positive quarterly report. Data Center revenue was a record, up 14% from a year ago and up 18% sequentially, led by growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures. The revenue growth reflects strong demand from large consumer internet companies and cloud service providers. Enterprise demand for GPU platforms was strong, although general purpose networking solutions declined both sequentially and from a year ago. “The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Jensen Huang, founder and CEO of NVIDIA.

Trading recommendation: buy 380 and take profit 394.

#WTI:

In recent days, top OPEC+ producers have given a raft of conflicting messages about next oil policy moves, making it difficult to predict the outcome of the next meeting. Saudi Arabia's energy minister warned that short-sellers betting oil prices will fall should "watch out" for pain. Some investors took that as a signal that OPEC+, the Organization of Petroleum Exporting Countries and allies including Russia, could consider further output cuts at a meeting on June 4. Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting this week.

Trading recommendation: range 71.50 - 74.50.