Coffee With Greta: Focus Turns To Earnings
DJIA Futures: -114 (-0.3%) SPX Futures: -20 (-0.5%) NASDAQ Futures: -58 (-0.5%) Good morning friends! Futures are slipping as traders digest earnings and gear up for more Fed speakers today. Let’s get right to it! CVS Beats Q4 Expectations, Confirms Oak Street Acquisition CVS Health (CVS) shares are up 2.9% ahead of the open after beating Q4 earnings expectations and confirming it is buying Oak Street Health (OSH). Here’s how the healthcare giant’s results compared to analysts’ estimates: Adjusted EPS: $1.99 vs $1.92 expected Revenue: $83.85 billion vs $76.32 billion expected Revenue was up 9.5% year over year. CVS expects adjusted EPS of $8.70 to $8.90 in 2023, in line with estimates of $8.84. The company also announced an all-cash $10.6 billion deal to purchase primary-care provider Oak Street Health. CVS will pay $39 per share for the company, OSH shares are up 5% ahead of the open. CVS’s CEO said, “2022 was a year of progress, and we continue to build on that momentum with bold moves that will improve the health care experience.” Oak Street will become part of CVS’s Health Care Delivery organization and the company’s current CEO will continue to lead the unit. Uber Rallies On Earnings Beat Uber (UBER) shares are 7% higher in premarket trade after beating Q4 expectations on the top and bottom line. Here’s how the ride share giant’s results compared to analysts’ expectations: EPS: $0.29 vs $0.18 per share loss expected Revenue: $8.6 billion vs $8.49 billion expected Mobility gross bookings: $14.9 billion vs $14.8 billion expected Delivery gross bookings: $14.3 billion as expected Revenue jumped 49% year over year. The CEO said it was Uber’s “strongest quarter ever” capping off its “strongest year.” The company also hit 2 billion trips in a single quarter for the first time. Uber expects gross bookings to grow between 20% and 24% this quarter. Chipotle Falls On Disappointing Q4 Earnings Chipotle Mexican Grill (CMG) shares are falling 4.2% ahead of the open after reporting disappointing Q4 earnings. Here’s how the restaurant chain’s results compared to analysts’ estimates: Adjusted EPS: $8.29 vs $8.90 expected Revenue: $2.18 billion vs $2.23 billion expected It’s the first time Chipotle has missed expectations on the top and bottom line since Q3 2017. Same-store sales rose just 5.6% vs analysts’ expectations for 6.9%. The CFO said, “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see … frankly, we started the quarter soft, and we ended the quarter soft.” But the CEO said those weaker restaurant traffic trends have already reversed in the new year. Chipotle said it expects same-store sales growth in the high single digits this quarter while analysts are estimating 6.7% growth. The CFO said the company is not planning anymore price hikes this year. Mortgage Demand Jumps Mortgage demand jumped last week as rates fell for the fifth week in a row. The Mortgage Bankers Association reported total application volume jumped 7.4%. That was led by a surge in refinance applications, which rose 18% weekly but were still 75% lower year over year. Purchase applications rose 3% weekly and were 37% lower annually. The increase came as the average 30-year fixed contract rate fell to 6.18% from 6.19%. But those rates jumped sharply at the start of this week after the hot January jobs report on Friday and comments from the Fed chair that the bank could continue raising rates. More Fed Speakers Several Fed officials are scheduled to speak today, keeping the market on edge about the bank’s future plans. New York Fed President John Williams, Fed Governor Lisa Cook, Fed Vice Chair Michael Barr, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and Fed Governor Christopher Waller are all speaking at some point in the day. These speeches come after Fed Chair Jerome Powell spoke to the Economic Club of Washington on Tuesday. He said, “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy.” But he also said that process still “has a long way to go.” Powell highlighted the strong January jobs report as an issue saying, “if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.” In Case You Missed It Zoom (ZM) shares rallied 9.9% on Tuesday after announcing layoffs. The CEO made that announcement in a blog post. Zoom plans to cut about 15% of its workforce, impacting 1,300 employees. The CEO said the company needs to adapt to the “uncertainty of the global economy” and “its effect on our customers.” The stock is down 1.9% ahead of the open.
Continue Reading -->Coffee With Greta: Traders Await Powell
DJIA Futures: -114 (-0.3%) SPX Futures: -7 (-0.2%) NASDAQ Futures: -1 (-0.01%) Good morning friends! Futures are mostly lower as traders await a speech by Fed Chair Jerome Powell. Let’s get right to it! Powell On Deck Fed Chair Jerome Powell is scheduled to speak at an event at the Economic Club of Washington today. Powell’s speech is expected to begin around 12:40 p.m. ET. The market is monitoring this speech after the chairman struck a more dovish tone after last week’s rate hike. But after the January jobs report came in hot on Friday, Powell’s tone may shift back to be more hawkish. Minneapolis Fed President Neel Kashkari maintained his hawkish stance in an interview with CNBC this morning. Kashkari said, “We have a job to do. We know that raising rates can put a lid on inflation. We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.” He sees the federal funds rate peaking at 5.4% later this year, from the current range of 4.5% to 4.75%. But other Fed officials see the terminal rate around 5.1%. Kashkari highlighted the continued strength in the labor market as an issue. He said that data “tells me that so far we’re not seeing much of an imprint of our tightening to date on the labor market.” Pinterest Slips On Q4 Revenue Miss, Weak Outlook Pinterest (PINS) shares are falling 1% ahead of the open after missing Q4 sales expectations and issuing weak guidance. Here’s how the social media company’s results compared to analysts’ estimates: EPS: $0.29 vs $0.27 expected Revenue: $877 million vs $886.3 million expected Q4 revenue was up 4% year over year while overall sales for the year rose 9%. For the full-year, Pinterest logged a net loss of $96 million. The company forecast Q1 sales growth in the “low single digits” vs analysts’ expectations of 6.9% growth. But the CEO remains optimistic about the turnaround. He said, “While the industry as a whole is facing headwinds, we are adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.” Bed Bath & Beyond Collapses Bed Bath & Beyond (BBBY) shares are plummeting 37.5% in premarket trade after the company announced a new public offering to raise more than $1 billion. The company will be offering shares of Series A convertible preferred stock, warrants to purchase Series A shares, and warrants to buy the common stock. Analysts see this as a last ditch effort to raise cash before a bankruptcy filing. Wedbush analysts lowered their price target on the stock to $0 after the announcement. Oak Street Health Rallies On CVS Acquisition News Oak Street Health (OSH) shares are surging 34.6% ahead of the open on news CVS (CVS) is nearing a deal to buy the company. The Wall Street Journal reported today that CVS is close to an agreement to acquire Oak Street for about $10.5 billion including debt. That would price the company around $39 per share, the stock closed at $25.96 on Monday. Oak Street operates more than 160 primary-care centers across 21 states and focuses on patients enrolled in Medicare. Annual Trade Deficit Hits Record The U.S. trade deficit widened less than expected in December but the annual gap hit a record-high. The Commerce Department reported that gap increased 10% to $67.4 billion at the end of 2022. That was better than economists’ expectations of $68.5 billion. Meantime, the annual deficit jumped 12.2% to $948 billion in 2022. Exports rose 17.7% last year to $3 trillion while imports rose 16.3% to $4 trillion.
Continue Reading -->Swing Trading 101: How Sami Lost $65,000 Before He Hit It Big
Before I got into the stock market, I was a CPA. After 8 years of continuing education, I decided I’m not doing that anymore. So, I gave up my CPA license. But I had saved up $20,000 while I was going to college, and didn’t know what to do with it. I read about how Warren Buffett, the second richest man in the world, made all of his money from investing. So I was fascinated. And then I read about a 21-year old kid from New York, who made $1 million dollars the year before. I thought “I’m going to blow them out of the water.” That’s how competitive I was. Not arrogant, just competitive. So I opened an account with $16,000, and in 6 months, I made $10,000. 6 months after that, I had $50,000 We’re not talking big money here but I was amazed that I went from $16,000 to $50,000 in a year. My PhD brother said “if you can make that kind of money by buying and holding, imagine what you could do playing these active stocks. He was referring to the stocks on the new highs list. That’s when I got into day trading. And then in a few short months, I lost everything, and $15,000 more. So I lost $65,000 off the top. That when I realized I didn’t know as much as I thought I did. And I started to look for professional trading education. After that I participated in a trading challenge from Zacks.com. The winner of that challenge received $100,000 at the end of the year. I did rather poorly. But I did something achieved something than winning the challenge. I met the guy who who. He turned $100,000 into $2 million within a year. He wrote a blog post about his dad passing away. So I just sent him a heartfelt message expressing my condolences. And then we got to talking and then he told me that he had been a professional trader for 15 years. He learned from a system called Trading the Pristine ® method. He told me to check it out, so I did.The rest is history. I became a member of the community, and then I was invited to teach. I didn’t want to be a teacher. I just wanted to trade. But my house was being remodeled, and I thought I’d try it for 6 months during the construction. Before I knew it, I was a full-time trader and educator. Eventually, I was named Director of Education of T3 Live. Now let’s talk some actual trading. Throughout the course of my trading career, I realized that not everything works the same in all conditions. Some strategies are only suited for certain environments. So I’ve accumulated a number of strategies over the years that deploy based on market conditions. Today I’m going to talk about swing trading, which is my wealth-building tool. Day trading is for income. Institutional money can’t get in and out of the positions in a day or two. They’re trading millions upon millions of shares. So they’d like to hold for a long time. And they can push stocks up or down by quite a lot. So swing trading gives you the opportunity to take advantage of the institutions’ buying power. Scroll up and watch the video to learn more about Sami’s swing trading strategy.
Continue Reading -->Sami’s Swing Trade Game Plan This Week
Get Sami Abusaad’s swing trade game plan for this week: Find out: Sami’s key levels in SPY, QQQ, and IWM Why ACAD, ETSY, SQQQ, and YANG are on his bullish radar Why AIT, BILL, DB, and RIO could drop
Continue Reading -->META $197 Is the Level to Watch
SPX futures are -30 after hitting a high of 4195 last week. I sold the BOS account and reduced risk across all my trading accounts. Now we see what’s next. 4076-4094 is support zone number one (8 day support). The bigger area is 4015-4048. SPY gave nice opportunities long. It hit a high of $418.34 to reduce. On Friday, it gave signals to bring risk down. The first support area is $407-$408.64. If we see a move below that this week, the next big spot is $397.50ish-$401. QQQ’s hit a high of $313 last week. On Friday it closed below $306.73. Now we’ll see if there’s a 5-15-30 minute low to trade against, or if it reclaims $304.57. 8 day support is near $298ish. We have mostly red arrows around the world after a big start to 2023. Spain’s Hot CPI is putting some pressure on Europe, and most of China is lower after a holiday week. Now let’s dig into some individual names: META has a big earnings gap to be long against. This can give clues on the strength of the tape. See if it holds and up and clears $197. This will be a focus moving forward. It’s been very good to us since December. TSLA became my 2023 focus again on January 6 on the bullish engulfing candle. It hit $199 last week. In a sea of red, it’s up this morning. The SEC case was thrown out. This will remain a focus, but I did sell mine Friday. AAPL acted well post-earnings. This stock will give opportunities and clues to the tape. I’ll focus here a bit more. See if it holds $151ish or sees the $148 gap area. AMD had a strong move post-earnings. It seems like dips can be buyable if this market stays constructive. $83 is some support. $85.53 is Friday’s low. MSFT hit $263 and closed weak on Friday. It’s on the bottom of the list. See if it stays below $257.10 to fill the gap down to the $255 area. Scott Redler’s positions disclosure as of 2023-02-06 at 7.41.24 AM
Continue Reading -->Coffee With Greta: New Week Kicks Off
DJIA Futures: -197 (-0.6%) SPX Futures: -35 (-0.8%) NASDAQ Futures: -142 (-1.1%) Good morning friends! Futures are falling as traders look ahead to a busy week of earnings and an upcoming speech by Fed Chair Jerome Powell. Let’s get right to it! Tyson Shares Slides As Earnings Miss Tyson Foods (TSN) shares are falling 4.8% ahead of the open after missing fiscal Q1 expectations on the top and bottom line. Here’s how the meat processing company’s results compared to analysts’ expectations: Adjusted EPS $0.85 vs $1.31 expected Revenue: $12.93 billion vs $13.52 billion expected The CEO said, “We faced some challenges in the first quarter. Market dynamics and some operational inefficiencies impacted our profitability.” Beef sales dropped to $4.72 billion from $5 billion a year ago while pork sales fell to $1.53 billion from $1.63 billion. Tyson expects those sales declines to continue into the full year. The company said, “For fiscal 2023, the United States Department of Agriculture (USDA) indicates domestic protein production (beef, pork, chicken and turkey) should be relatively flat compared to fiscal 2022 level.” Tyson forecast fiscal 2023 sales to total between $55 billion and $57 billion vs analysts’ estimates of $55.19 billion. Dell Announces Layoffs Dell Technologies (DELL) shares are up 1.9% in premarket trade after announcing layoffs this morning. A new SEC filing shows the PC company plans to layoff 5% of its workforce. That would impact about 6,650 employees. In a memo to employees, the company’s co-COO said, “There is no tougher decision, but one we had to make for our long-term health and success.” Earnings In Focus This will be a quieter week of economic data with the market’s main focus being on earnings. Here’s a look at some of the companies scheduled to report this week: Monday PM: Activision Blizzer (ATVI), Pinterest (PINS), Spirit Airlines (SAVE) Tuesday PM: Chipotle (CMG) Wednesday AM: CVS (CVS), Uber (UBER) Wednesday PM: Walt Disney (DIS), Robinhood (HOOD) Thursday AM: Pepsico (PEP), Kellogg (K) Thursday PM: PayPal (PYPL), Lyft (LYFT) Fed Speakers Hit The Circuit The Fed also remains in focus this week with several central bank officials set to give speeches over the next two days. Fed Chair Jerome Powell is scheduled to speak at the Economic Club of Washington at 12:40 p.m. EST on Tuesday. Vice Chair Michael Barr will also give a speech Tuesday afternoon. Then on Wednesday several officials are scheduled to speak throughout the day: New York Fed President John Williams Fed Governor Lisa Cook Vice Chair Michael Atlanta Fed President Raphael Bostic Minneapolis Fed President Neel Kashkari Fed Governor Christopher Waller Traders are monitoring these speeches for more hints about the bank’s future plans for rate hikes. After last week’s Fed meeting, Powell struck a more dovish tone saying for the first time that the “disinflationary process has started. The Fed has penciled in two more rate hikes this year followed by a pause with no cuts until 2024. But CME Group’s FedWatch Tool shows the market pricing in as many as two rate cuts before the end of 2023.
Continue Reading -->Coffee With Greta: Piping Hot Jobs Report
DJIA Futures: -189 (-0.6%) SPX Futures: -45 (-1.1%) NASDAQ Futures: -224 (-1.7%) Good morning friends! Futures are tumbling after the release of a piping-hot January jobs report. Let’s get right to it! Job Growth Surges U.S. job growth surged past expectations in January. The Labor Department reported the U.S. economy added 517,000 jobs last month with the unemployment rate falling to 3.4%. That was sharply higher than expectations for 187,000 jobs and the unemployment rate to tick up to 3.6%. It was the strongest monthly gain since July 2022 and the lowest unemployment rate since May 1969. The leisure and hospitality sector continued to lead the monthly gains, adding 128,000 jobs. While job creation surged, wages also posted solid gains. Average hourly earnings rose 0.3% monthly and 4.4% year over year. The data is bad news for traders who are betting the Fed will pause rate hikes after March and approve two rate cuts at the end of the year. The central bank has said it needs to see a weakening in the labor market to make a real difference on inflation. Treasury Yields Surge After Hot Jobs Report U.S. Treasury yields are rallying this morning after the release of that hot jobs report. The 2-year yield is up 14 basis points to 3.42% while the 10-year yield is up 9 basis points to 3.5%. The new data underscored the strength of the U.S. labor market even in the face of the Fed’s aggressive monetary policy. Apple Drops On Big Earnings Miss Apple (AAPL) shares are falling 1.9% ahead of the open after reporting its largest quarterly revenue decline since 2016. Here’s how the iPhone maker’s fiscal Q1 results compared to analysts’ expectations: EPS: $1.88 vs $1.94 expected Revenue: $117.15 billion vs $121.10 billion expected That was Apple’s first EPS miss vs expectations in nearly seven years. Sales in the key holiday quarter dropped 5.5% from a year ago, the first year-over-year decline since 2019. Apple CEO Tim Cook blamed the weak results on the strong dollar, production issues in China for the iPhone 14 Pro and Pro Max, and the overall macroeconomic environment. The company did not provide fiscal Q2 guidance. Amazon Falls On Light Guidance Amazon (AMZN) shares are dropping 5.8% in premarket trade as light guidance overshadows a Q4 revenue beat. Here’s how the tech giant’s results compared to analysts’ expectations: EPS: $0.03, not comparable to estimates because of a $2.3 billion pre-tax non-cash loss on the value of the company’s stake in Rivian Revenue: $149.2 billion vs $145.42 billion expected Amazon Web Services Revenue: $21.4 billion vs $21.87 billion expected Advertising Revenue: $11.56 billion vs $11.38 billion expected Amazon’s Q4 sales were higher than its own prior guidance while its $2.7 billion in operating income was in line with estimates. The company’s full-year 202 sales totaled $514 billion, up 9% year over year. Amazon lost $2.7 billion last year, including a $12.7 billion loss from its position in Rivian (RIVN). The company expects Q1 revenue to range between $121 billion and $126 billion, sharply missing analysts’ estimates of $139.2 billion. CEO Andy Jassy said, “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.” Alphabet Misses Q4 Expectations Alphabet (GOOGL) shares are 4% lower ahead of the open after missing Q4 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $1.05 vs $1.18 expected Revenue $76.05 billion vs $76.53 billion YouTube ad revenue was the biggest drag on overall sales, coming in at $7.96 billion vs $8.25 billion expected and down from $8.63 billion the year before. Alphabet said it will incur a charge of between $1.9 billion and $2.3 billion, mostly in the current quarter, related to the layoffs it announced in January. Ford Misses Q4 Profit Expectations, Reports Full-Year Loss Ford (F) shares falling 7.6% in premarket trade after missing Q4 profit expectations and reporting a net loss for the full-year. Here’s how the automaker’s results compared to analysts’ expectations: Adjusted EPS: $0.51 vs $0.62 expected Automotive revenue: $41.8 billion vs $40.37 billion expected Ford’s profits were $11 billion lower than Q4 2021. For the full year, the company lost $2 billion. CEO Jim Farley said, “We should have done much better last year. We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.” CFO John Lawler said the disappointing earnings were mainly due to execution and supply chain management issues. He said, “Our cost structure is not competitive. Our quality is not where it needs to be. And we will take the actions and be more aggressive about making sure that we’re making progress on both of those key areas for us in 2023.” Ford said it expects to earn between $9 billion and $10 billion in adjusted ebitda this year. Starbucks Drops After Fiscal Q1 Miss Starbucks (SBUX) shares are down 2.2% ahead of the open after missing fiscal Q1 expectations. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.75 vs $0.77 expected Revenue: $8.71 billion vs $8.78 billion expected The miss was mainly due to lower sales in China, the company’s second-largest market. Same-store sales in China plunged 28% last quarter while same-store sales in the U.S. rose 10%. Starbucks expects 10% to 12% revenue growth this year and adjusted EPS growth of 15% to 20%. In Case You Missed It Coinbase (COIN) shares surged 24% on Thursday after a federal securities suit was dismissed. A federal judge dismissed the class-action suit against the company Wednesday. The complaint claimed that Coinbase had engaged in the unregistered sale and offering of securities and failed to register as a New York state broker-dealer. The suit was dismissed with prejudice which means the plaintiffs cannot refile the same case.
Continue Reading -->Coffee With Greta: Meta Bets Big On Its Future
DJIA Futures: -27 (-0.1%) SPX Futures: +30 (+0.7%) NASDAQ Futures: +213 (+1.7%) Good morning friends! Futures are mixed with tech stocks rallying after a big stock buyback announcement from Meta. Let’s get right to it! Meta Surges Meta Platforms (META) shares are surging 19.5% ahead of the open after beating Q4 revenue expectations. Here’s how the social media giant’s results compared to analysts’ expectations: EPS: $1.76 vs $2.26 expected Revenue: $32.17 billion vs $31.53 billion expected Daily Active Users (DAUs): 2 billion vs 1.99 billion expected Monthly Active Users (MAUs): 2.96 billion vs 2.98 billion expected Average Revenue per User (ARPU): $10.86 vs $10.63 expected The market shook off the profit miss after the company also announced a $40 billion stock buyback. That was a signal the company is feeling good about its future. Meta forecast Q1 revenue between $26 billion and $28.5 billion, in line with analysts’ estimates of $27.1 billion. CEO Mark Zuckerberg said, “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.” The company expects its total expenses in 2023 to range between $89 billion and $95 billion, lower than the previous outlook of $94 billion to $100 billion. Meta’s bet on the metaverse continued to cost it money though. The company’s Reality Labs unit lost $4.28 billion in Q4 and $13.72 billion in all of 2022. Meta said, “Reality Labs operating losses in 2023 will grow significantly year-over-year.” FedEx Laying Off Officers, Directors FedEx (FDX) shares are up 3.1% in premarket trade after announcing it will lay off 10% of its officers and directors. The corporate job cuts are part of efforts to cut costs as consumer demand falls. The CEO said, “this was a necessary action to become a more efficient, agile organization.” The cuts come on top of FedEx’s previously announced plan to slash $1 billion in costs by parking planes and shutting down some offices. The company is aiming to cut about $3.7 billion total this fiscal year. Tesla Expected To Increase Shanghai Output Tesla (TSLA) shares are rising 2.6% ahead of the open following a Reuters report the automaker is planning to raise output at its Shanghai factory. The EV maker has reportedly seen increased demand following price cuts it announced in early January. A memo seen by Reuters said Tesla plans to produce a weekly average of nearly 20,000 units at the Shanghai location in February and March. The move to increase production comes after the company cut output in December by about a third from November as it faced lower demand. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly at the end of January. The Labor Department reported 183,000 Americans filed initial claims for unemployment benefits last week. That was down by 3,000 from the week before and lower than 195,000 expected. It was the lowest level of claims since April 2022. Continuing claims also fell by 10,000 to 1.66 million in the week ending January 21. ECB Hikes Rates By 50bp The European Central Bank voted in favor of another 50 basis point rate hike today. In a statement, the bank vowed to “stay the course in raising interest rates significantly at a steady pace.” The ECB said it plans to hike by another 50bp in March and then future decisions will be data-dependent. Today’s hike put the eurozone’s key rate at 2.5%. Although eurozone inflation fell for the third straight month in January, headline inflation remains at 8.5% as high energy prices squeeze consumers. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Apple (AAPL) Amazon (AMZN) Alphabet (GOOGL) Ford (F) In Case You Missed It The Fed hiked rates as expected by 25bp on Wednesday. The FOMC voted unanimously for that hike and said more hikes are still appropriate. But stocks rallied after the Fed chair struck a more dovish tone during his press conference. Jerome Powell told reporters, “we can now say for the first time that the disinflationary process has started.” The market is betting on 2 rate cuts at the end of this year but Powell said, “Given our outlook, I don’t see us cutting rates this year, if our outlook comes true.”
Continue Reading -->Trading Tips from ChatGPT: Are They Awful?
Do you know how long it took big tech and social media companies to reach 1 million users? Netflix: 3.5 years Airbnb: 2.5 years Twitter: 2 years Facebook: 10 months Spotify: 5 months Instagram: 2.5 months But do you know how long it took OpenAI’s ChatGPT app to get its first 1 millon users? 5 days! Artificial Intelligence is on everyone’s minds. People are using AI for things like high school assignments, college papers, virtual receptionists, and customer service. Buzzfeed is even replacing journalists with AI. As traders, we must ask ourselves can we trade with ChatGPT? So we asked ChatGPT a query about trading:: “Give me 7 tips for stock trading that I can’t find in mainstream books, articles, or videos. Tell me what the best pros do and be very specific.” Now let’s rate ChatGPT’s answers! ChatGPT Trading Tip #1: Develop a solid risk management strategy. This includes setting stop-losses, diversifying your portfolio, and having a plan for both short-term and long-term investments. My Score: 6/10 Solid risk management is one of the most important elements of trading. ChatGPT Trading Tip #2: Utilize fundamental analysis in addition to technical analysis. While technical analysis looks at charts and past price movements to predict future trends, fundamental analysis examines a company’s financial and economic fundamentals to assess its true value. My Score: 1/10 The best way to go out of business as a day trader is to worry about fundamentals and technicals. This is one of the worst tips I’ve ever gotten from a robot. As a day trader, I am looking at technical signals and price action to determine my buy and sell decisions. A stock may be attractive on fundamentals but ugly on technicals. So if I listen to my fundamental bias, I might lose my shrt. ChatGPT Trading Tip #3: Keep an eye on global events and their potential impact on the markets. This could include political elections, natural disasters, or economic policy changes. My Score: 6/10: Tape bombs hit the market almost every day. It is very important to understand the potential effect. What ChatGPT misses is that a good trader understands the relationship between different possible events and macroeconomic indicators, and how those can possibly affect the equity markets. ChatGPT Trading Tip #4: Take advantage of options trading. Options trading can provide a way to hedge against potential losses in your portfolio, as well as offer additional income through selling options. My Score: 6/10 A really fast way to lose a lot of money is to be a beginner trader. An even faster way to lose a lot of money is to be a beginner options trader. Options trading can be a very helpful vehicle in terms of hedging trades and portfolios, and the selling of options or options right can be a profitable source of income. It is also something that requires education, skill, and proper risk management. So I’ll give it a six out of ten. ChatGPT Trading Tip #5: Consider the use of algorithmic trading. Algorithmic trading uses computer programs to make trades based on a set of rules and conditions, which can help remove emotional biases from the trading process. My Score: 2/10 Oh boy. I feel a rant coming. I’ve worked with a lot of algorithmic traders. Do you know who loses most to algorithmic traders? It’s other algorithmic traders. So if you think you’re gonna write an algo and go toe-to-toe with Citadel, I have a bridge in Brooklyn to sell you. Algorithmic trading can be very helpful if you have the resources, the bandwidth, and the computing power to do it properly. Then there’s whole idea of removing emotional biases from trading. To some extent, you should remove biases from trading. This idea that traders can just write a program that will trade their idea without their emotions is nonsense. You’re always going to be emotional. You’re always going to have emotions. You have to get over that. You have to embrace the fact that you are an emotional being. ChatGPT Trading Tip #6: Don’t be afraid to ask for help. Many successful traders have mentors or belong to trading groups where they can share ideas and insights. My Score: 10/10 “I can succeed at trading without any help,” said no successful trader ever. The idea that you can be a lone wolf and never get any help is is preposterous. It’s about as easy as launching yourself to the moon. It’s just not going to happen. This is ChatGPT’s best tip by far. You need help. You need mentorship. You need an accountability partner. You need someone to help you figure out a strategy that works. You must understand risk management, technical analysis, and the craft of trading. It takes a team. I almost said “it takes a village” but I stopped just short of that! ChatGPT Trading Tip #7: Continuously educate yourself. The market and economy are constantly changing, so it’s important to stay up-to-date on new developments and strategies in the trading world. My Score: 8/10 This is a good one. It’s funny. There’s an interesting duality here. The fundamentals of markets never change. They were the same 100 years ago when the fathers of technical analysis were writing their books. But every day you wake up and the market has a different personality The dynamics of the market are constantly changing. Price action is constantly changing. So, it is one of those paradoxes where the fundamentals of technical analysis never change and you never see anything new. On the other hand, everything constantly changes, as far as how they move. The most important thing I would tell a beginner trader is to stay up-to-date with developing strategies in the trading world. Understand what’s moving certain markets. Understand the personality of the market you’re trading. That would be the first thing. And a big part of your continuing education is to practice the virtues that got you there to begin with. That would be
Continue Reading -->Coffee With Greta: Traders Wait For The Fed
DJIA Futures: -136 (-0.4%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -7 (-0.1%) Good morning friends! Futures are lower as traders wait for the Fed. Let’s get right to it! Private Job Growth Slows Sharply Private sector job growth slowed more than expected at the beginning of 2023. Payroll firm ADP reported U.S. private employers added 106,000 jobs in January. That was lower than economists’ expectations for 190,000 and down from 253,000 in December. The hospitality industry continued to see the largest gains, adding 95,000 workers. Financial activities sector added 30,000, manufacturing added 23,000, and education and health services added 12,000. But the trade, transportation, and utilities sector lost 41,000 jobs, construction lost 24,000, and natural resources and mining fell by 3,000. Pay rose 7.3% year over year, relatively unchanged from December. But ADP’s chief economist said severe weather impacted the numbers and job growth may not have been as weak as this report indicates. The Fed has been looking for the labor market to weaken as it hikes interest rates to slow inflation. Today’s data comes ahead of the official January jobs report on Friday which is expected to show the U.S. economy added 187,000 jobs and the unemployment rate ticked higher to 3.6%. AMD Tops Q4 Estimates Advanced Micro Devices (AMD) shares are up 3.2% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $0.69 vs $0.67 expected Revenue: $5.6 billion vs $5.5 billion expected The company continued to see slowing sales of its PC chips and graphics processors. But data center sales jumped 42% year over year while its embedded segment saw sales skyrocket 1,868% due to its purchase of chip manufacturer Xilinx. AMD forecast $5.3 billion in Q1 sales, which would be a 10% decline year over year and missed analysts’ estimate of $5.47 billion. Snap Tumbles On Revenue Miss Snap (SNAP) shares are falling 13% in premarket trade after its Q4 sales came up short. Here’s how the social media giant’s results compared to analysts’ expectations: Adjusted EPS: $0.14 vs $0.11 expected Revenue: $1.30 billion vs $1.31 billion expected Global daily active users: 375 million vs 375.3 million expected Average revenue per user: $3.47 vs $3.49 expected In a letter to investors, Snap called 2022 a “challenging year” marked by “macroeconomic headwinds, platform policy changes, and increased competition.” Sales rose 12% for the full year to $4.6 billion but the company declined to provide guidance for Q1. Snap said, “On the monetization side, we anticipate that the operating environment will remain challenging, as we expect the headwinds we have faced over the past year to persist throughout Q1.” Peloton Rises On Strong Fiscal Q2 Revenue, Narrowing Loss Peloton (PTON) shares are up 6.1% ahead of the open after reporting better-than-expected fiscal Q2 revenue. Here’s how the fitness equipment maker’s results compared to analysts’ expectations: Loss per share: $0.98 vs $0.64 expected Revenue: $792.7 million vs $710 million expected Although that loss was steeper than estimates, it was down from a loss of $1.39 per share a year earlier. It was the eighth quarterly loss in a row for the company. Peloton’s CEO called the results a possible “turning point” for the business as he focuses on an aggressive turnaround strategy. The company’s subscription revenue was higher than sales of its equipment for the third quarter in a row. Peloton’s connected fitness product sales dropped 52% year over year while subscription revenue jumped 22%. The company forecast sales will fall in the current quarter to a range of $690 million to $715 million. That was in line with analysts’ estimates for $692.1 million. Mortgage Demand Pulls Back Mortgage demand fell last week despite rates continuing to fall. The Mortgage Bankers Association reported total application volume fell 9% weekly. Purchase applications fell 10% weekly and were 41% lower year over year. Refinance applications dropped 7% weekly and 80% annually. The drop came despite the average 30-year fixed contract rate falling to 6.19% from 6.2%. MBA’s chief economist said buyers are still struggling with tight supply but activity is expected to increase soon. He said, “Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth.” Coming Up: JOLTS and Fed Decision The Labor Department releases its December job openings and labor turnover survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the number of vacant jobs fell to 10.3 million at the end of 2022 from 10.5 million in November. The Fed then releases its first rate decision of the year at 2:00 p.m. ET followed by Chairman Jerome Powell’s press conference at 2:30. CME Group’s FedWatch Tool shows over 99% of traders expect the bank to raise the federal funds rate by 25 basis points. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Meta Platforms (META) In Case You Missed It Consumer confidence fell unexpectedly at the beginning of the year as Americans grew wearier of an impending recession. The Conference Board’s consumer confidence index fell to 107.1 in January from a revised 109 in December. That missed economists’ expectations for an increase to 109.5. The drop was mainly due to a decline in the expectations index which fell to 77.8 from 83.4. Any reading below 80 typically signals a recession within the next year. PayPal (PYPL) announced plans to lay off 2,000 employees on Tuesday. Those cuts represent about 7% of the company’s workforce. PayPal’s president and CEO said the company is working to address the “challenging macroeconomic environment.”
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