Coffee With Greta: Debt Ceiling Talks Make Progress
DJIA Futures: +58 (+0.2%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +30 (0.2%) Good morning friends! Futures are higher amid optimism over debt ceiling talks. Let’s get right to it! Debt Ceiling Negotiations Continue President Biden is expected to meet on Tuesday with the big four Congressional leaders about the debt ceiling. Sources say there were “productive” staff-level negotiations over the weekend. This comes after Friday’s meeting was postponed in order to provide more time for lower-level talks. The Treasury Secretary says the U.S. is facing a June 1 default deadline to raise the debt limit. Big Retail Earnings Week This will be an important week to help traders gauge the health of the U.S. consumer. Several big retailers are scheduled to report Q1 results this week: Tuesday: Home Depot (HD) Wednesday: Target (TGT) Thursday: Walmart (WMT) These reports will give traders more insight into how consumers have been shifting their spending habits amid high inflation and ahead of an expected recession. Atlanta Fed President Says No Rate Cuts Atlanta Fed President Raphael Bostic says he doesn’t see any rate cuts happening in 2023. Bostic told CNBC this morning, “For me, inflation is job No. 1. We’ve got to get back to our target. If there’s going to be some cost to that, we’ve got to be willing to do that.” He added, “If there’s going to be a bias to action, for me would be a bias to increase a little further as opposed to cut.” But CME Group’s FedWatch Tool still shows the market pricing in as many as 3 cuts by year-end. Empire State Manufacturing Index Plummets A key manufacturing gauge plummeted in May. The Empire State’s manufacturing index plunged 42.6 points to negative 31.8. That was sharply lower than expectations for a reading of negative 5 and reversed the gain seen in April. The shipments index plunged 40.3 points to negative 16.4 and unfilled orders fell 13.2 points to negative 13.2. But the six-month expectations index improved by 3.2 points to 9.8.
Continue Reading -->7 Tech Names to Watch This Week
SPY keeps playing with levels. Last week it couldn’t build on strength and sellers couldn’t keep it below levels. We’ll see how this week starts. $413.64 is Friday’s high. See if it gets and stays above. $414.54 is above. The bears can’t growl so loud this week unless we get a hard close below $408.64. QQQ’s hit a high of $327.17 last week as some specific setups worked. The 8 day is key active support. We’ll see if this sector can keep getting flows. It needs to hold the $322ish area to stay special. Now let’s dig into 7 tech leaders: AAPL continues to digest post-earnings. On Friday if felt vulnerable but it held the earnings gap. If you are super active, make sure it holds $170.76-$171 support. If it doesn’t, it can get choppier and harder to sit with. $174.59 is key active resistance. MSFT remains Very Impressive. Whenever you think it gets vulnerable, it holds the 8 day. It needs to hold the $306 area. If that holds, perhaps it tries to get going again with $313 as pivot resistance. GOOGL was a big focus for us last week. I got big around $107ish and it hit $117.92 Friday. I did sell my stock and switched to some call as it seemed stretched. Loop Capital called it a hold today. Let.s see how it digests. Holding $114.41-$116 would keep momentum. AMZN was another focus for us. I got pretty big in the $105 area and then sold the rest into the $113+ area last week. Now, we’ll see if it can build a bull flag above $109ish to give us more opportunities. META is trying to set up again after hitting a high of $244 a few weeks back. Some are long vs. the $229 gap pivot. If it can get and stay above $238, maybe it gets some active momentum back again. Loop Capital raised it this morning. TSLA couldn’t hold the Friday gains even with Elon saying they will have a new Twitter CEO faster than some thought. I did sell most of mine into the $177 gap fill. Then it failed to hold $174 with a low of $166ish. It’s flattish this morning. It’s hard to tell what’s next. If it breaks and stays below $166ish, the bears will growl loud. I’m just going to watch it for now. NVDA is trying to hold the 8 day. This tech market leader can give clues to the week. It needs to hold the $280 area. Otherwise it can see downside. A move above $292ish tells us we can still have some special moves. Friday’s high is $287ish. Scott Redler Positions Disclosure as of 2023-05-15 at 8.26.28 AM
Continue Reading -->What’s On Tap for Traders: May 15-19
Welcome to your weekly trading preview! Use the Table of Contents to jump around: Table of Contents This Week’s Trading CalendarThe Week in Review…A Busier Stream of Econ DataRetail Earnings TimeSo How Has Earnings Season Been?Traders Are Still in a Bad MoodA Look at Sector Performance in 2023:Factoid of the Week: The Best Traders on Earth are in the US CongressGet to Know JR Romero This Week’s Trading CalendarClick the calendar image to enlarge it, then scroll down to see what’s coming down the pipe the week of May 15: The Week in Review…What a week! We survived:Earnings whiffs from Disney (DIS), PayPal (PYPL), AirBnB (ABNB), Wynn (WYNN)US CPI & PPI reportsA giant pop & drop in Tesla (TSLA) FridayThe major indices were mostly down this week, but the QQQ’s managed to squeeze into the green.(data as of 2 p.m. Friday) And year-to-date, the QQQ’s are still crushing the other big ETFs thanks to huge moves in big tech stocks like Apple (AAPL), Tesla (TSLA), Nvidia (NVDA), and Microsoft (MSFT). Even with Friday’s ugly outside day, it’s been pretty smooth sailing this year:Now let’s look forward to next week. A Busier Stream of Econ DataThe US economic calendar picks up next week with:Monday: NY Empire State ManufacturingTuesday: Industrial Production, Business Inventories, Retail Inventories, Fed’s Williams speaksWednesday: Building Permits, Housing StartsThursday: Jobless Claims, Philly Fed, Existing Home SalesThe big discussion on the Street is whether the Fed can slow the economy without breaking it.So everyone will be watching these reports for a better idea of where the US economy stands.After this week’s light CPI and PPI reports, traders are pricing in a slightly higher probability of a Fed Rate hike at the June 14 meeting.As of Friday afternoon, traders were pricing in a 16.6% probability of a June rate hike, up from 10.7% last week. That’s thanks to this week’s light CPI and PPI reports, which showed continued moderation in inflationary pressures.Only a moron would argue that inflation is low.But it is less awful.And overseas, we get:Monday: Switzerland PPI, Canadian Housing Starts & Whole Sale Sales, China Industrial Production & UnemploymentTuesday: Great Britain Employment, EU GDP, Italy CPI, Canada CPI, Japan GDPWednesday: EU CPI, Japan Industrial Production, New Zealand PPI, Australia EmploymentThursday: Canada Housing Prices, Japan CPIFriday: Germany PPI, Canada Retail sales Retail Earnings TimeEarnings season is pretty much done, but we’ve got some big retail reports on tap:Tuesday: Home Depot (HD)Wednesday: Target (TGT), TJ Maxx (TJX)Thursday: Walmart (WMT), Ross Stores (ROST)Friday: Foot Locker (FL)This earnings season has been all over the place for consumer stocks. We’ve seen some huge hits (like Apple) and some big misses (like Disney) Nonetheless, Walmart and Target should give us fresh insights on the consumer. Outside of retail, we have Baidu (BIDU) on Tuesday, Cisco on Wednesday (CSCO), and Applied Materials (AMAT) on Thursday. So How Has Earnings Season Been?As we noted last week, earnings season is pretty strong relative to expectations. According to FactSet, 92% of S&P 500 companies have reported, and so far:78% of companies beat EPS estimates75% of companies have beaten revenue estimates.Earnings have declined by -2.5% vs. expectations for a -6.7% declineSo earnings stink, but they’re not as bad as expected. Which is why the market’s been up this year. Traders Are Still in a Bad MoodInvestors and traders remain remarkably bearish despite the market’s stability. According to AAII, just 29.4% of investors are bullish. That’s up from 24.1% the past two weeks, but well below the 37.5% long-term average. AAII said “pessimism among individual investors stayed above average for the 12th consecutive week.” A Look at Sector Performance in 2023:Click to enlargeIt’s the same old story. Housing (ITB) is winning which it’s not supposed to do in a rising rate environment, which could be related to traders pricing in rate cuts later this year. And tech is pretty strong with XLK, SMH, and ARKK all up 20% YTD. Meanwhile, Natural Gas (UNG), Banks (XLF, KRE), Energy (XLE, OIH), and Cannabis (MSOS) have lagged, big time. Factoid of the Week: The Best Traders on Earth are in the US CongressAccording to Unusual Whales, Alabama Senator Tommy Tuberville is quite the active options trader:BREAKING: Senator Tommy Tuberville has just sold millions in stock and options.He sold puts on $TXN, $KR, $HPQ, $PARA, $AMT, and sold 50k in puts on $TSLA, $CSCO and $MSFTAnd much more.He appears to using options while in Congress.Wild.— unusual_whales (@unusual_whales) May 12, 2023 Interestingly, two opposing members of Congress — Matt Gaetz and Alexandria Ocasio-Cortez — are teaming up to ban members of Congress from trading or owning stocks. Because Paul Tudor Jones or Richard Dennis have nothing on this crew:BREAKINGI have just released the full trading report on politicians in 2022.Despite 2022 being the worst market since 2008, both Democrats & Republicans beat the market.Many politicians individually beat the market.And many made unusual trades resulting in huge gains. pic.twitter.com/qDWIJB2spk— unusual_whales (@unusual_whales) January 3, 2023 Get to Know JR RomeroHow did JR Romero go from code to pro trader & VTF® moderator.
Continue Reading -->Coffee With Greta: Debt Ceiling Crisis Looms
DJIA Futures: +124 (+0.4%) SPX Futures: +14 (+0.3%) NASDAQ Futures: +26 (+0.2%) Good morning friends! Futures are higher as regional bank stocks attempt to rebound. Let’s get right to it! Debt Ceiling Meeting Delayed A meeting on the debt ceiling originally slated for today has been pushed to early next week. President Biden was set to host the big four Congressional leaders at the White House today for the second round of talks this week. But sources say the meeting has now been pushed to next week. This comes after negotiations on Tuesday failed to make any progress. House Speaker Kevin McCarthy is demanding spending cuts in exchange for a debt ceiling hike while Democrats says that’s a non-starter. Sources told NBC that the delay in today’s meeting is a positive sign. They said, “Meetings are progressing. Staff is continuing to meet and it wasn’t the right moment to bring it back to principals.” Treasury Secretary Janet Yellen says the U.S. will run out of money as early as June 1. Regional Bank Bounce Back Regional bank stocks are rebounding today after tumbling again on Thursday. PacWest Bancorp (PACW) shares are up 0.4% in premarket trade after plunging 22.7% on Thursday. The SPDR S&P Regional Banking ETF (KRE) is up 0.7%. Regional banks have seen extreme volatility in recent weeks as traders wonder which might be the next to fail. Tesla Jumps After Musk’s Twitter CEO Announcement Tesla (TSLA) shares are up 2.3% ahead of the open after CEO Elon Musk said in a tweet that he has hired a new CEO for Twitter. Musk said, “Excited to announced that I’ve hired a new CEO for X/Twitter. She will be starting in ~6 weeks! My role will transition to being exec chair & CTO, overseeing product, software & sysops.” The news is good for Tesla shareholders who have previously felt like Twitter is a distraction for Musk. In April, a group of shareholders publicly called for Tesla’s board to ensure he would dedicate more time to the electric vehicle company. Import Prices Jump U.S. import prices rose more than expected in April. The Bureau of Labor Statistics’ import price index rose 0.4% vs 0.3% expected. It was the first monthly increase of 2023 but prices were still down 4.8% annually. Imported fuel prices jumped 4.5% last month, the first increase since June 2022. Import prices excluding fuel were flat. Export prices also rose 0.2% in April but were down 5.9% year over year. In Case You Missed It Peloton (PTON) shares tumbled 8.9% on Thursday after 2.2 million of its fitness bikes were recalled in the U.S. The Consumer Product Safety Commission issued the recall over injury and fall concerns. The CPSC claims the seat post on the Model Number PL01 bikes can detach and break unexpectedly during use. Peloton has reportedly received 25 reports of unexpected breakages since January 2018, including 12 reported injuries.
Continue Reading -->Coffee With Greta: More Good Inflation News
DJIA Futures: -128 (0.4%) SPX Futures: -3 (-0.1%) NASDAQ Futures: +33 (+0.3%) Good morning friends! Futures are mixed as traders digest more inflation data, jobs data, and earnings. Let’s get right to it! Wholesale Inflation Eases U.S. wholesale inflation pressures cooled more than expected in April, in a sign that consumer prices will continue to fall. The Bureau of Labor Statistics’ producer price index rose 0.2% last month and 2.3% year over year. That was better than expectations for +0.3% monthly and +2.5% annually. It was also the lowest annual reading since January 2021. The core PPI rose 0.2% monthly and 3.2% annually, in line with expectations on a monthly basis and better than 3.3% annually expected. Weekly Jobless Claims Jump Weekly jobless claims jumped last week to a nearly two-year high. The Labor Department reported 264,000 Americans filed initial claims for unemployment benefits. That was up by 22,000 from the previous week and higher than 245,000 expected and the highest level since October 2021. The data is a sign of tightening in the labor market, which is what the Fed wants to see. Continuing claims fell by 63,900 to 1.72 million in the week ending April 22. PacWest Deposits Tumble PacWest Bancorp (PACW) shares are plunging 18.9% in premarket trade after the regional bank revealed a steep drop in deposits last week. In an SEC filing today, PACW said deposits declined 9.5% during the week of May 5. But the bank said it was able to fund all of the withdrawals with available liquidity. PacWest said it now has $15 billion of available liquidity vs $5.2 billion in uninsured deposits. The latest drop in deposits comes on top of the 16.9% decline the bank reported in Q1. Disney Falls As Subscriber Numbers Drop Walt Disney (DIS) shares are down 5.3% ahead of the open after the company reported fiscal Q2 results that were in line with expectations, but subscriber numbers declined. Here’s how the entertainment company’s results compared to analysts’ estimates: EPS: $0.93, as expected Revenue: $21.82 billion vs $21.78 billion expected Disney+ subscribers: 157.8 million vs 163.17 million expected The company lost 4 million Disney+ subscribers, or 2%, during the quarter. But Disney’s streaming losses were better than estimates at $659 million vs $841 million expected. But the parks, experiences, and products divisions were a bright spot as revenue jumped 17% to $7.7 billion. About $5.5 billion of that revenue was from Disney’s theme park locations. Robinhood Jumps After Earnings Beat Robinhood (HOOD) shares are up 3.9% in premarket trade after beating Q1 expectations on the top and bottom line. Here’s how the online broker’s results compared to analysts’ estimates: Loss per share: $0.57 vs $0.62 expected Revenue: $441 million vs $425 million expected Robinhood added 120,000 customers during the quarter, bringing the total to 23.1 million vs 23.05 million expected. The company made more money on deposits last quarter than trading, as it offered above-average interest rates. And stock-trading declined with monthly active users falling 26% year over year to 11.8 million. Robinhood announced it will allow 24 hour trading, Monday through Friday, on a select group of stocks starting next week.
Continue Reading -->Coffee With Greta: Inflation Is Cooling
DJIA Futures: +144 (+0.4%) SPX Futures: +29 (+0.7%) NASDAQ Futures: +103 (+0.8%) Good morning friends! Futures are jumping after a better-than-expected inflation report. Let’s get right to it! CPI Cools More Than Expected U.S. inflation pressures cooled more than expected in April. The Bureau of Labor Statistics’ consumer price index rose 0.4% monthly and 4.9% year over year. That monthly gain was in line with expectations and cooler than 5% annually expected. Used cars and gas prices saw the largest increases last month, up 4.4% and 2.7% respectively from March. The core CPI rose 0.4% monthly and 5.5% year over year, in line with estimates. I’m hosting a free Q&A with Scott Redler after the market close today to discuss the reaction to the CPI and more inflation data on the way. Register for free now! (*you must login to LinkedIn to sign-up) Airbnb Plunges On Q2 Warning Airbnb (ABNB) shares are plunging 14.2% ahead of the open after beating Q1 expectations but issuing weak Q2 guidance. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.18 vs $0.09 expected Revenue: $1.82 billion vs $1.79 billion expected Revenue rose 20% year over year and it was the first time Airbnb has been profitable in Q1 on a GAAP basis. The company said it had a “strong start” to the year and it’s looking forward to another “strong summer travel season”. But Airbnb also warned, “Nights and Experiences Booked will have unfavorable year-over-year comparisons in Q2 2023 as we overlap pent-up 2022 demand following the COVID Omicron variant.” The company forecast Q2 revenue between $2.35 billion and $2.45 billion vs analysts’ expectations for $2.42 billion. Rivian Jumps After Q1 Earnings Beat Rivian (RIVN) shares are jumping 8.9% in premarket trade after beating Q1 expectations and reaffirming its 2023 production target. Here’s how the electric truckmaker’s results compared to analysts’ estimates: Adjusted loss per share: $1.25 vs $1.59 expected Revenue: $661 million vs $652.1 million expected Rivian said it is still on track to meet its 50,000 vehicle production target for 2023. Roblox Flat After Missing Q1 Expectations Roblox (RBLX) shares are up 0.3% in premarket trade after reporting a wider loss and lower revenue than expected in Q1. Here’s how the video game company’s results compared to analysts’ estimates: Loss per share: $0.44 vs $0.40 expected Revenue: $774 million vs $766 million expected Roblox’s average daily active users jumped 22% year over year to 66 million while engagement hours rose 23% to 14.5 billion. Mortgage Demand Jumps After Fed Meeting Mortgage demand jumped last week after the Fed seemed to signal a pause in rate hikes. The Mortgage Bankers Association reported purchase applications rose 5% weekly and were 32% lower than a year ago. Refinance applications jumped 10% weekly and were down 44% annually. The average 30-year contract fixed rate fell to 6.48% from 6.5% the previous week. In Case You Missed It The President and top Congressional leaders appeared to make no progress on a debt ceiling deal Tuesday. Biden plans to host another meeting with the “big four” from Congress on Friday. He told reporters after Tuesday’s meeting, “Everyone in the meeting understood the risk of default. I made clear during our meeting that default is not an option.”
Continue Reading -->Coffee With Greta: Traders Await Inflation Data
DJIA Futures: -83 (-0.2%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -74 (-0.6%) Good morning friends! Futures are falling as traders digest the latest earnings ahead of key inflation data on Wednesday. Let’s get right to it! PayPal Slips Despite Earnings Beat PayPal (PYPL) shares are down 6.9% in premarket trade despite beating Q1 expectations on the top and bottom line. Here’s how the digital payments company’s results compared to analysts’ estimates: EPS: $1.17 vs $1.10 expected Revenue: $7.04 billion vs $6.98 billion expected But PayPal’s guidance for the current quarter was underwhelming. The company expects Q2 earnings on the low end of $1.15 to $1.17 per share vs analysts’ forecast for $1.17. PayPal forecast full-year adjusted earnings of $4.95 per share vs $4.87 per share previously. Palantir Rallies After Earnings Beat Palantir (PLTR) shares are jumping 15.4% ahead of the open after beating Q1 expectations and forecasting a full-year profit. Here’s how the software company’s results compared to analysts’ estimates: EPS: $0.05 vs $0.04 expected Revenue: $525 million vs $506 million expected Revenue increased 18% year over year with U.S. commercial revenue up 26%. The CEO said Palantir expects to remain profitable “each quarter through the end of the year.” The company forecast Q2 revenue between $528 million and $532 million and $2.19 billion to $2.24 billion for the full year. Lucid Falls After Q1 Miss, Lower Production Guidance Lucid Group (LCID) shares are dropping 10.1% ahead of the open after missing Q1 expectations and cutting its production guidance. Here’s how the electric automaker’s results compared to analysts’ estimates: Loss per share: $0.43 vs $0.39 expected Revenue: $149 million vs $204 million expected Lucid delivered 1,406 vehicles in Q1, making the average revenue per delivery $106,000 vs $133,000 in Q4. That indicates pricing has dropped faster than expected as analysts were anticipating $145,000 in revenue per vehicle. The CEO said, “We are on track to produce over 10,000 vehicles in 2023.” But Lucid’s forecast in Q4 was for production of 10,000 to 14,000 vehicles this year. Biden Hosts Debt Ceiling Negotiations President Biden will meet with Congressional leaders at the White House today for negotiations about raising the debt ceiling. The House Speaker, Senate Majority Leader, House Minority Leader, and Senate Minority Leader will all attend today’s meeting. This comes as the two sides remain at odds over an agreement to raise or suspend the debt ceiling. But Treasury Secretary Janet Yellen has warned the government will run out of money in early June. Yellen says the Treasury Department is already relying on “extraordinary measures” to pay its bills. Republicans have pushed for spending cuts in exchange for raising the debt ceiling but Democrats have labeled that a non-starter. Biden said Friday, “Those two are totally unrelated. Whether you pay the debt or not, doesn’t have a damn thing to do with what your budget is. They’re two separate issues.”
Continue Reading -->Coffee With Greta: Banks Rally, Inflation Week Begins
DJIA Futures: +82 (+0.2%) SPX Futures: +6 (+0.1%) NASDAQ Futures: -22 (-0.2%) Good morning friends! Futures are mixed as bank stocks extend Friday’s rally and traders look ahead to inflation data this week. Let’s get right to it! Regional Banks Extend Rebound Regional bank stocks are rallying again today after bouncing back on Friday. PacWest Bancorp (PACW) shares are leading the trend, up 35.2% ahead of the open. That adds to the bank’s 81.7% gain on Friday. PacWest slashed its dividend late Friday evening to just $0.01 per share vs $0.25 previously. The CEO also said the bank’s businesses remain “fundamentally sound”. Western Alliance Bancorp (WAL) shares are up 14.7% with the SPDR S&P Regional Banking ETF (KRE) up 2.5%. Tyson Foods Drops On Surprise Loss, Lower Outlook Tyson Foods (TSN) shares are tumbling 10% in premarket trade after reporting a surprise fiscal Q2 loss and cutting its full-year outlook. Here’s how the meat company’s results compared to analysts’ estimates: Adjusted loss per share: $0.04 vs $0.79 earnings per share expected Revenue: $13.1 billion vs $13.6 billion expected Tyson said beef and pork sales declined year over year while chicken and prepared foods sales rose. The company cut its fiscal 2023 revenue outlook to between $53 billion and $54 billion vs $55 billion to $57 billion previously. Inflation Week Traders are gearing up for the latest inflation data later this week. The April consumer price index will be released before the market open on Wednesday. Then the producer price index will be released Thursday morning. This data comes after the Fed seemed to hint last week that it was ready to pause rate hikes. But the Fed Chair emphasized that the bank will remain data-dependent for future decisions. Yellen’s Debt Ceiling Warning Treasury Secretary Janet Yellen continued to call on Congress over the weekend to raise the debt ceiling. She warned that a failure to do so would cause a “steep economic downturn” in the U.S. Yellen said, “Our current projection is that in early June, a day will come when we’re unable to pay our bills unless Congress raises the debt ceiling, and it’s something I strongly urge Congress to do.” She said the Treasury Department is already using “extraordinary measures” to avoid default. President Biden has invited the House Speaker, House Minority Leader, Senate Majority Leader, and Senate Minority Leader to a meeting at the White House on Tuesday to discuss an agreement on the debt ceiling.
Continue Reading -->Key ETF Levels This Week
We have mixed markets around the world with a slight positive feel. Friday’s solid jobs report quieted the recession debate. AAPL’s solid report with the tech action also helped the indices reclaim the 8/21 day moving averages again. We have the CPI and PPI this week. There’s some concern that they will stay elevated but that probably doesn’t alter the Fed’s course. The debate is over cutting rates in the second half of 2023, not if they need to continue to raise. We’ll see if 4084-4114 holds to clear 4147-4164 later this week. SPY reclaimed the 8/21 day again on Friday. Now we’ll see if it can hold $411ish to clear $413.74 to see the high of the range again. We’ll probably need benign CPI and PPI numbers to have it clear that. Tech continues to act best. QQQ’s cleared $318 fast to see $323 again. Now we’ll see if it can hold the $320 area to keep upper momentum. Now let’s look at some of the big index ETFs I watch: XLE hasn’t been special all year as I’ve mentioned many times. It broke $83 to see a low of $77.87. See if it can hold the $79 pivot now. XLF bounced Friday after four down sessions. I’d trim into early strength. Watch JPM for clues. I’d stay away aside from quick range trades. KRE: regional banks are still a problem. 3 banks went to zero. PACW cut the dividend and it’s up 32%. I would not chase it. KRE has resistance at $40.67-$41.28. IWM is choppy and lags but worth a look at times. It’s only a headwind when making lows. I guess it has room to the $179 area. ARKK had a rare gap up that held on Friday. Perhaps it can continue towards the $38 resistance downtrend line. That spot will be important. Scott Redler Positions Disclosure as of 2023-05-08 at 8.10.19 AM
Continue Reading -->What’s On Tap for Traders: May 8-12
Welcome to your weekly trading preview! We added a Table of Contents to help you jump around: Table of Contents This Week’s Trading CalendarThe Week in Review…It’s Inflation Time!Earnings Season Slows Down But It’s Not OverSo How Has Earnings Season Been?Traders Are in a Rotten MoodA Look at Sector Performance in 2023:Factoid of the WeekGet to Know Sami Abusaad This Week’s Trading CalendarClick the calendar image to enlarge it, then scroll down to see what’s coming down the pipe the week of May 8: The Week in Review…What a week! We survived:Big earnings from Apple (AAPL), AMD (AMD), Starbucks (SBUX), Shopify (SHOP), and Qualcomm (QCOM)The FOMC and ECB Rate DecisionsThe Nonfarm Payrolls ReportThe regional bank collapseAnd with Apple leading a big Friday surge, our big 4 horsemen ETFs recovered some of the midweek damage, with the QQQ’s even getting in the green for the week:Year-to-date, the QQQ’s are still crushing the other big ETFs thanks to huge moves in names like Apple, Nvidia (NVDA), and Microsoft (MSFT). The QQQ’s also have no exposure to banks or energy, which have underperformed. So it’s been smooth sailing in 2023:Now let’s look forward to next week. By the way, Scott Redler is hosting a free week in the Alpha Team VTF®, and he can walk you through all the events we’ll talk about. It’s Inflation Time!We’re walking into a big week for inflation… and it’s worldwide thing. Yes, the US has CPI on Wednesday and PPI on Thursday. Traders will be looking for evidence inflation is breaking down to support expectations that the Fed will pause after this past week’s 25 bps rate hike. The CME FedWatch Tool implies a 96.1% probability that the Fed does not hike at the June 14 Feed meeting. FedWatch also shows the market is pricing in a 38.1% chance of a 25 bps cut in July. We’ll see if the CPI/PPI numbers sway these expectations. And overseas, we get:Wednesday: Germany CPI, China CPI & PPIThursday: New Zealand Inflation ExpectationsFriday: France, Spain, Brazil, and Russia CPIEngland in particular has a busy economic calendar next week with:Monday: Retail SalesTuesday: House Price IndexThursday: Bank of England Rate Decision & Meeting Minutes, Industrial ProductionFriday: GDP, Manufacturing Production Earnings Season Slows Down But It’s Not Over85% of the S&P 500 have reported earnings (more on this below), but we’ve still got some notable reports hitting the tape this week. Several consumer names report, including PayPal (PYPL) on Monday, AirBnB (ABNB) and UnderArmour (UAA) Tuesday, and Disney (DIS) on Wednesday. Even with high inflation, The consumer seems to have unlimited money for things they desire (like iPhones and McDonald’s fries), so it will be interesting to see if these companies show strength or strain. AirBnB and Disney will also give us reads into travel demand. Electric vehicle enthusiasts will be watching Lucid Group (LCID) on Monday and Rivian Automotive (RIVN) on Tuesday. Tesla (TSLA) got slapped on earnings in April because of margin pressure, and Ford (F) is losing buckets of money in its EV business. We’ll find out if Lucid and Rivian do any better. And don’t forget about Carl Icahn! His company Icahn Enterprises LP (IEP) moved its report to Wednesday, May 10. IEP got smashed this week after Hindeburg Researched accused Icahn of accounting irregularities. Look at this rollercoaster of a chart — we’re all eager to see how this one turns out: So How Has Earnings Season Been?According to FactSet… not bad — at least relative to expecations. 85% of S&P 500 companies have reported, and so far:79% of companies beat EPS estimates75% of companies have beaten sales estimates.Earnings have declined by -2.2% vs. expectations for a -6.7% declineNobody’s celebrating a -2.2% decline in earnings but it’s not as bad as -6.7%. Remember, the market’s about expectations, and expectations were too low coming into earnings season. Speaking of low expectations… Traders Are in a Rotten MoodInvestors and traders remain remarkably bearish despite the market’s stability. According to AAII, just 24.1% of investors are bullish. That’s well below the 37.5% long-term average. Plus, AAII said “bullish sentiment is unusually low for the 50th time out of the past 70 weeks,” and “bearish sentiment is still above its historical average of 31.0% for the 71st time out of the past 76 weeks.” This is despite the SPY’s 7.8% gain in 2023 and the QQQ’s 21.2% rally. Now let’s dig below the surface to see what’s been working this year: A Look at Sector Performance in 2023:2023’s been a bizarre year. It’s almost like we’re risk on and risk off at the same time. On the risk on side: Housing (ITB) is leading the market despite a slowdown in housing, Tech (XLK, SMH) is booming and ARKK rebounded from a messy 2022. And on risk off, gold (GLD) is outperforming and Treasuries (TLT) are up. Who could have imagined both ARKK and gold outperforming? Factoid of the Week According to Bespoke Investment Group, nonfarm payrolls have exceeded economists’ estimates for 13 straight months.This chart is bonkers. Non Farm Payrolls has now exceeded expectations for a record 13 straight months. https://t.co/UaURbFdG6a pic.twitter.com/4urENerxmy— Bespoke (@bespokeinvest) May 5, 2023 Maybe we should stop trusting economists’ long-term predictions? After all, they can’t predict anything even one month out… Get to Know Sami AbusaadHow did Sami achieve greatness as a trader? Find out here:
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