U.S. equities finished in the red on Monday despite trading in positive territory for most of the session on excitement over one giant and a few smaller buyout deals.
The biggie was the disclosure of a $62 billion all-cash offer for Monsanto Company (MON) from Bayer announced on Sunday. Among the smaller deals was a rejection by Tribune Publishing Co (NYSE:TPUB) of a $15-a-share offer from Gannett Co Inc (NYSE:GCI).
In the end, the Dow Jones Industrial Average lost a fraction, the S&P 500 lost 0.2%, the Nasdaq Composite lost 0.1%, and the Russell 2000 lost 0.1%.
Stocks continue to look vulnerable here as the headwinds build. Federal Reserve officials keep making hawkish noises, raising odds of a June rate hike. Economic data has been uneven. Corporate earnings and retail results have been a drag. And we’ve entered a period of poor seasonality for market performance — made worse by the fact this is a presidential election year.
With all that in mind, keep an eye on these three stocks today: Apple Inc. (NASDAQ:AAPL), Best Buy Co Inc (NYSE:BBY) and Ford Motor Company (NYSE:F)
Ford Motor Company (F)
U.S. auto sales are in a bubble and prone to a pullback as lenders cut back on aggressive subprime financing just as a flood of off-lease vehicles depresses used car prices. No wonder that F shares have been sliding sideways since the summer of 2013 as investors have grown increasingly skeptical of the surge of auto sales.
Watch for a sharp move away from the 50- and 200-day moving averages, which would break the post-February uptrend and put support near $11 in play.
I have recommended the June $13 F puts to Edge Pro subscribers.
Apple Inc. (AAPL)
AAPL shares appeared to have broken up and out of their month-long funk on Monday on reports in Taiwan’s Economic Daily that the company has ordered more iPhone 7 handsets than previously expected. The newspaper said that between 72 million and 78 million phones were ordered, above the 65 million Wall Street was expecting.
The stock had been under pressure over the past two months after reporting a first-ever drop in iPhone sales as the company’s pace of innovation slows amid saturation in the smartphone market.
Edge Pro subscribers closed out a 283% gain on their May $107 AAPL puts back on May 11.
Best Buy Co Inc (BBY)
Electronics retailer BBY appeared to be coiling up in preparation for a breakout from a tight three-month trading range with resistance near $33-$34. This would have capped a sideways slide that’s been in play since late 2013 after a massive 400% rally as the company’s decision to start matching internet prices saved it from oblivion.
But with the consumer electronics cycle slowing as tablets, PCs, gaming consoles and televisions no longer create a primal draw for store foot traffic — and new products like wearables and action cameras haven’t really gone anywhere — investors have been in wait-and-see mode on the stock.
One of the things they were waiting for: Today’s quarterly earnings report.
Unfortunately, BBY reported a revenue decline of 1.3%. And despite a near-doubling of earnings to 70 cents per share from 36 cents per share, Best Buy shares were off more than 5% in premarket trading, which will have shares dropping below their 50- and 200-day moving averages.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
