Coffee With Greta: Is This Netflix’s Big Comeback?
DJIA Futures: -186 (-0.6%) SPX Futures: -28 (-0.8%) NASDAQ Futures: -76 (-0.7%) Good morning friends! Futures are dropping despite strong Q3 results from several companies as economic concerns continue to weigh on the market. Let’s get right to it! Netflix Crushes Earnings Expectations Netflix (NFLX) shares are surging 11.1% ahead of the open after crushing Q3 earnings and user growth expectations. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $3.10 vs $2.13 expected Revenue: $7.93 billion vs $7.837 billion expected New global paid net subscribers: 2.41 million vs 1.09 million expected That user growth was more than double Netflix’s own projection for just 1 million and 1.43 million of the total were in the Asia Pacific region. The company expects to add 4.5 million subscribers in the next quarter and revenue of $7.8 billion. Netflix said it is “very optimistic” about its new ad supported tier that launches next month. United Airlines Rallies After Reporting Q3 Profit, Upbeat Outlook United Airlines (UAL) shares are up 5.4% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $2.81 vs $2.28 expected Revenue $12.88 billion vs $12.75 billion expected Revenue was up 13% from Q3 2019 as travelers paid higher prices for flights. United forecast adjusted EPS of $2.25 per share in Q4, sharply higher than analysts’ estimates of $0.98. The airline said it “now expects fourth quarter adjusted operating margin to be above 2019 for the first time.” Higher Prices Boost Procter & Gamble Procter & Gamble (PG) shares are up 1.6% ahead of the open after fiscal Q1 expectations. Here’s how the consumer goods giant’s results compared to analysts’ estimates: EPS: $1.57 vs $1.54 expected Revenue $20.61 billion vs $20.28 billion expected Higher prices for its products offset a 3% decline in sales volume. The CFO said, “We feel very good about the consumer reaction to our price increases because we don’t see any major trade downs.” P&G expects net sales to decline 1% to 3% in fiscal 2023 and EPS growth to be at the low end of its prior forecast of flat to up to 4%. Housing Starts Tumble New home construction fell more than expected in September. The Commerce Department reported housing starts dropped 8.1% last month to a seasonally adjusted annual rate of 1.439 million units vs 1.47 million expected. Starts were down 7.7% year over year as high rates put pressure on the market. Single-family starts fell 4.7% while multi-family starts tumbled 13.1%. Building permits rose 1.4% to a seasonally adjusted annual rate of 1.564 million units vs 1.54 million expected. Mortgage Demand Drops to 25-Year Low Mortgage demand hit a 25-year low last week as rates continue to climb. The Mortgage Bankers Association reported purchase applications fell 4% weekly and were down 38% year over year. Refinance applications fell 7% weekly and 86% annually. The drop came as the average 30-year fixed contract rate rose to 6.94% from 6.81%. That’s the highest rate on the MBA index since 2002. More buyers turned to adjustable rate mortgages amid the higher rates. The ARM share of applications rose to 12.8% last week, the highest since March 2008. Upcoming Earnings Here are the key companies set to report earnings after the market close today: Tesla (TSLA) IBM (IBM)
Continue Reading -->How Kira Turner Went from Extreme Athlete to Top Trader
Get to know Kira Turner, one of our Inner Circle moderators, in this in-depth interview. Interview Transcript* *this transcript has been edited for length and clarity Michael Comeau: Kira is a full-time professional trader out of Austin, Texas, where she lives with her three children and two dogs. She was a pro trader in the nineties, trading at cornerstone trading from 1994 to 2001. Then she moved into real estate investing, and she back to trading in 2018. One of the really interesting things about Kira is she has a lot of experience in what some would consider high risk activities. Namely rodeos. and skydiving. It turns out that rodeos are pretty dangerous about — about 20 times more dangerous than football in terms of the risk of a catastrophic injury. So this is going to be a really interesting conversation about developing nerves for trading, managing risk and keeping your head together. Kira Turner: Thank you. It’s good to be here and I never would have realized that radios were so dangerous. That’s a very interesting statistic. MC: Would you have done it if you know it was so dangerous in the first place? KT: When you’re young, you think you’re bulletproof. And so I never thought I would get hurt really doing anything. I got a couple of concussions and I had a couple of broken bones. So you can get hurt, but you never think ABOUT that when you’re a kid. MC: So that’s going to bring us to a different kind of starting point than usual. I want to talk a little bit about the type of person you are. How would you describe your own personality? KT: I would describe myself as a glass half full kind of person. So, I’m always looking for the bright side. And I’m pretty easy going, but I’m very driven, as far as making changes goes. If I see something I don’t like, you know, in myself, or in my house, or whatever, I think, what are the steps I need to take to change that? And I’ll just be on a path toward achieving my goal. And that’s been pretty consistent throughout my life. If I decide I want something, I figure out how I need to get there, and then I head in that direction. MC: How does that relate to your trading, and how you manage risk on a day to day basis? Are you saying you have little attachment to what’s in front of you? KT: I don’t know if I would say that, but sometimes it’s good not to have too much attachment. Today was a really hard day. In fact, you’re probably interviewing me on one of the hardest trading days of the year. What I will do this evening is probably take a long walk and really think about what I did today. What I could have done better, if there were trades that I took too much risk on, or should have taken more risk on, and that kind of thing. So I’ll just kind of replay today and focused on how to make it better. MC: Can you give me an example:? KT: At one point I got short the futures. There was a slow downtrend, and I didn’t take profit when I had it. I had about 100 points of profit. And I thought we would move up a little bit and then just continue our nice slow downtrend. That didn’t happen. So I ended up giving back a fair amount of my profit just to try to stay in the trade. Because on trend days, I like to get in and just keep moving my stop and just today it wasn’t the day for that. I’m should have been more careful. MC: I want to compare this to rodeos specifically. What is the mix of confidence, fear and excitement on a day like this vs. when you’re about to get on a 1,200 pound horse that could kick you in the head? How did those emotions mix for you? KT: In both cases, it’s a performance, right? So you’ve got a certain amount of time where you need to do something. It’s so psychological in both cases, and you’ve got to be mentally prepared. The key component is knowing what your risk is. On a horse, your risk might be falling off, or the horse stumbles and falls or something like that. In the market, I can control my risk even better because, depending on the size of my position, I can control how much money is at risk. Part of what I love about trading is the excitement, but it’s also because I know how much risk that I have. MC: That’s an interesting point. Because technically, anything could happen. We have all these economic issues, geopolitical issues. Everything is going crazy. So how do you assess how much is actually at risk? KT: Well, for instance, I’ve got a small biotech stock and it’s around $4. I know that, even if the whole market falls apart, it’s not probably going to go under $3.50. That’s just a low-risk position for me, so I don’t worry about that. If I’m in something that’s likely to move a lot, or that I’m afraid might move a lot, I would use options. My risk would be limited to the amount of premium that I’ve paid. If I’m actually in stock, and I’m worried about it, I lower my size. Something I’ve talked to Inner Circle members a bunch about is that if you have a lot of anxiety about a trade, and that’s keeping you up at night, for sure, you need to be in less size. If you’re worried that a loss can really damage your account and hurt your ability to trade because it eats up too much of your capital loss, then you’re in too much. You need to have a smaller position, and take
Continue Reading -->The 7 Unbreakable Rules of Bear Market Trading
A bear market can leave you broke, angry, and feeling like a fool. The bear doesn’t just want your money. He wants your sanity, confidence, and self-respect. In a bull market, you get rewarded for taking risks. And the bigger the risks, the bigger your profits. Remember 2020 through early 2021? If you bought stocks, you did well. But if you bought cryptos, NFT’s, Lamborghinis, Miami real estate, and Rolex watches, you did even better. But in a bear market, you can do what feels responsible… and still get your head handed to you. So I want you to take my 7 unbreakable rules of bear market trading and put them to work for yourself. Starting with… Rule #1: Do Not Buy Stocks Just Because They Are Down A few weeks ago, a colleague asked me: “Should I buy Zoom (ZM)? It’s down 87% off the highs and at pre-Pandemic levels.” My answer was no. And you should be able to guess why. Zoom is at $78 right now. You could have made the same “but it’s down so much” case at $100 when it was 83% off the highs. Or at $125 when it was 79% off the highs. You buy a stock because you can make a strong case for it going up. Not because it dropped by some random percentage. Because if a stock can go from $588 to $78, don’t count out $68 or $58, because… Rule #2: The Fundamentals Just Don’t Matter Sometimes According to SlickCharts.com, just 87 stocks in the S&P 500 are up this year. And most of the names in the green are in energy, defense, health care, and consumer staples. That makes sense because of the war in Ukraine and the Fed’s tighter monetary policy. So if you made money this year, it’s because you understood the environment. You most likely did some combination of the following: Got long energy Shorted tech/growth names Focused on short-term trading. It certainly hasn’t been analyzing cash flow statements and forecasting earnings. In fact, I’ve been telling my community over and over that this coming earnings season is not about earnings. Yes, there are times when fundamentals matter, but right now, it’s about whether the Fed gets back on our side. And as we saw in 2009, the market bottomed way before the numbers got better. Rule #3: Buy Ugly and Sell Beautiful One of the most unusual things about a bear market is how hard stocks can rally. The market can be on the verge of death… only to skyrocket faster and harder than you can ever imagine. But the strength tends to disappear in a flash. It’s like the sellers are pulling a prank on you. So you have to buy when it feels most wrong to buy. And you have to sell when it feels like the market is finally turning around. Take this XBI chart. As you can see, I sold some at point B, and it kept going up. You could say I sold that piece too early, but I know from experience that in this market, those gains could have been gone just minutes later. And of course, I sold more at point C, after which XBI dropped. This process of trimming and trailing has been key to Inner Circle’s success in the 2022 bear market. Rule #4: Leave Emotion At The Door This is easier said than done. But, I have a simple rule for managing your emotions when the market is spiraling out of control: Size down, because size dictates emotion. That applies whether you are going long or short. The more money you have on the line, the more stressed you’ll feel. So you don’t want to press too hard. Because when you’re wrong, your losses will be smaller. And yes, you must get used to taking losses. And when you’re right, you’ll tell yourself “I knew I should have bought more.” But you have to remember that since bear market rallies are so powerful, you can make quite a bit of money from smaller positions. So don’t worry about missing out. As long as you can hit singles and doubles while minimizing your losses, the money will pile up. Rule #5. Averaging Down is Pointless In a bear market, you could be tempted to buy a stock like Tesla (TSLA) at $250. Then you’ll watch it tick down to $245, then $240. So you buy a few hundred more shares. It hits $230 and you buy another 100 shares. And so on. Before you know it, you’re out $100,000 because you bought a “good” stock on sale. And just because the bear can be so cruel, you hit the eject button… right before the stock goes up $100 in a week off a strong earnings report. Instead, be ready to dump anything that is not working. Since bear markets gyrate so much, odds are you’ll have another chance to get in down the road. Averaging down is for bull markets only. And even then you have to be careful. Rule #6: Always Have Capital on Hand Bull markets always push things too high. And on the flip side, bear markets always push things too low. You must always have capital on hand, because you want to put money to work at the extremes. And if you play it right, you can make life-changing money. Do you realize that you could have bought Apple (AAPL) under $3 in 2009? (adjusted for splits) If you bought 1,000 shares at $3, you’d be sitting on a $142,000+ position today and you’d even be collecting some dividends. These opportunities don’t come along every day, but you only need a few of them! Rule #7: Don’t Be a Hero Unless You Look Great in Tights As general life advice, you should try to be the hero in your own story. But you’re not in a movie about a trader that’s one trade away from fixing their life. Sorry Kevin
Continue Reading -->Coffee With Greta: Stocks Extend Rally On Strong Earnings
DJIA Futures: +622 (+2.1%) SPX Futures: +82 (+2.2%) NASDAQ Futures: +269 (+2.4%) Good morning friends! Futures are rallying following a series of strong earnings reports this morning. Let’s get right to it! Goldman Sachs Rallies On Earnings Beat Goldman Sachs (GS) shares are up 3.3% ahead of the open after topping Q3 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ expectations: EPS: $8.25 vs $7.69 expected Revenue: $11.98 billion vs $11.41 billion expected Profit was down 43% year over year while revenue fell 12%. Both fixed-income and equities trading revenue topped expectations, offsetting a miss in investment banking revenue. Goldman’s asset management and consumer & wealth management divisions also beat estimates. CEO David Solomon officially announced a corporate reorganization that was reported earlier this week. He said, “Today, we enter the next phase of our growth, introducing a realignment of our businesses that will enable us to further capitalize on the predominant operating model of One Goldman Sachs. We are confident that our strategic evolution will drive higher, more durable returns and unlock long-term value for shareholders.” Hasbro Earnings Squeezed By Inflation Hasbro (HAS) shares are slipping 0.6% in premarket trade after reporting mixed Q3 results. Here’s how the toy maker’s results compared to analysts’ expectations: Adjusted EPS: $1.42 vs $1.52 expected Revenue: $1.68 billion, in line with estimates The CEO said Hasbro’s third quarter “was further impacted by increasing price sensitivity for the average consumer” as high prices squeeze buyers. The company maintained its full-year forecast for revenue growth to be flat or slightly down. Albertsons Beats Fiscal Q2 Estimates Albertsons (ACI) shares are up 1% ahead of the open after beating fiscal Q2 expectations on the top and bottom line. Here’s how the grocery chain’s results compared to analysts’ expectations: Adjusted EPS: $0.72 vs $0.65 expected Revenue: $17.92 billion vs $17.71 billion expected. Revenue was up 8.6% year over year while same-store sales jumped 7.4%. But the cost of sales surged 9.6% and Albertsons’ gross margin contracted to 27.9% to 28.6%. Johnson & Johnson Tops Q3 Expectations, Trims Sales Guidance Johnson & Johnson (JNJ) shares are up 1.3% in premarket trade after beating Q3 expectations. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $2.55 vs $2.48 expected Revenue: $23.8 billion vs $23.4 billion expected Johnson & Johnson forecast full-year sales between $93 billion to $93.5 billion, down from $93.3 billion to $94.3 billion previously. The company expects full-year adjusted EPS of $10.02 to $10.07 vs $10 to $10.10 previously. Microsoft Confirms Job Cuts Microsoft (MSFT) shares are up 2.4% ahead of the open after a company spokesperson confirmed recent job cuts. The spokesperson told CNBC, “Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead.” Those cuts were first reported by Axios and impacted fewer than 1,000 people. Salesforce Rallies On New Investor Stake Salesforce (CRM) shares are up 6.5% in premarket trade after activist investor Starboard Value LP unveiled a stake in the company. CNBC reported Starboard’s founder said he sees significant opportunity in the software maker. He did not specify the dollar amount of his stake but said it is significant. Homebuilder Sentiment Expected to Fall The National Association of Homebuilders releases its sentiment index for October at 10:00 a.m. ET. That index is expected to fall 2 points to 44, as high mortgage rates continue to squeeze builders. That would be the 10th straight monthly decline with anything under 50 considered negative. Upcoming Earnings Here are the key companies set to report earnings after the market close today: Netflix (NFLX) United Airlines (UAL)
Continue Reading -->Coffee With Greta: Stocks Rebound From Rollercoaster Week
DJIA Futures: +344 (+1.2%) SPX Futures: +52 (+1.4%) NASDAQ Futures: +195 (+1.8%) Good morning friends! Futures are higher following a rollercoaster of a week. Let’s get right to it! Empire State Manufacturing Index Falls The New York Fed’s Empire State manufacturing index fell more than expected this month. The index dropped 7.6 points in October to negative 9.1. That’s the third straight negative reading and worse than economists’ expectations for negative 5. Any reading below 0 indicates deteriorating business conditions. The new orders index was unchanged at 3.7 while the shipments index plunged 19.9 points to negative 24.1. Unfilled orders rose by 3.8 points to negative 3.7 and the prices paid index jumped 9 points to 48.6. That’s the first increase in prices paid over the past three months. This index and the Philly Fed’s manufacturing index are both considered barometers for national factory activity. Bank of America Earnings Bank of America (BAC) shares are up 2.4% ahead of the open after topping Q3 expectations on the top and bottom line. Here’s how the bank’s results compared to economists’ expectations: EPS: $0.81 vs $0.77 expected Revenue: $24.61 billion vs $23.57 billion expected Profit fell 8% compared to a year ago as Bank of America built up its loan loss reserves by $378 million and paid $520 million in charge-offs for bad loans. But the consumer bank benefited from higher interest rates, with net interest income surging 24% to $13.87 billion. Oil Prices Rise Oil prices are higher this morning as the market digests loose monetary policy decisions from China against global recession fears. West Texas Intermediate crude futures are up 0.5% to $86 bbl while Brent crude futures are up 0.6% to $92 bbl. China’s central bank left interest rates unchanged for the second month in a row, bucking the trend of tightening monetary policy around the world. But the strength of the dollar and continued tightening from the U.S. Federal Reserve is keeping a lid on price gains today. Housing Market In Focus This Week The bulk of big economic data releases this week will focus on the U.S. housing market. The National Association of Homebuilders releases its October sentiment index at 10:00 a.m. ET on Tuesday. The Census Bureau reports housing starts and building permits for September on Wednesday. And the National Association of Realtors reports existing home sales for September on Thursday. The housing market has slowed drastically as mortgage rates have surged higher.
Continue Reading -->Coffee With Greta: Traders Digest Big Bank Earnings
DJIA Futures: +64 (+0.2%) SPX Futures: +6 (+0.2%) NASDAQ Futures: +11 (+0.1%) Good morning friends! Futures are higher as traders digest Q3 earnings from 4 of the largest banks in the U.S. Let’s get right to it! Interest Income Boosts JPMorgan Chase Q3 Profits JPMorgan Chase (JPM) shares are up 1.2% ahead of the open after topping Q3 expectations on the top and bottom line. Here’s how the bank’s results compared to analysts’ expectations: EPS: $3.12 vs $2.88 expected Revenue: $33.49 billion vs $32.1 billion expected Profit fell 17% year over year as the bank boosted its loan reserves by $808 million. Revenue jumped 10% compared to a year ago as Chase benefited from higher interest rates. Net interest income surged 34% to $17.6 billion, topping analysts’ expectations by more than $600 million. Wells Fargo Beats Q3 Expectations Wells Fargo (WFC) shares are up 1.8% in premarket trade after beating Q3 expectations. Here’s how the bank’s results compared to analysts’ estimates: Adjusted EPS: $1.30 vs $1.09 expected Revenue: $19.51 billion vs $18.78 billion expected Wells Fargo built up its credit loss reserves by $784 million last quarter, which dented profits. Net income fell more than 30% from Q3 2021. Wells Fargo’s mortgage business has been impacted by higher rates but the bank has also benefited from higher rates in retail and commercial banking. Net interest income jumped 36% due to higher interest rates and higher loan balance. Morgan Stanley’s Q3 Profit Plunges Morgan Stanley (MS) shares are down 2.8% ahead of the open after missing Q3 expectations on the top and bottom line. Here’s how the bank’s results compared to analysts’ expectations: EPS: $1.47 vs $1.49 estimate Revenue: $12.99 billion vs $13.3 billion estimate Profit tumbled 29% year over year with revenue down 12%. Morgan Stanley’s investment banking revenue tumbled 55% to $1.28 billion, in line with estimates. But investment management revenue dropped 20% to $1.17 billion, below estimates. Citigroup Beats Q3 Estimates Citigroup (C) shares are up 0.8% in premarket trade after beating Q3 expectations even as profits plunged year over year. Here’s how the bank’s results compared to analysts’ expectations: EPS: $1.63 vs $1.42 expected Revenue: $18.51 billion vs $18.25 billion expected Revenue rose 6% year over year while net income plunged 25% as the bank built up its loan loss reserves. Citigroup increased those reserves by $370 million during the quarter. September Retail Sales Fall Flat Retail sales fell flat in September as high inflation puts pressure on consumers. The Commerce Department reported retail sales were unchanged last month vs expectations for 0.3% growth. That was down from the upwardly revised 0.4% growth in August. Retail sales were up 8.2% year over year, a five-month low. Sales at motor vehicles and parts dealers fell 0.4% while gasoline sales dropped 1.4%. Restaurants and bars saw a 0.5% increase in sales and grocery store sales rose 0.4%. Retail sales excluding autos rose 0.1% vs economists’ expectations for 0%. Kroger to Buy Albertsons Kroger (KR) shares are falling 2.7% ahead of the open after announcing it will buy Albertsons (ACI). ACI shares are also down 3.7% in premarket trade. Kroger will buy Albertsons for $34.10 per share, in a deal valued at $24.6 billion. The combination of the two grocers would put the company in a close second to Walmart (WMT) as the largest U.S. grocer by market share. Both companies’ boards have unanimously approved the agreement which now needs regulatory approval. Oil Prices Fall On Recession Worries Oil prices are slipping today as recession fears take over. West Texas Intermediate crude futures are down 2% to just over $87 bbl while Brent crude futures are down 1.8% to just under $93 bbl. Both contracts are on track for weekly losses following two straight weeks of gains. In Case You Missed It Netflix (NFLX) shares jumped 5.3% after the streaming giant announced it will price its new ad-supported tier at $6.99/month. That $1 less than Disney+ and Hulu with commercials. The company said commercials will be 15 or 30 seconds long and play before and during content. There will be an average of four to five minutes of commercials per program.
Continue Reading -->The Power of Monthly Charts in Technical Analysis
In my technical analysis and moving averages lessons, I typically show daily charts. But sometimes it pays to pull back and look at longer time frames, like the monthly. This is especially true in a bear market, when daily charts can be full of noise without a clear trend. Let’s dissect the bust in Meta (META), which is down over 65% from its post-Pandemic highs, using a monthly chart. Positions Disclosure: Scott J. Redler is long AAPL, MBIO, PTON, QQQ, SPY, is short PTON calls, SPY calls, SPY puts Here’s the naked chart: Now let’s break the monthly chart down step-by-step. (A): It started with the $384 top set in August 2021, marked with the “A” on the chart: (B): META fell to $344 to confirm the false breakout, and to have us on our toes for more downside. (C): META then lost the 8 and 21 month moving averages as the stock blew threw support and free-falled. Remember, each bar on this chart represents a month, so traders had plenty of chances to just book the loss and avoid more damage on the way down. (D): Next, META broke below a bear flag $190, giving us yet another sell signal. (E): Meta breaks through $154 support to approach key levels at $123 and $113.55. The lesson here is simple: watch longer time frames, especially during a bear market. Sometimes, they can clarify things in a way daily charts can’t.
Continue Reading -->Coffee With Greta: Stubbornly High Inflation Causing Market Turmoil
DJIA Futures: -522 (-1.8%) SPX Futures: -80 (-2.2%) NASDAQ Futures: -329 (-3.0%) Good morning friends! Futures are plunging, reversing earlier gains as a hotter-than-expected CPI shows inflation pressures remaining stubbornly high. Let’s get right to it! Stocks Plunge As Inflation Runs Hot Consumer inflation is still running red hot and that’s bad news for the stock market. The Bureau of Labor Statistics’ consumer price index rose 0.4% monthly in September and 8.2% year over year. Both readings were higher than economists’ expectations even as the Fed hikes rates in an attempt to slow inflation. The higher prices were boosted by rising rent as gas prices fell. Gasoline prices were down 4.7% on a monthly basis but still up 19.7% year over year. Shelter prices rose 0.7% monthly and 6.6% annually. Food prices also continued to gain with groceries up 0.7% monthly and 13% annually. The core CPI – which excludes food and energy prices – rose 0.6% monthly and 6.6% year over year. Both of those were also hotter than expected. Weekly Jobless Claims Hit 7-Week High Weekly jobless claims jumped to a 7-week high in a sign that layoffs may be rising amid the Fed’s inflation fight. The Labor Department reported 228,000 Americans filed initial unemployment claims last week. That was up by 9,000 from the previous week and higher than expectations for 225,000. Claims have risen in three of the last four week and this is the highest level since late August. Continuing claims rose by 3,000 to 1.368 million in the week ending October 1. British Pound Jumps The British pound rallied against the dollar today following reports the British government is in talks to ditch parts of its recent tax cuts package. The pound hit an all-time low against the dollar after those unfunded tax cuts were announced on September 23. But Sterling traded 1.5% higher in London afternoon trading, hitting $1.1269. The government is reportedly considering reversing course on the changes to corporate taxes and dividend taxes. Walgreens Tops Fiscal Q Expectations Walgreens (WBA) shares are up 1% ahead of the open after beating fiscal Q4 expectations on the top and bottom line. Here’s how the healthcare company’s results compared to analysts’ expectations: Adjusted EPS: $0.80 vs $0.77 expected Revenue $32.5 billion vs 32.09 billion expected Pharmacy and retail sales declined 7.2% year over year while comparable sales rose 1.6%. Covid vaccines fell off sharply during the quarter with just 2.9 million administered vs 4.7 million in fiscal Q3 and 15.6 million in fiscal Q1. Delta Returns to Profitability, Revenue Hits Record Delta Airlines (DAL) shares are up 1.2% in premarket trade after reporting record-high revenue in Q3. Here’s how the airline’s results compared with analysts’ estimates: Adjusted EPS: $1.51 vs $1.53 expected Adjusted revenue: $12.84 billion vs $12.87 billion expected That revenue was 3% higher than 2019 levels thanks to higher prices as the airline flew a smaller schedule compared to Q3 2019. CEO Ed Bastian said, “The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international.” But Delta’s costs continued to surge in the quarter. Fuel costs came in at $3.32 billion, up nearly 48% compared to 2019. Excluding fuel, costs per available seat mile were up nearly 23% compared to three years ago. Oil Prices Drop on Hot Inflation Data Oil prices have turned lower following the release of hot inflation data this morning. West Texas Intermediate crude futures are down 1.8% to under $86 bbl while Brent crude futures are falling 1.4% to $91 bbl. Prices were pushing higher earlier this morning amid fresh supply concerns after the International Energy Agency warned about the impact of OPEC+’s supply cuts. The agency said, “The OPEC+ … plan … has derailed the growth trajectory of oil supply through the remainder of this year and next, with the resulting higher price levels exacerbating market volatility and heightening energy security concerns.” The group downgraded its oil demand growth estimates to 1.9 million bpd and 1.7 million bpd in 2023. In Case You Missed It The minutes of the Fed’s September meeting show officials are not worried about going too far in their fight against inflation. The report said, “Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” Officials said inflation is “showing little signs so far of abating” and they plan to continue rate hikes until they say evidence of a change.
Continue Reading -->Moving Averages for Stocks Explained: The Ultimate Guide to Trend Analysis for 2023
Moving averages are one of the most important technical analysis tools I use. They help me figure out:How aggressive I want to beMy mix of day and swing tradesWhich stocks and sectors I want to be long or shortJust how strong the current market trend isWhat news matters, and what doesn’tI rate moving averages above news, economic data, earnings, and just about any indicator you can think of.If I was a starting trader looking to build my net worth, moving averages would be my #1 focus.And through a series of new case studies, you will learn:What a moving average isHow moving averages are calculatedThe specific moving averages I use, and how I use them to detect strength and weaknessThe biggest myth of moving averages Editor’s Notes: If you want even more moving average case studies, please check out The Ultimate Guide to Moving Averages. Positions Disclosure: at the time of writing, Scott was long MBIO, SPY puts; was short SPY calls, SPY puts What Is a Moving Average? And How Are They CalculatedLet’s talk about how moving averages are calculated.A moving average is a stock’s average price over a specific time period.A daily moving average is the average of a stock’s daily closing prices over a specified number of days.(a weekly moving average would be the average of a stock’s weekly closing prices over a specified number of weeks)We’ll focus on the daily time frame in this guide. For example, the 50 day moving average is a stock’s average closing price for the last 50 days.Every day, the newest closing price in the moving average replaces the oldest, which is why we call it ‘moving’ — a moving average change every day.Here’s a simple chart of Apple (AAPL) with its 50 day moving average. The Biggest Myth About Moving AveragesPeople often say “moving averages don’t work” or “everyone sees the same moving averages, so they have no value”But here’s the reality: most serious technical analysts understand that a moving average is not the same as a trading strategy or even a signal. I don’t buy and sell purely because of a moving average.But moving averages do help me understand the trend which contributes to my overall decision-making process.That’s why they’re so valuable to me.Simple vs. Exponential Moving AveragesThere are 2 types of moving averages — simple and exponential. They are calculated in slightly different ways. A simple moving average is exactly what it sounds like — a simple average of the stock price. (the closing stock price, specifically) An exponential moving average gives extra weight to recent prices, so it does a better job of measuring the near-term trend. Here’s Advanced Micro Devices (AMD) with its 50 day simple (blue) and exponential (pink) moving averages.They’re pretty close, but the exponential (pink) is closer to the current price.The Moving Averages I UseTechnicians and traders have tended to focus on the 10, 20, 50, and 200 day simple moving averages, which you can think of as follows:10 day simple moving average: very short-term trend20 day simple moving average: short-term trend50 day simple moving average: intermediate trend200 day simple moving average: long-term trendI use a slightly different set of moving averages in my own trading, and in Redler All-Access:8 day exponential moving average: very short-term trend21 day exponential moving average: short term trend50 day exponential moving average: intermediate trend200 exponential moving average: long-term trend(I matched the colors here on the charts below.)I use exponential moving averages because they are more sensitive to the recent action, which gives me a better read on the near-term trend.Going forward in this article, all moving averages are exponential.Is There a Difference Between an 8 and 10 Day Moving Average?You may be asking “why the 8 day moving average? Why not the 10 day?”Most of the time, they’ll be very close together, as shown in this Amazon (AMZN) chart:But here’s what most people miss about moving averages: It’s not the exact moving averages you use that counts.It’s how well you use those moving averages to find opportunities, avoid trouble, and manage risk. I pay most attention to the 8 and 21 day exponential moving averages. I stick with those because my brain is trained to judge the action based on those time frames.If I was using, say, the 10 and 20 day simple moving averages, I’d probably end up with the same results — I’d just get there in a slightly different way.The Power of the 8 & 21 Day Exponential Moving AveragesTraders often ask me why I talk about the 8 & 21 day exponential moving averages so much. Whether you see me on Fox Business, CNBC, Twitter, or the Virtual Trading Floor®, odds are you’ll hear me me talking about them.Stocks that are in uptrends find support at the 8/21/50day. Stocks in downtrends get rejected at them on Bounces. Below the 200day is real selling. Rules to live by— Scott Redler (@RedDogT3) November 14, 2018 It’s because these moving averages are the most accurate short-term road map I’ve found.And I value moving average more than any other analysis I see out there.8 & 21 Day Moving Average Case Study I: The Energy SectorFrom the 2020 pandemic low to the time I’m writing this (October 2022), the energy sector dominated the market.Here is a chart of the VanEck Oil Services ETF (OIH) from December 2021 to March 2022 with the 8 and 21 day exponential moving averages.As you can see, the moving averages are sloping up. What were they telling us?They were telling us the trend was strong. As you can see, OIH just trended up along the moving averages, with occasional breaks that were quickly reclaimed. This is a classic powerful uptrend. Even if you’re not long a stock or ETF like this, resist the urge to short. Remember, the trend can go a lot further than may seem reasonable. In this case, OIH was rising because the Ukraine war spiked energy prices. If something goes from $200 to $300+ while staying above the 8 & 21 day moving averages, don’t bet against it going higher. So I never, ever short stocks or ETFs that show momentum above the
Continue Reading -->Coffee With Greta: Wholesale Inflation is Still Running Hot
DJIA Futures: +49 (+0.2%) SPX Futures: +9 (+0.3%) NASDAQ Futures: +39 (+0.4%) Good morning friends! Futures are higher even after the release of some hot inflation data. Let’s get right to it! Wholesale Inflation Rises More than Expected Wholesale inflation pressures rose more than expected in September as prices remain stubbornly high in the face of the Fed’s tightening policy. The Bureau of Labor Statistics producer price index rose 0.4% monthly and 8.5% annually vs analysts’ expectations for a 0.2% monthly increase and 8.4% annually. That was still a deceleration from the 8.7% annual increase in August. The core PPI, which excludes food, energy, and trade services, rose 0.3% monthly and 7.2% annually. That was in line with expectations on a monthly basis and slightly lower on an annual basis. Producer prices are a leading indicator for consumer prices. The September consumer price index will be out tomorrow morning. PepsiCo Tops Q3 Expectations, Hikes Forecast PepsiCo (PEP) shares are up 2.1% ahead of the open after beating Q3 expectations and hiking its full-year forecast. Here’s how the beverage giant’s results compared to analysts’ expectations: Adjusted EPS: $1.97 vs $1.84 expected Revenue: $21.97 billion vs $20.84 billion expected Revenue rose 9% year over year. Pepsi said it is accelerating its cost management initiatives, including smaller sizes for its variety packs. The company now expects full-year revenue growth of 10% to 12% up from 10% previously. Pepsi also sees core constant EPS growth of 10% vs 8% in its prior forecast. Intel Reportedly Planning Job Cuts Intel (INTC) shares are up 0.8% in premarket trade following a Bloomberg report the company is considering thousands of job cuts. The report said those layoffs will be announced as early as this month. Some divisions, like sales and marketing, are expected to see cuts that affect about 20% of staff. The reported plan comes in the face of a sharp slowdown in PC demand. Advanced Micro Devices (AMD) released preliminary Q3 results last week that sharply missed expectations due to that slowing demand. Adjustable-Rate Mortgage Demand Jumps Mortgage demand fell last week as rates pushed higher but buyers are now looking toward more risky loan types in order to purchase a home. The Mortgage Bankers Association reported total application volume fell 2% last week as the average 30-year fixed contract rate rose to 6.81% from 6.75%. That’s the highest rate since 2006. But the average rate for 5/1 adjustable rate mortgages was lower at 5.56. The ARM share of applications last week was just under 12% vs 3% at the beginning of this year. Purchase applications fell 2% weekly and were down 39% annually. Refinance applications also fell 2% weekly and plunged 86% compared to a year ago. Oil Prices Fall Flat Oil prices are slightly lower today as the strong dollar overshadows supply worries. West Texas Intermediate crude futures are down 0.4% to under $89 bbl while Brent crude futures are down 0.2% to $94 bbl. The market is in a back-and-forth over supply and demand with the strong U.S. dollar also pushing prices lower. The dollar hit a 24-year high against the yen today, making dollar-denominated commodities like oil more expensive for other currency holders. Fed Minutes on Deck The Fed will release the minutes of its September policy meeting at 2:00 p.m. ET today. The bank voted for its third straight 0.75% rate hike at that meeting and penciled in another large rate hike at the November meeting as well. The market will be looking at the minutes for more clarity on the bank’s discussion around when rates will peak. Traders have been hoping for an earlier Fed pivot than laid out in the dot plot if the economy continues to weaken. But today’s PPI data and last week’s strong jobs data don’t make that case.
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