May hurt but we are still up this quarter

Morning Traders! We are Munny Tree. Your ride or die in this volatile market.

May has come and gone and….it wasn’t great for us. But we have learned from it and are incorporating those lessons into our modeling. Good news is, we start a new month and with it a fresh outlook and new opportunities to make some money. Here’s what’s on the docket this week:

• Economic News this week

• Summer slowdown coming?

• What we are watching for in the market this week

Last Week’s Performance & May Overall

Last week was relatively flat overall for the portfolio. We ended down 0.5% overall

For the month of May we were down -2.66% 📉. It was our first month under-performing the market in 16 months. Everyone has a bad month and this was ours.

But, the good news is we are still up (and beating the market) for the quarter and the year as a whole. We are still outperforming the market this year by 2.5x!!

Here’s where things stand to start June:

Economic News this week

It’s a relatively slow week on the economic news front. A few things to pay attention to:

• Jobless claims (Thursday 8:30am ET): This is the biggie this week. The Fed is looking at their duel mandate. If jobless claims start rising that may mean the Fed has to ease policy a bit so as not to cause more unemployment

• Unemployment Rate (Friday 8:30am ET): This goes hand-in-hand with the jobless claims. Market is expecting the unemployment rate to stay at 3.9%. If it pops up above 4% then we might really be looking at some decisions for the Fed. Expect the market to rally on higher unemployment rate (weird right?)

Summer Slowness Coming?

During the month of May, if you watched CNBC, Bloomberg, Fox Business, or read a finance blog or website, then you probably heard the “Sell in May and go away” phrase. Why do they say this? Because that’s what happens (to some degree) during the summer.

This chart shows the average daily trading volume of the S&P 500 by month for the past 25 years:

June volumes stay pretty close to the average for the spring. This is because in the northeast USA, where New York City is and most of the institutional traders are, schools are still in session until late June. Once schools are out the finance industry goes on vacation and there is just less volume.

The difference in the chart may not look like much but the difference between June and July volumes is over 3 Billion shares traded. That volume reduction changes volatility, sometimes in a big way.

So what does this mean for us?

1. We want to make June as good as it can be and take advantage of the volatility while it’s here.

2. Our stock screening becomes even more important. There is still trading and opportunities in the market we just want to find them and maximize them

3. We’ve historically had a good summer and I expect that to happen again this year

What we are watching this week

Managing our existing portfolio:

• KYMR: The position is down 14% and all momentum has died. We will be looking to sell this during the week

• MBLY: We are also down 15% on this position. There is a little bit of momentum picking up so we will hold and see if it continues. If not, we are going to cut our loss

• TXG: Another position down 14%. It appears the downward momentum has stalled. We will look to see if it reverses back up. If not, we will cut this loss and move on

• NEOG: Picking up steam and is already up 5%. May be looking to take profits in the coming week if we get a pop up.

• MLCO: Up almost 10%. There is some positive momentum picking up. Hoping to see this go up another 5-10% and may take profits around $8.50-$9.00

Here’s what we are watching this week (in order of most likely to acquire):

Happy trading! Look out for alerts on new buy / sell position during the week.