We have possible weakness late Wednesday July 1st into July 2nd, the last trading day of the week. The height of the rebound tomorrow and possibly early Wednesday will tell us a lot. We will see how much the Fed is or isn’t helping the markets this week. Regardless, a sustained rally is coming soon. Expect whipsaw action, back n forth, to continue into July 13th before our sustained trend develops.
The Nasdaq is our leader and attracts all of the hot money. The dips here should be very shallow but the advance we forecast may be weaker as the other indexes play catch-up.
We are on the sidelines as far as the metals complex goes. A strong trending trade is coming over the next 5-8 trading days, but first consolidation.
Many restaurant stocks had good days today. There was programmed pension fund selling last week as they rebalanced. Each quarter, they are expected to maintain a certain amount of cash on hand. As one can imagine, many were decimated by the March collapse and deployed excessive capital and leverage to try to play catch up with the post-Covid bounce. Some selling was in order. We expect more strength the next few days.
Jana Partners' additional board seats go active July 1st. Jana is based in NYC and is comprised of private equity activist investors. They engineered the Whole Foods buyout by Amazon and have a large corporate rolodex. They are rainmakers and make big deals happen. They have been pressuring BLMN to sell and or break-up the company for 9 months. Bloomin' Brands capitulated in April to some of their demands and granted them more of a voice inside the company. It is our opinion that very soon some Bloomin' assets will be sold for cash and/or stock to a private equity company, or to another restaurant company like Darden. Jana may also lead a take-over themselves, opting to sell every location to a new franchisee. Bottom line, it’s our opinion something very big is going to occur the next 3 months and it should be very favorable to shareholders. This is a name to hold onto for a long term position. Some of our members simply do not have the stomachs to handle draw downs when they come. Hence, we may opt to take profits at some point in the near future and trade in and out. Jana has a proven track record of rewarding loyal shareholders.
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