T3’s Take T3: Pop & Drop at the F.B. Corral!
By Michael Comeau 1) Lucky 13 for Facebook Yesterday after the close, social media giant Facebook (FB) delivered a massive earnings beat, sending shares as high as $133.91 in extended trading, or up 8.6%. The company is seeing significant growth in mobile, higher revenue from Instagram, and improving user engagement metrics, Facebook’s huge numbers weren’t exactly a surprise, since the company had beaten Wall Street’s earnings estimates for 12 straight quarters, making yesterday lucky number 13. This set the stage for a sell-the-news reaction, and Facebook finished well off the highs at $125.00 up 1.4% on the day. However, Facebook shares are still doing incredibly well in 2016 with a 19.4% year-to-date gain. 2) Jeff Cooper on Facebook’s Exhaustion Signal This afternoon, my buddy Jeff Cooper issued an interesting take on Facebook’s weakness: FB is poised to leave a large-range Gilligan sell signal if it closes at/near session lows. This is an exhaustion signal marked by a gap up to a new 60 day high with a close at/near session lows. AAPL is a different pattern as its earning’s gap was not a gap to new 60 day highs or 52 week highs or all time highs as is the case with FB. My takeaway is that institutions are scale-up sellers on pops. Tomorrow we get the reaction to two other FANG stocks (AMZN and GOOGL). If they react similarly to FB or don’t blow out expectations, there may be nothing left on the table to prevent a slide. 3) Another Day, Another Grind Given that crude oil is a major drive of equity market sentiment, I’ve been a bit surprised at how well equities have held up in the face of oil’s near-20% decline off the highs. And again today, we saw oil decline sharply… and stocks basically rolled their eyes. The S&P 500 went nowhere for the second day in a row, finishing at 2170.06, up 0.2%. In fact, the S&P hasn’t made a 1% move since July 8. Facebook and Apple’s (AAPL) small gains today helped the Nasdaq outperform. Biotechnology led the decliners’ column today, with the S&P Biotech ETF (XBI) falling -0.5%. Energy stocks were down on oil’s decline, with oil service names showing notable dips. P.S. My partner in crime Kurt Capra is hosting a FREE trading webinar after the close on Tuesday, August 2, 2016. Click here to sign up
Continue Reading -->Morning Call Express: S&P 500 Remains Range-Bound
In today’s Morning Call Express, Jeffrey Cooper discusses his thoughts on the recent moves in names like AAPL and FB and the fact that the SPY remains in its 2-week range. He also questions if this range is going to play out similarly to late July of last year. Jeff also talks about the recent action in oil and how it may play into the next move for the market.
Continue Reading -->Scott Redler Discusses Earnings on Fox Business Television
Yesterday after the closing bell, T3 Live Chief Strategic Officer appeared on Fox Business News to discuss earnings season.
Continue Reading -->Fed-Induced Breather or Run of the Mill Digestion?
Global markets are flashing slightly red this morning despite yet another whopper of an earnings report from Facebook (FB). Facebook is around $130 and making new record highs, and I’m asking myself why I ever sold this stock. It’s especially impressive in the face of Twitter’s (TWTR) struggle to just meet its own guidance. NDX futures are slightly in the red, as are SPX futures. Overnight, Euro-area economic confidence beat expectations and German and Spanish unemployment declined. We’ve talked extensively about how post-Brexit data has been beating expectations, and the trend continues. Of course, this plays right into a conversation about the Fed because the Brexit has been a source of concern. Yesterday, the Fed said it is less worried about near-term economic risks, which wasn’t a total surprise given the aforementioned data trends. Some folks are attributing today’s little slump to the Fed’s little hawkish twist, but I’m not buying that for 2 reasons: 1) The dollar actually FELL and gold rose after the release of yesterday’s Fed statement, showing that traders still think the Fed’s going to move slowly. The perceived odds of a Fed rate hike have risen, but perhaps not enough just yet. The dollar and gold are also following through on yesterday’s moves. 2) We’ve come a long, long way. The SPX is up 166 handles from the post Brexit lows and the FTSE 100 is up even more on a percentage basis. (see chart) This little sideways grind feels more like run-of-the-mill digestion, which I think could continue. I see August as being similar to the April-May snoozefest that bankrupted hordes of aggressive put options buyers. SPX barely budged yesterday, but there were some positives below the surface. Tech (inspired by Apple’s (AAPL) big earnings report, biotech, and small caps al did quite well, even with another big drop in crude oil. Crude oil is an important driver of risk sentiment and fundamentals (it heavily impacts earnings and high-yield energy bonds), so I’m a bit puzzled at how the market yawned at a near-20% drop in WTI crude. The big question I’m asking now is whether the good news we’re getting (solid economic data, huge earnings from AAPL and FB) is coming just in time for a short-term top. In my mind, price leads news (or as Mr. Jeff Cooper says, the news breaks with the cycles), so I’m wondering if this nice little streak of happy news is justifying all-time highs after the fact. We’ve got Amazon (AMZN) and Google (GOOGL) hitting after the close today. Should both of them beat, it will be interesting to see if that inspires real buying. For now, we still feel stretched and sentiment is positive, but you can’t argue with price — the bulls are holding strong. Good luck friends.
Continue Reading -->T3’s Take 3: Apple Hulk-Smashes the Bears
Want to start trading like a pro? Then click here. Trust me. By Michael Comeau 1) Apple Wins, Bears Cry As I wrote yesterday, expectations appeared to be very low heading into Apple’s (AAPL) Tuessday night earnings report. The numbers confirmed that suspicion as Apple reported better-than-expected revenues, earnings, and iPhone unit sales. The company also delivered very strong revenue guidance, which indicates that iPhone sales are holding up much better than the bears have expected. Apple shares ripped 6.6% to $103.03 today, helping to push the Nasdaq Composite and Nasdaq 100 indices to within striking distance of all-time highs. And let’s give Warren Buffett some credit — he disclosed his stake in Apple in mid-May when Apple hit its 2016 low. 2) The Bull Returns… Sort of Equity markets were a little odd today. Apple set off a rally in the Nasdaq and the widely-watched biotechnology was very strong, but the S&P 500 barely budged. The index fell -0.1% to 2066.58 — not exactly a barnburner! Oil prices and energy stocks slumped on higher-than-expected oil inventories, and we also saw weakness in utilities, real estate, consumer staples, and transports. Overall, the action felt like run-of-the-mill digestion, though with a clearly bullish tinge. If biotech makes another run like this tomorrow, we could see the S&P hitting new highs and the Nasdaq finally making its own new record. 3) Fed Schmed As expected, the Fed left rates unchanged today and issued a somewhat hawkish statement. The Fed said that employment data points to an increase in labor utilization, and that near-term risks to the economic outlook have diminished. Initially, gold fell and the dollar spiked, which are consistent with a more hawkish Fed. However, almost immediately, those moves reversed themselves and gold ended up 1.6% higher at $1,349/oz at the equity market close. And the dollar ended up at daily lows. Presumably, traders still believe the Fed will move very slowly as Fed Funds futures indicate that the next rate hike won’t happen until well into 2017.
Continue Reading -->Twitter Is No Fun, Can’t Offer Proper Guidance
I’ve been a long-time bear on Twitter (TWTR) and the company’s lousy quarter just reinforced the fact that it has 2 major problems: 1) User Experience As I’ve said before, unless you have a lot of followers, Twitter isn’t much fun. You don’t get much engagement relative to platforms like Facebook (FB) and Instagram. Meanwhile, go out and find any teenager and ask them what platforms they’re focused on. They’ll say Snapchat and Instagram, which offer more engagement, are easier to use, and are just plain more fun than Twitter. Not everyone can come up with clever one-liners, but everyone can take a selfie or shoot a quick video. This has to change. Twitter has to become FUN to use. 2) Guidance I’m baffled by Twitter’s inability to set its guidance bar low enough to generate real beats. For Q2 (reported yesterday), Twitter guided for $600 million in revenues. At the time (4/26), that was 12% below street estimates. And Twitter only beat it by $2 million in revenue! In Q1, Twitter actually failed to hit its own guidance, even though its guidance was 5% below street expectations when issued. Any smart company offers guidance low enough to beat. So if Twitter can barely beat its guidance, it says 1 of 2 things: either they continually overestimate their own revenue momentum, or they need to take investor relations 101. Given that their CFO is a former high-profile Wall Street analyst, I think it’s the former. Now if Twitter can’t beat its guidance for Q3 — which implies just 7% revenue growth — we’re looking at a single-digit stock unless it gets taken over. Perspective We have to remember that at one point, Facebook (FB) — the undisputed king of social and perhaps the greatest digital ad platform the world has ever seen — was at one point down and out. So a turnaround can’t be completely counted out, assuming Twitter can drastically improve its user experience. (I don’t have faith myself) That’s the first step to getting the numbers to turn, though throughout history, I can’t remember a single successful turnaround of a social media platform. Friendster… nope. MySpace… nope. AOL… nope. Google+… nope. For now, this chart below tells you everything you need to know about Twitter: It plots the 2017 consensus revenue forecast (red line) against Twitter’s stock price since the IPO. This is a good illustration of the trend of growth expectations for the company. In early 2015, analysts expected over $5 billion in 2017 revenues. Now they’re forecasting under $3 billion. That red line needs to start going up. Soon.
Continue Reading -->3 Next Steps to Ultimate Victory for Apple
I was worried about Apple’s (AAPL) quarter the way everyone else was. But with very sour sentiment, I made a plan to buy if it could get and stay above $100-$101. I did that live on the VTF after-hours. Let’s take a look at the chart: Getting in was step 1. Now we’ll see if it can hold that area moving forward, and we’ll see what kind of levels the intraday action gives us. Step #2 is to reclaim the 200-day moving average around $103.75, and then hold above that for a few sessions. Step #3 would be to break the downtrend that has plagued the stock for well over a year. If that happens, Apple can turn into a tailwind for the next few months. I’ll continue updating you with key levels so we can effectively navigate the action together. If you’d like to trade with me live, take a FREE trial to the VTF.
Continue Reading -->Scott Redler’s Morning Note: Fed Dead Ahead
Editor’s Note: This is a special FREE edition of Scott Redler’s Morning Note and his extended Morning Call video, which are released at 8:30 a.m. ET each day as part of Redler All-Access. Please call my team now at 1-888-998-3548 if you’d like to get Redler All-Access for FREE. ************* By Scott Redler We have mixed markets around the world this morning. Europe has positive action with the DAX +0.9%, CAC +1.4%, and the FTSE +0.3%, even with DB profits plunging 100% year-over-year. Asia was mixed as the Nikkei rallied 1.7% and the yen dropped on stimulus talks. Shanghai bucked the trend and is down 1.9% as they might curb some wealth management products. The Hang Seng rallied +0.4%. Our markets have been a bit choppy and erratic in this upper area. Strength has been sold and weakness bought as we’ve tried to figure out if SPX can hold above the 2155-2159 upper zone. If it continues to hold, we’ll see if it can break and close above 2175 after the 2:00 p.m. Fed announcement today. Some think they could be a bit more hawkish. Oil has been a drag as it slipped from $51 to below $43 with no real bounce. We’ll see if today’s 10:30 a.m. inventory number can turn it around to help broaden the rally a bit. USO has yesterday’s low at $10.02 to watch for a possible RDR long. UWTI has yesterday’s low at $20.27. Tech has acted much better since last week, when we said it can play catch-up to see all-time highs. QQQ is opening at 2016 highs. See if they can stay above $114.20 to keep momentum. Small caps had a choppy day but ended at 2016 highs with the IWM above $120.60. Now see if it extends and holds above yesterday’s high of $120.97. Banks have been flagging since earnings. Maybe a more hawkish tone gets them to clear this recent consolidation. I’ll write down what needs to hold, then pivots to clear to get back on the move. XLF has support at $23.55 and clearing $23.70 with volume could bring back buyers. JPM has to hold $63.50 and clear $64.30 to resolve the flag higher. C has to hold $43.80 and clear $44.40 to resolve the flag higher. BAC started to go yesterday and cleared $14.40. Holding this can get it back towards $15. MS started to clear its flag yesterday above $29.15 and it has room towards $30-32. GS has to hold $159.50 and clear $161.50 to try for the 200 day at $164.50. High-beta tech is on the move in separate patterns: NFLX held its post-earnings low Monday and closed well, giving some a clue to be long into yesterday’s gap up on the insider buy. Now see if it holds $90.90 as your pivot support. AMZN has earnings Thursday. I would avoid it until then. Recent support is $729-733. GOOGL has numbers Thursday. It’s been holding $750. It might give a trade above $760.50 before it. TSLA has lots of headlines flowing. Elon Musk talks up its potential, but also about a money raise. It needs to hold $225 to potentially give another trade above $231.39. MBLY got hit as news came it ended its relationship with TSLA. But it could strengthen with BMW. It will need some time. It can head into a gap fill if it clears $46.89. BABA has acted decent since clearing $80.05, but found resistance again at $85. Earnings aren’t until next week. See if it can hold $82.60 until then. NTES woke up Monday and had some follow-through above $201.50 to hit $206 yesterday. There is no setup now. PCLN is not doing much, but it is flagging after a big move. Support is $1305. Mega caps: AAPL had an impressive quarter after sentiment turned very sour. Now maybe with iPhone 7/7+ on the way, this stock could be more of a tailwind. It cleared $100.50 last night, giving us a good entry. If it can hold this, it could be more of a focus with decent resistance at $103.50-$105. First step is holding the gap up. Then, it needs to break the downtrend. MSFT still acts well but it’s a little choppy and extended. There is no setup but it’s fine as long as it holds $55.50. IBM acts fine but it’s also choppy. It needs to hold $161 to stay constructive. INTC had a nice move back towards the highs after holding the 21 day at $34. There is not much to do now. Social names: FB reports today after the close as it opens at another all-time high. There is not much to do now. It is priced for perfection. If you are an investor, congratulations. Traders should probably wait until after the report. $122 is the recent pivot high. TWTR still can’t put it together. It’s down 10%. There is support at $16.20ish. My options will be at $0. I will let dust settle and see how it shapes up today. Other notables: ACIA: after a big move with multiple pivots, it could use a rest. Jim Cramer pumped it last night. I may look for a cute short vs. $65.59. TWLO is choppy in this tight upper range. It seems like it needs earnings before the next move’s inside range. It has support at $39.50 and resistance at $41.70. LVS had a gap & go after earnings. I wouldn’t chase it now. See if it digests above the earnings gap at $49.27. WYNN has had a nice move since clearing the $97 pivot. It still has earnings to contend with. $105 offers some resistance. FCX had a big reversal after earnings. With a bit of time, perhaps it takes out $12.90 to get back towards $14. Metals are flattish. We have Fed statements today. GLD’s recent low is $125.11 after a corrective move from $131+. It will need to clear and close above $126.40 to bring in buyers. TLT: I’m not sure if the recent down move priced in a more hawkish
Continue Reading -->The Morning Hammer: Apple Smashes Bears, Record Nasdaq Highs in Sight
Global markets are in a happy mood courtesy of Apple’s (AAPL) better-than-expected earnings report, and Japan’s signaling of more stimulus. Apple is up ~$6.50 in the early going after beating analysts’ earnings, revenue, and iPhone unit estimates, and offering strong forward guidance. Meanwhile, just as traders thought Bank of Japan stimulus was priced in (based on yesterday’s big rally in the yen), PM Shinzo Abe showed commitment to a $265 billion stimulus package. That’s pushing the yen back down, which is great for risk appetites. SPX futures are slightly green, while NDX futures are up 0.7%. If Apple generates some follow-through among other large-cap techs, we could see a new Nasdaq Composite all-time high above 5231.94. And the NDX may finally exceed its March 2000 high of 4816.35. Facebook (FB) reports after the close, and if it repeats another blowout, maybe we see those records fall by the weekend. In related news, Twitter (TWTR) dropped another guidance stink bomb last night and is getting smashed up. Meanwhile, Fiat Chrysler raised its forecast, and Comcast (CMCSA) and GlaskoSmithKline beat. Crude oil is down after the API showed a very small decline in crude oil inventories after the close yesterday. EIA data hits at 10:30 a.m. ET. Economists expect a 2 million barrel decline. We also have durable goods, pending home sales, and of course, the FOMC rate decision. Fed Funds futures show that traders are pricing in a mere 10% chance of a rate hike today. The forward outlook will be key. I would pay close attention to see if the Fed eases up on its concerns over the Brexit, given that global economic data has been generally strong as of late. Lately, I’ve been emphasizing that perception of the Fed, which impacts all financial markets, is incredibly volatile. Ths is especially true this year. 2 months ago, traders were pricing in a 74% chance of a December rate hike. That number dropped to 10% chance after the Brexit. Now those odds are back up to nearly 50%. And we act like Tesla (TSLA) is volatile… Now one thing I found really interesting yesterday was the action below the surface in biotech. IBB was red because of Gilead’s (GILD) weak earnings report and big decline. Yet XBI, which is much more diversified (GILD is 8% of IBB), was actually well in the green. So below the surface, biotech was strong (as was the Russell 2000) on an overall snoozer of the day. So pay close attention to biotech — if it turns out to be a coiled spring, the bulls might party like it’s 1999. And 1999 was a good year!
Continue Reading -->Apple Eats Bears, Bears Eat Twitter
1) Holding Ahead of Apple US markets entered a holding pattern ahead of Apple’s (AAPL) earnings report, which hit after the close today. (more on this below) The S&P 500 traded in an extremely tight range today before finishing at 2169.19, up a tiny 0.03% on the day. The Nasdaq and Russell 2000 indices showed solid outperformance today despite an intraday drop in oil and some biotech names. This was a bit of a surprise given that overseas markets indicated a risk-off posture in the early going, perhaps best exemplified by the sharp rise in the Japanese yen, which rallies when traders grow more cautious. Crude oil stayed weak, with WTI crude breaking the $43 handle, though energy stocks actually finished up. 2) Bio-Confusion Large cap biotechnology stocks took a tumble today after industry giant Gilead (GILD) reported disappointing second-quarter earnings results and poor guidance. Gilead, which accounts for 8% of the iShares Nasdaq Biotechnology ETF (IBB), fell -8.5% today, while IBB dipped -0.7% That wasn’t exactly a pretty picture, but outside of Gilead, biotechnology was actually pretty decent. The XBI ETF, which is much more diversified than IBB, was actually well in the green today. This indicates that many traders believe Gilead is facing company-specific problems that won’t impact the sector. 3) Post-Close Earnings Twitter (TWTR) beat analysts’ earnings estimates for the 6th quarter in a row, but it reported disappointing revenues and delivered atrocious third-quarter guidance. Many traders were surprised at Twitter’s dissappointment given the headline-heavy US election cycle and global geopolitical troubles, which should be driving significant news consumption and chatter via Twitter. Twitter shares were down sharply in extended trading. That’s not a surprise given that the stock just rose over 20% on takeover speculation. Meanwhile, Apple (AAPL) was up over 5% after-hours as the company beat Wall Street’s expectations for sales, earnings, and iPhone unit sales. Apple also offered strong forward guidance. This should mean good things for the Apple calendar spread trade I suggested today. And it may even be good for the Intel (INTC) calendar spread trade from last week if tech stocks get a lift.
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