Barron's Live

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Speaker 1: This is Barron's Live. Each week, we bring you live conversations from our newsrooms about what's moving the market right now. On this podcast, we take you inside those conversations, the stories, the ideas and the stocks to watch, so you can invest smarter. Now, let's dial in.

Lauren R. Rublin: Hello, everyone and welcome to Barron's Live, our weekly webcast and podcast. I'm Lauren Rublin, senior managing editor of Barron's. Thanks for joining us today, the first trading day of June, for a technical look at the markets and the latest earnings news. My guests are Barron's Deputy Editor, Ben Levisohn, and Katie Stockton, founder and managing partner of Fairlead Strategies. We'd like to thank the sponsor of today's program, TIAA, which offers retirement plans. Learn more at TIAA.org/sharedpromise. So Katie and Ben, welcome to Barron's Live and let's talk markets.

Ben Levisohn: Thanks, Lauren.

Katie Stockton: Thank you, Lauren.

Lauren R. Rublin: So glad you're both here. Katie, there is an old Wall Street expression, "Sell in May and go away." I'm sure you've heard it.

Katie Stockton: I have heard that before.

Lauren R. Rublin: Absolutely. That's because the first part of the year seasonally has been stronger for stocks than the summer. Interestingly, you think the S&P's near-term bias is neutral. That would go along with the summer doldrums, but that the long-term bias is bullish. I ask you the question, should investors have sold in May and gone away? What does the market setup look like to you?

Katie Stockton: Well, I don't want investors to go away really ever because we know that-

Lauren R. Rublin: We don't either.

Katie Stockton: ... for the most part, the markets are in bullish territory. We do have still behind the major indices, long-term upside momentum. But indeed, as you cite, we are less constructive short term and also intermediate term. That's just given the loss of momentum that we've seen of late on our daily and weekly charts. The monthly charts are still just firing away in all cylinders, but the daily and weekly charts are a little bit less than inspiring. Because we have a loss of momentum really as of April, that makes the intermediate-term outlook more neutral. Then as of just the last week or two, we have now a loss of short-term upside momentum for the first time in a month or so. We don't think now is the right time to be adding exposure, but rather we'd wait for some of that sell in May flush-out perhaps to run its course, and then we'd look to add back.

Lauren R. Rublin: I want to ask Ben, from a fundamental perspective, what is causing this loss of momentum? Is it earnings? Is it exhaustion from a big rally? Is it concern that the Fed won't be cutting rates? Is it all three?

Ben Levisohn: Yeah, yeah. I think it's a combination of all of that. Earnings are great but that's past us now, and we're still struggling with what is the Fed going to do? The economic data has been kind of meh. I think a lot of the argument for a bullish stock market depends on that economic data staying strong, so that earnings could keep growing and pushing the market higher. I think just after such a strong start to the year, it's probably the market just saying it needs to take a breather for a little while.

Lauren R. Rublin: All right, but not too much of a breather as Katie implied. So let's talk about the transportation average, Katie. The transports have been underperforming the Dow Industrials this year in a pretty pronounced way. Dow theory would tell you that's a troubling sign for the market, and I know you're alarmed by it too. Yet some people would say a move in the transports doesn't mean what it did years ago when the US had a more industrial economy, as opposed to a services economy that we have today. Putting all that together, how concerned should investors be by the divergence between the industrials and the transports? Is it really sending a bad signal for the market or should we just ignore it?

Katie Stockton: Well, it definitely doesn't send a good signal. However, with any divergence, including the stuff of the Dow theorists, we feel that these divergences will put us on lookout for any loss of momentum that's meaningful. They set a tone as opposed to calling for action, so the transports have really underperformed. This is not new, by the way. They've underperformed really consistently for more than several months so this is longer-term underperformance. Of course, it means that the Dow theory is not really confirming where we have both the industrials and the transports at new highs. Yet to your point, with the services economy and technology really leading the market nowadays, I think that that definitely bears some weight. We feel that with the lost momentum and relative strength behind transports, we'd be more inclined to believe any breakdowns that we see from a top-down perspective, but of course, we don't have breakdowns. Of course, we have really quite the opposite. We have this year, earlier this year, we had widespread breakouts to new highs and that includes the S&P 500 Index. That breakout to new highs for us actually yielded a measured move projection of above 6,100. It's a level we think is more likely for 2025, but it just assumes the trajectory of this current bull market cycle will persist over time. That's what we have our eyes on longer term and we don't want to lose sight of that, just given any divergences, whether they're in the transports or elsewhere. There's also even a shorter-term breakout in the S&P 500 above the 5,260 resistance from before the April corrective phase. That breakout tells us that indeed the bull cycle is still dominant. Even though we're calling for a bigger pullback here in the near term, again, we want to keep our eyes on that bullish cycle. Have that as our framework and our backdrop until the market tells us otherwise.

Lauren R. Rublin: Do you have a target for the end of 2024 for the S&P?

Katie Stockton: We don't. I always say I wish I had that crystal ball to say, "Okay. Well, on this date, the S&P would be there." Unfortunately, I do not but our indicators will give us a sense of time and price but independently. Our long-term metrics do all still point higher, and most of them point higher for at least the next several months up to, I'd say, about nine months or so. We really don't have indicators that help us beyond that timeframe, so we reserve the right to change our mind in several months, of course. Then that target, that objective, the measured move is just assuming the trajectory of the uptrend will maintain itself. But we're using the 2020 low for that projection and I would argue that that's a pretty unusual environment, to come off of a pandemic low with a very steep uptrend. Because of that unusual comp in a way, I do feel like maybe it's going to take a little bit longer than the normal projection would indicate.

Lauren R. Rublin: Okay. Let's talk about the AI trend, which has been driving this market and NVIDIA's shares in particular. NVIDIA is considered perhaps the biggest, best play on artificial intelligence. It's a chip maker and its stock is up more than 3000% in the past five years. It's been an extraordinary run. Everybody wants to know whether this stock has more room to run or whether it's going to roll over, so I'm curious what your technical take is?

Katie Stockton: Well, it's true. Indeed, NVIDIA has just been such a stellar stock in terms of momentum and relative performance. It tends to stairstep higher so it does have consolidation phases, but people seem to forget those consolidation phases for the strong up moves that emerge from them. Of course, we've had one of those of late in response to NVIDIA's latest earnings reports. We want to be really respectful of that uptrend and the new highs and the relative performance of NVIDIA. But also we want for investors to tread cautiously in stocks that don't have that same prowess perhaps in terms of the AI theme. There are other stocks that are considered to be plays on the AI trend that have broken down. There is some risk to the market, in that if you're not finding the market leader in NVIDIA and you're digging a little bit deeper, you see that they're not all charts like that. We can say, "Well, Microsoft and Alphabet, those look great. Meta looks fairly healthy as well." Qualcomm, those are all in the more mega-cap arena. But if you go a little bit farther down the market cap spectrum and look at names like ServiceNow or iPath or Supermicro, you don't see such strong charts there. So I'd just tread cautiously outside of the leadership within that AI space.

Lauren R. Rublin: All right, that's fair enough. That's a good reading. You've also been following and writing about the long-term breakouts in gold and copper and commodities in general. So let's get your read on those two metals. Where do you see gold headed from here, and what about copper? Is the rally exhausted or is there more upside? Why don't we start with gold?

Katie Stockton: I think both of the uptrends in gold and copper are somewhat exhausted in the short term, but they have such major, long-term breakouts that we feel that this is a commodity bull cycle that really has some legs to it. We want to be better buyers of weakness in the commodity arena. Looking at gold, it cleared a multi-year trend channel earlier this year. It emerged from that with a very strong up move and it's since been consolidating as of about April. We want to look for a better buying opportunity, but that breakout is really a very long-term, bullish development for the price of gold. It projects to well above 2,500 per ounce. Then copper too emerged from what we call a long-term triangle formation. The triangle formations to us are among the most high-probability price patterns from a technical perspective. Copper indeed completed one a couple of months ago, so we were encouraged by that. We saw the same, by the way, from the likes of Freeport-McMoRan and other copper plays. We're very bullish on this space long term, but here too there's some signs of exhaustion. We call that an overbought downturn in our work or a sell signal from something called the DeMARK Indicators. Those are pretty commonplace right now in the space, telling us that we will get a deeper pullback to add exposure, but we really want to keep our eyes on that longer-term breakout and longer-term uptrend. We think it's a resumption of the uptrend that also emerged for commodities off of the 2020 lows. We have turnarounds, by the way, underway as well seemingly in some of the agricultural commodities and also natural gas, which has been really a long-term laggard within the commodity complex.

Lauren R. Rublin: So turning up you mean?

Katie Stockton: Yes, upturns.

Lauren R. Rublin: Yeah.

Katie Stockton: Go ahead, Ben.

Ben Levisohn: I was going to say, Katie, do you have a preference for either the commodities versus the stocks?

Katie Stockton: I would say still the stocks right now in terms of relative price momentum. Especially, when we always talk about how we prefer to have most of our portfolio look like long-term uptrends, but with a smattering of positions that are long-term turnarounds. Because the commodities arguably are more in that turnaround camp, we are very interested in having exposure but we would still be overweight the equities.

Lauren R. Rublin: Katie, tell us something that's in a real downtrend.

Katie Stockton: Oh, there's a lot of those, believe it or not. You can source some of the equities, at least, you can source some of the lagging sectors. Healthcare for one, it has been a real source of underperformance longer term. We're seeing some of these defensive sectors though that have underperformed, now show some indications of turning the corner as well. Very obviously in the utilities space, but secondarily in the staples and in healthcare, you look at a name like Pfizer, for example, long-term downtrend there. But just in the past month or so, it's really showing some signs of life. Momentum has shifted, there's some positive divergences behind the scenes. Some of these longer-term downtrends actually become somewhat interesting, because that prolonged, oversold condition ultimately allows it to establish a basing phase. We also feel like we have that kind of action out of China, out of the Chinese stock market benchmarks, that there's been more neutral action over the last year or so. But from that neutral price action, we're starting to see signs of life in our long-term indicators suggesting a turnaround may be underway.

Lauren R. Rublin: Interesting. That's one to watch, for sure. I want to go back to Ben for a moment. I forgot to ask you this, Ben, when we were talking about NVIDIA. The stock is splitting 10-to-1 after the close on Friday. We had a question from Bernard who wants to know should you buy NVIDIA before the stocks split? Just in general, what are the implications for investors? What should they know as the company prepares to split?

Ben Levisohn: Well, really stock splits drive me crazy, because there's no fundamental reason that a stock should outperform when it announces a split. Nothing's changing about the company other than the price of the shares, and that doesn't change the valuation. It just means that there are more shares, so that the math about everything is identical to what it was before the split. In a perfect world, there would be no reaction to a stock split. It's just a thing that happens, but there's actually been some research showing that you know what? Stocks are reacting to stock splits. Trivariate Research, which is founded by Adam Parker, who was once the US equity strategist over at Morgan Stanley. He put out a note that was looking at the performance. He found that there is actually a five percentage point outperformance against a stocks' industry from the month before to the month after the announcement. And that there's even a two percentage point outperformance after the split itself. He basically ascribes this to the fact that retail investors are going to feel more comfortable buying it. They'll be able to buy a full share instead of a fraction of a share. As much as I hate to acknowledge it, it does seem like there is some sort of outperformance that comes with this. However, I think again, you have to look at the fundamentals of the stock. If you're a trader, trading these kinds of things can be great. But if you're buying the stock, you have to be worrying about more than just that two percentage point gain that comes after the split. You need to be worrying about is it going to keep outperforming over the next year, over the next three years, over the next five years, over the next 10 years? That's going to depend on a lot more than just a split.

Lauren R. Rublin: It's a fascinating thing that suddenly the splits do seem to matter, but long term is the important thing, as you rightly point out.

Ben Levisohn: As I said, it drives me nuts.

Katie Stockton: It's psychological.

Lauren R. Rublin: Duly noted. We've talked a lot about the technical setup of the market and various stocks and commodities, but we haven't talked yet about the macro news. Ben, the market is going to be buffeted this week and next by a lot of that macro news. The European Central Bank is widely expected to cut interest rates this week that would put them ahead of the Fed. In the US, we're going to get the May jobs report on Friday, and next week is the FOMC meeting. That's the Fed's policy committee. What are you watching in the markets as we enter this big macro period?

Ben Levisohn: Well, partially one of the things I'm watching is just to see how the markets react to that ECB decision, if they actually do go ahead and cut. Over the last month or so, we're actually seeing European stocks are doing a little bit better than US stocks. I was just looking at IEUR, which is a BlackRock iShares MSCI Europe ETF.

Lauren R. Rublin: This gives me a chance to plug this past week's Q&A, by the way, which was all about the upturn in Europe.

Ben Levisohn: Yeah. I think that if this does help the European economy, then it's going to perhaps give a boost to those stocks, because they've also been laggards for a very long time. Of course, the US companies, many of them are multinationals, and so they're going to be benefiting as well from an upturn in business there, if that is what happens when rates get cut in Europe. But I do think it makes looking at European stocks all that more interesting.

Lauren R. Rublin: What about here? What's your read on jobs and the FOMC?

Ben Levisohn: Well, jobs are supposed to be, we're supposed to get another, I guess, just decent report. It's supposed to be an increase, about 5,000 jobs to about 180,000. Unemployment remaining at around 3.9. I think that if you get around that number, it just continues to show that the US economy is fairly strong. There's still demand for workers, and those are all good things. As I said earlier, a lot of the US, the bull case for US relies on the economy remaining strong and earnings rising because of it. I think that is going to be the thing to watch this week. We don't want to see it too hot. Again, that's going to cause some consternation over when the Fed may cut or may not cut, or will they even have to rise? I know that Nick Jasinski, our reporter here at Barron's, has said that the Fed isn't going to cut this year, which seems like a pretty good forecast. If we see a number though that is too weak, that forecast might have to change. I think people just want to see a number that's again, Goldilocks, not too hot, not too cold.

Lauren R. Rublin: That would be ideal, I agree. Let's have a look at some of the companies reporting earnings this week. I wanted to start with CrowdStrike. It's a software company specializing in cyber security. There was an alarming story in the Wall Street Journal today for all who missed it, about China's latent threats against critical US infrastructure. It's worth reading. CrowdStrike's products are in demand and so are its shares. They're up more than 100% over the past year. What are we going to learn, Ben, when CrowdStrike reports tomorrow?

Ben Levisohn: Well, I just want to point out that as strong as the stock has been over the past year, it's had a really bad five days of trading. It's down almost 13% over the past five days, just very ugly. I think part of it is this sell-off in anything that is software that's gone on in the stock market.

Lauren R. Rublin: Yeah, loss of momentum we talked about.

Ben Levisohn: Yeah. Then there's also the fact that it's just a really expensive stock.

Lauren R. Rublin: Yes.

Ben Levisohn: It is 76 times or 70, sorry. Now it's only 70 times earnings right now, but that's still a pricey stock. That being said, the analysts are fairly bullish on it. I was reading a Guggenheim note that was saying that they think that it's going to be able to beat earnings for this quarter. It's going to be able to guide the second quarter above the estimates and will raise its fiscal year guidance as well. That would all be great. They're basing this partially on field checks that show that the companies that use it are using it more. That's the bullish hope for it, is that it's going to be able to come out with earnings. I think with this, I'd much rather see a stock selling off into earnings, than I do rallying into it because I think it does say that people are concerned and maybe it lowers the bar for the beat. The company is supposed to report a profit of $.89 a share. That would be up from $.57 on revenue of $905 million, up from $693 million.

Lauren R. Rublin: That's a pretty big gain. Let's take a look at Dollar Tree. The company reports on Wednesday. It's had a good three months. It's had a bad year.

Ben Levisohn: Yeah, that's pretty much right. These stocks are very much out of favor of these dollar stores, for reasons both, I think, related to inflation. It's hard to sell things for a dollar when inflation has been rising as quickly as it has. Also, because it's customer base, which tend to be lower income, it gets hurt more by higher prices, so it's a double whammy there. It's hard to find optimism about Dollar Tree. There's still problems there with Family Dollar, which they bought, but have been struggling to turnaround. It's been a pretty lousy acquisition. You're actually seeing people lowering their earnings estimates for the year heading into this report. That's what Oppenheimer did. I think, again, the sentiment around these has been pretty terrible. We saw last week that Dollar General was able to gain following its report, and perhaps the same will happen with Dollar Tree. But I still think it's a stock that until it starts to show that it can solve these problems with Family Dollar. Just that things are about to... Just that the business is going to get better, that's going to move past these things. It's a stock that's better off just watching instead of buying.

Lauren R. Rublin: It's a tough one. Another tough one is Lululemon. It was a story stock for a long time and the story was great. Everybody wanted to wear Lulu's athletic apparel. You could barely get into the stores. Now the picture isn't so good. Competitors have caught on and the shares are down more than 30% in the past three months. Lulu reports on Wednesday. Do you think there'll be good news in store?

Ben Levisohn: It depends on what you mean by good news. I think in Lulu's case, everything is relative, and so the stock is down a ton. I think it's about 32% over the last three months if my numbers are accurate. Just every earnings report, it seems to have been a bigger issue for the company. That being said, a lot of the talk has been about competition. One of the things that's interesting about Lulu, is that there's been a lot of talk about competition for a very long time, from when Gap stores brought the athletic brand onto market and in other things like that. Yet the company had continued to do very well, and so now there's a lot of competitive risks that's priced in. But Cowen actually thinks that maybe there's too much of that risk priced in. It's going to be, growth probably will not be as fast going forward, which would explain a lot of the decline. But if it's still a double-digit grower, it might've been punished too much. But I think that's what people are going to be looking for with this report is to see, "Let's get a little more sense of what earnings are going to look like." Now, they're still growing, $2.40 a share is expected. That'd be up from $2.28. Sales have still grown to $2.2 billion. That'd be up from about $2 billion. There's still growth there, but it really has been an ugly time for them.

Lauren R. Rublin: It's kind of a sentiment issue too.

Ben Levisohn: Very much so.

Lauren R. Rublin: Katie, I wanted to ask you to take a look at Lulu's stock and give us a technical reading.

Katie Stockton: Well, the peak-to-trough decline is about 43% by my measures, so really has been punished, this stock. It's down near some longer-term support just shy of 300. It does have an oversold reading, as you could imagine, in place. What's compelling to me though is as it's come down, this last downdraft actually has a positive divergence in our momentum gauges. While we do like to see also like then stocks coming down a little bit into earnings, a name like this is actually a little bit more compelling even to us because it is oversold versus a CrowdStrike, which would be relatively overbought still despite its several day downdraft. From a contrarian perspective, with the oversold condition and divergence in the proximity of support. It actually looks compelling perhaps for a relief rally, but it's not for the faint of heart, because the downtrend is evident. The longer-term metrics do point lower. This would be a countertrend position if somebody was making a trade.

Lauren R. Rublin: It's a tough one to decide fundamentally. It sounds like it's a bit confusing technically, but good analysis. Thank you. I wanted to go back to Techland where HP Enterprise reports tomorrow. This is a hardware company and also an AI beneficiary. Ben, tell us the outlook for HP Enterprise.

Ben Levisohn: Yeah. It's another interesting one because it's one where it's legacy businesses, the stuff that isn't AI is not doing very well, at least not expected to do well according to Evercore. But it's AI business, Evercore expects to do really, really well. Their analysts think that that's going to be enough for the stock, but for them, it means that there has to be upside to the AI expectations. It's both on the actual sales, but on backlogs. If that gets people excited about the AI story, HP Enterprise should do pretty well. But for me, I find these very hard to play it. Number one, I'm not a tech guru, so understanding the actual mix in their products and what goes out as the AI comes in, is really tough. But if the analysts say it's an AI story, I guess it's an AI story, but everything wants to be an AI story right now.

Lauren R. Rublin: Right, maybe even Barron's Live. But I think we're doing pretty well with HI, which I call human intelligence.

Ben Levisohn: Right.

Lauren R. Rublin: So that's thanks to the two of you. Katie, I wanted to ask you about a tech stock that really took a nosedive last week. That's Salesforce. The company reported a disappointing quarter. It had downbeat earnings guidance. What is the technical setup for Salesforce after that tumble?

Katie Stockton: Yeah. With the gap down, we're always really interested in scrutinizing the price action right on the back of that gap down. For CRM, the very next day after the earning drop in gap, it rose into that gap and did so pretty meaningfully. That usually is a short-term, positive development, because the gap itself actually creates a vacuum of resistance on the chart for one. But it also just suggests very simply, that the decline is probably a little bit overdone on the downside. When you look from a longer-term perspective at CRM, you can argue that the uptrend is still intact. We use something called the cloud model to that end. The weekly cloud model actually shows support pretty much in line with current levels per this cloud model. We think that it's not necessarily a broken chart. Certainly, it needs some work to rebuild itself, but this initial move up into the gap is somewhat encouraging from a shorter-term perspective.

Lauren R. Rublin: I'm sure the folks at Salesforce would be happy with that analysis. Why don't I get us some listener questions? We've got quite a few of them. DL asks, "What is the technical outlook for Amazon stock?"

Katie Stockton: For Amazon, Amazon really struggled to get through some longer-term resistance on its chart. It was right around 189, and that has proven to be a real hurdle for it. Maybe there's a fundamental reason for that, I'm not sure. But near that level, we saw downturns, overbought downturns, MACD or momentum downturns, and those are still an issue for the stock. I would say longer-term uptrend is still intact, but it has some more work to do in terms of recovering from this loss of momentum near resistance. What I'd love to see from Amazon to signify that this corrective phase has matured, is something from our weekly stochastic oscillator. It's our preferred overbought/oversold metric. Once it finally gets more oversold and turns up well, that's where it becomes interesting to us. I think that needs at least a few weeks to happen based on the way it's set up currently.

Lauren R. Rublin: All right. We had a question from Rod, an interesting question. What notable technical anomalies do you currently see in the markets?

Katie Stockton: Well, that's an interesting question.

Lauren R. Rublin: Yeah, right.

Katie Stockton: One I don't often get. One of the interesting things has been looking at Bitcoin as a risk asset and also gold as a risk-off asset. These correlations and long-term historical designations don't always hold. Think about gold and how it's fallen off a bit since April. Alongside the equity market, both have entered what we would consider to be corrective phases at the same time, and yet historically we would think of gold as a safe haven asset class. It should be doing even better than it has done perhaps of late, so that would be one indication. Then, of course, Bitcoin at times diverging from the action in the DNSK 100 for one, things of that nature. I would say it's the correlations breaking up at times between Bitcoin, gold and the equity market.

Lauren R. Rublin: That's a good anomaly. We had a question from Joseph about Starbucks and the technical setup for Starbucks. What do you see there?

Katie Stockton: Starbucks, yeah, let's pull it up. I know based on how often my teenagers go to Starbucks, it should look pretty good.

Ben Levisohn: My wife and daughter too.

Katie Stockton: But I'm afraid not. Listen, it's a long-term downtrend. It still has negative, long-term momentum. Within that context, it's discovered some support around the 2022 bear market cycle low. I think for now it has a bit of a footing, which is an intermediate-term positive. Just like that CRM, it came pretty quickly up into the earnings-driven gap or the gap down from earlier this month. That increases the potential for short-term, upside follow through within the context of the long-term downtrend. That gap from earlier this month would be filled just above 87. Of course, the stock's trading around 81 and change right now, so probably worth holding for a better selling opportunity if you owned it.

Lauren R. Rublin: Ben, do you have any thoughts about Starbucks fundamentals? I know the company is trying to right itself after a rocky stretch.

Ben Levisohn: Yeah, it's been tough for them. They've had China issues. They've had trouble here in the United States with even the founder, Howard Schultz, weighing in what they're doing wrong.

Lauren R. Rublin: That was amazing.

Ben Levisohn: Yeah, that was amazing. It's so hard to take over these companies from very vocal, former leaders, and I think that's it. They do need to find a way to really get growth going again, and maybe it's simplifying products because they have a lot of very weird drinks on the menu.

Lauren R. Rublin: The vile drinks.

Ben Levisohn: Right, it's pretty amazing what they have. But I don't know, they really do need to figure out a way to get that growth going. Again, the one thing I'll say is that it's a lot cheaper than it used to be. It's under 21 times, which for this stock, is quite a big discount. That being said, it's not growing the way it was, and so you have to wonder how much of that is priced in now. But it was at its peak in April of 2023, so just over a year ago, the stock was trading around 30 times earnings. Now we're down at 20.8 so that's a pretty big haircut.

Lauren R. Rublin: It seems this is a market that is giving very big haircuts to companies that disappoint. I'm thinking of we talked just today about Salesforce and Lulu and now Starbucks. It's a very unforgiving market.

Ben Levisohn: Yeah, but if you do manage to deliver, you just get more expensive. I always think of Costco, which is another one of these stocks that is very consistent. It's actually more expensive than it was a year ago. It's up to almost 48 times, 47 times right now and higher than it was a year ago. So if you can keep making your numbers, great, but if not, yeah, it's painful.

Lauren R. Rublin: Indeed. We had a question from Barry about the 10-year Treasury note interest rate. I wanted to ask you, Katie, we haven't talked about bonds today. But if you take a look at the 10 year, what's your technical read on it?

Katie Stockton: Yeah. It's been really interesting that the long-term uptrend that goes back to 2020, we think that uptrend marks a secular shift for yields. Meaning that the multi-decade downtrend that preceded it has been reversed. We are over time looking for higher lows and higher highs. However, we think that the yields across the spectrum, are entering a corrective phase, even a corrective year, or year or two based on historical price action or action for yields. We have a pretty meaningful loss of upside momentum behind 10-year yields, meaning that as they've come up and near this 4.8% level, the momentum is really uninspired. It's somewhat lackluster. We're looking for a lower high ultimately to be established relative to the higher from late last year near 5%. And for a corrective phase to ensue and be prolonged within the context of that secular shift. The support that we're watching here in the near term for 10-year yields is around 435, and that's based on both the daily cloud model that we track and also the 200-day moving average. Below that, we're going to start to look for a test of more significant support, which for us is right around 4.13%. It's below that level that will feel affirmed in our biases towards the downside for the next year or so.

Lauren R. Rublin: That would be welcome considering what's been happening with bond yields. We have a batch of questions about the oil price and oil stocks, so why don't we turn to that next? What do your indicators tell you about the price of West Texas intermediate, or you can go with Brent Crude if you'd like, but the oil price, where is it headed?

Katie Stockton: Well, if anyone shares my frustration in analyzing crude oil, I think we can all take a step back and realize that it's a trading range. Trading ranges are the most frustrating environments, especially from a technical perspective. Over the last, I'd say, year and a half or so, crude oil has really made no progress meaningfully to the upside or downside. For that reason, it's been really pretty hard to navigate from a long-term perspective. You can't just add exposure and sit with it and let it ride, because there's just no trend there to take advantage of. It's been quite frustrating when you think about it in terms of this trading range. Within the range, there is downside momentum, so the intermediate-term gauges point lower. But we do have an oversold reading that we think within the coming weeks will yield another low within the context of this trading range. Perhaps that this becomes the low that's the start of a turnaround, and we say turnaround likely to the upside based on our longer-term metrics. It's a bit early to be decisive, but there is some real interesting divergences developing on the monthly chart. Looking at the MACD histogram, you'll see that there's higher lows in place as crude oil has gone sideways, for one, it's also into long-term support based on that monthly cloud. We think there's the potential for crude oil to ultimately emerge from this trading range, perhaps in the same way that we saw from the price of copper. Then it would join this newfound commodity bull cycle that we talked about earlier. With all of that in mind, we would be interested in adding exposure to energy stocks into a deeper corrective phase here, but we would remain more shorter to intermediate-term focus on that sector, as long as crude oil remains range-bound.

Lauren R. Rublin: All right. What about oil stocks?

Katie Stockton: Yeah, same way, so with the energy complex, we always tend to see them positively correlated to crude oil. Until we feel convinced that there's an intermediate-term low in place there for crude, we wouldn't be adding exposure, especially with our top-down views that we have a deeper pullback underway here. We'd probably give it a little time, and by that I mean weeks, not months before adding exposure to the energy complex. Then we would just keep that shorter to intermediate-term outlook, meaning trying to take advantage of the next upswing, but not necessarily positioning for the long term, not until we see crude oil advance. Where it would advance at this point from the corrective phase or from the trading range, is above about $85, $86 per barrel.

Lauren R. Rublin: All right. Take a while for that range to be broken.

Katie Stockton: That's right.

Lauren R. Rublin: So let's close with Don's question. He wants to know what are the technicals on Tesla?

Katie Stockton: On Tesla, I think that is a more common question and I'm happy to address it, because listen, anything in the markets that looks different from the S&P 500 can be perceived as an opportunity. We really like to see things that are not necessarily correlated to the top-down takeaways for the major indices because therein lies opportunity. For Tesla, it is still a downtrending stock with long-term downside momentum. Within that context, we've seen intermediate-term momentum improve, with a minor breakout from our daily cloud model. The short-term outlook is positive or neutral to positive probably here, based on our metrics with resistance fairly strong in the 200 area. That's based on a couple of factors. We would say for a relief rally or a countertrend move, we feel fairly confident that it can get back up to that 200 level. But not terribly confident that it can get meaningfully above that, not without some other shift perhaps fundamentally to suggest it can get through.

Lauren R. Rublin: Got it. All right. Katie, we put you to work today and I really thank you.

Katie Stockton: Of course, I'm happy to.

Lauren R. Rublin: Ben, thank you also for your comments and contributions.

Ben Levisohn: Thank you, Lauren.

Lauren R. Rublin: I want to thank our audience for tuning in today. Next week on Barron's Live, we'll be talking about the summer travel season. As you can imagine, airline prices are higher than they've been in a long time. Try booking a hotel, it's also very difficult. America is on the move. You can see it in the services' inflation. We have Markus Hansen, portfolio manager from Vontobel Asset Management, joining us to talk about travel stocks. He'll also talk about a lot of other things, so please join us next Monday. Travel over to Barron's Live virtually that is, and join us again. Thanks again, everyone. Hope to hear from you next week. Have a good week.