Scott Redler’s Dog Bytes: Tech Sector Lows
SPX futures are +33, giving some upside follow-through to Friday’s reversal. We’ll see if it holds or fades. 3945-3970 is some resistance. See if tech holds or fades after many leaders broke hard last week.TSLA changed character on April 21 after earnings. The strong report got sold. Then the $973 break confirmed the new active bearish sequence. TSLA also lagged the bounce. On Friday, I made money short. It broke $700 to see $633 before a weak bounce with the indices. I did buy some $620 puts into the end-of-day bounce. TSLA isn’t up much considering the futures strength. I’ll be watching this carefully. AAPL helped lead the indices to the lows last week. We did well short here. I covered on Friday. I’m not sure how it will respond to market strength. Resistance is now in the $140.78-$141.60 area. AMD is very choppy and just gives two-way action based on the futures. It didn’t make a new low Friday but it hit the $88 area. It’s red while futures are up. See how it reacts today. I’m not in a rush to do anything here. NVDA is also red. But it hasn’t been special for months and has been trending lower. $155-$157 is the recent low area heading into Wednesday’s earnings.Positions Disclosure as of 5/23/2022 at 8:55 a.m. ET
Continue Reading -->Coffee With Greta: Traders Just Bought The Dip
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +308 (+1%) SPX Futures: +35 (+0.9%) NASDAQ Futures: +70 +(0.6%) Good morning friends! Futures are higher as markets attempt to bounce back from an intense sell-off. Let’s get right to it! Traders Just Bought the Dip with More Retail Earnings Ahead Traders are attempting to recover some of the recent losses after an intense sell-off on Wall Street. The S&P 500 is still hovering just above a bear market after briefly dropping into that territory on Friday. The Dow logged its first 8-week losing streak since 1932 last week. The Nasdaq and the S&P have both fallen for 7 straight weeks for the first time since 2001. But the market will have a close eye on a slew of retail earnings this week after disappointing results from Target (TGT) and Walmart (WMT) last week. Best Buy (BBY) and Nordstrom (JWN) are up first on Tuesday. And then Costco (COST), Dollar Tree (DLTR), Dollar General (DG), and Macy’s (M) report earnings on Thursday. More bad retail results could prompt a further selloff after Target and Walmart’s earnings showed consumers shifting their spending habits due to inflation. Other key earnings this week include Zoom (ZM), Intuit (INTU), Nvidia (NVDA), and Alibaba (BABA). Key Economic Data This Week There’s no economic data on the schedule today but traders have their eyes on some key reports this week. The S&P Global May manufacturing and services PMIs will both be released Tuesday morning while the Census Bureau is set to report new home sales for April. Then on Wednesday, the Commerce Department reports durable goods orders and core capital equipment orders for April and the Fed releases the minutes of its May meeting. The Commerce Department releases its first revision of Q1 GDP growth on Thursday while the National Association of Realtors reports pending home sales for April. And Friday it’s all about inflation with the Bureau of Labor Statistics set to release the April personal consumption expenditures price index. Oil Prices Rise On High Demand, Tight Supply Oil prices are rising today amid high demand for fuel in the U.S. and tight supply of oil. West Texas Intermediate crude futures are up more than 1% to over $111 bbl while Brent crude futures are rising 1% to nearly $114 bbl. The U.S. is heading into its peak driving season, which typically begins Memorial Day weekend and ends on Labor Day. Even as gas prices have hit record highs in recent weeks, mobility data from TomTom and Google has shown an increase in people driving. Gas Prices Hit 14th Straight Record-High U.S. gas prices hit a new record high for the 14th straight day today. AAA shows the national average rose to $4.596 overnight. That’s up more than 11 cents from a week ago and more than 47 cents compared to one month ago. At this same time last year, a gallon of regular gas cost just $3.039. Diesel prices have cooled after hitting a record-high last week. A gallon of diesel now costs $5.554, down from $5.577 on May 18. VMware Surges On Rumored Broadcom Acquisition VMware (VMW)) shares are surging 20.7% ahead of the open amid reports chipmaker Broadcom (AVGO) is in talks to acquire the company. Reuters reported negotiations are ongoing and a deal is not imminent. No details of a potential deal are known but Wells Fargo analysts said, “We believe an acquisition of VMware would be considered as making strategic sense; consistent with Broadcom’s focus on building out a deepening enterprise infrastructure software strategy.” Broadcom shares are slipping 4.9% in premarket trade. GameStop Launches Crypto, NFT Wallet GameStop (GME) shares are up 2.8% ahead of the open after launching its digital asset wallet for crypto and NFTs. The company said the wallet will “allow gamers and others to store, send, receive, and use cryptocurrencies and non-fungible tokens across decentralized apps without having to leave their web browsers.” GameStop also said it “is a self-custodial Ethereum wallet.” A wallet extension can be downloaded on Google Chrome which will later enable transactions on GameStop’s upcoming NFT marketplace. The company said that is expected to launch in fiscal Q2. World Economic Forum Underway In Davos More than 2,000 world leaders, economic experts, and business leaders are gathered in Davos, Switzerland for the 2022 World Economic Forum. The meeting kicked off Sunday and this is the first in-person summit since January 2020. The theme of this year’s meeting is “History at a Turning Point”. Russia was excluded from the annual meeting due to the war in Ukraine while Ukrainian President Volodymyr Zelenskyy will address the summit via video. U.S. climate envoy John Kerry is attending the summit but President Biden is not. The meeting is expected to focus on war, with panels on climate change, rising energy prices, global supply chain issues, poverty, and the metaverse.
Continue Reading -->Coffee With Greta: The Bear Just Missed…
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +272 (+0.9%) SPX Futures: +43 (+1.1%) NASDAQ Futures: +173 (+1.5%) Good morning friends! Futures are higher as the market looks poised for a Friday rally after two days of selling. Let’s get right to it! S&P 500 Inching Closer to Bear Market The S&P 500 looks like it will avoid opening in bear market territory as the index teeters on the edge of that cliff. The official closing level for a bear market is 3,837.25, which would be down 20% from the index’s most recent record in January. If the S&P slips into that territory it would be its first bear market since the pandemic plunge in March 2020. The Nasdaq is already deep in a bear market, down 29% from its November record as of Thursday’s close. The Dow has dropped more than 15% from its high. Even with today’s bounce, the Dow is on track for its first 8-week losing streak since 1932. Both the S&P and the Nasdaq are on track for their seventh straight weekly loss. Investors Flee To Bonds The 10-year and 30-year Treasury yields are both flat, after tumbling on Thursday as investors flee to safety amid turmoil on Wall Street. Yields fall as more investors buy Treasury notes and bonds. Analysts say this week’s activity in the Treasury market shows investors are becoming increasingly concerned about the short-term future of the economy as the Fed tackles inflation. Foot Locker Rises on Earnings Beat Foot Locker (FL) shares are up 4.2% ahead of the open after beating Q1 profit expectations. The shoe retailer reported adjusted earnings of $1.60 per share on $2.18 billion in revenue. Analysts were expecting adjusted EPS of $1.54 on $2.2 billion in revenue. Comparable-store sales fell 1.9% year over year and the company’s gross margin fell by 1% as supply-chain costs and markdowns rose. Foot Locker forecast full-year earnings at the top range of its guidance. The company expects EPS to be between $4.25 and $4.60 in 2022. Discount Retailer Ross Plunges On Earnings Ross Stores (ROST) shares are tumbling 23.3% in premarket trade after missing Q1 expectations. The discount retailer reported earnings of $0.97 per share on $4.33 billion in revenue. That missed analysts’ expectations for EPS of $0.99 on $4.53 billion in revenue. It was also a sharp decline from EPS of $1.34 on $4.52 billion a year ago. Comparable-store sales dropped 7% compared to Q1 2021. Ross forecast same-store sales will fall 4% to 6% annually in Q2 with EPS between $0.99 and $1.07. Deere Slips Despite Earnings Beat Deere & Company (DE) shares are down 5.7% ahead of the open despite beating Q1 expectations. The company reported earnings of $6.81 per share on $13.4 billion in revenue. That was better than analysts’ expectations for EPS of $6.69 on $13.2 billion in revenue. It was also an increase from Q1 2021 and Deere hiked its full-year earnings guidance. The company now expects $7.2 billion in net income this year, up from $6.9 billion previously and higher than analysts’ estimates for $7 billion. Palo Alto Networks Jumps On Outlook Palo Alto Networks (PANW) shares are up 11.8% in premarket trade after beating fiscal Q3 expectations and hiking its full-year guidance. The cybersecurity company reported adjusted earnings of $1.79 per share on $1.39 billion in revenue. That topped expectations for adjusted EPS of $1.68 on $1.36 billion in revenue. Revenue jumped 29% year-over-year. Palo Alto’s CEO said, “We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends.” The company hiked its full-year outlook, forecasting adjusted EPS between $7.43 and $7.46 per share and revenue between $5.481 billion and $5.501 billion. That beat analysts’ estimates for EPS of $7.29 on $5.46 billion in revenue. Oil Prices Hold Steady Oil prices are slightly higher today as the market weighs several factors. West Texas Intermediate crude futures are up 0.3% to $112.50 bbl while Brent crude futures are 0.3% higher at $112.40 bbl. Concerns about slowing economic growth in the U.S. are offsetting expectations of a demand rebound in China. The EU is also still working to approve a sanctions package which includes a ban of Russian oil imports. Both WTI and Brent are on track for their fourth straight weekly gain. U.S. Gas Prices Hit New Record Average U.S. gas prices jumped to another record-high for the 11th day in a row today. AAA shows the national average for a gallon of regular rose to $4.593 overnight. Diesel slipped to $5.57/gal after touching $5.577 earlier this week. Gas prices have been surging due to reduced refinery capacity in the U.S. on top of higher oil prices from Russia’s war in Ukraine. In Case You Missed It Existing home sales tumbled 2.4% in April as mortgage rates rose. The National Association of Realtors reported sales dropped to a seasonally adjusted annual rate of 5.61 million units vs 5.64 million expected. The median sales price jumped 14.8% year-over-year to a record $391,200. There were 1.03 million homes for sale at the end of April, representing a 2.2-month supply at the current sales pace. The Conference Board’s leading economic index fell 0.3% in April. That drop was unexpected as economists had forecast a flat reading. The decline was largely due to a decline in home building permits and consumer confidence. The Conference Board expects the U.S. economy will expand just 2.3% this year vs 5.6% in 2021.
Continue Reading -->Coffee With Greta: Retail Is a Total Mess, Thanks to Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -339 (-1.1%) SPX Futures: -41 (-1%) NASDAQ Futures: -124 (-1%) Good morning friends! Futures are falling with the S&P 500 teetering on the brink of a bear market following more disappointing retail earnings. Let’s get right to it! Kohl’s Slashes Outlook Kohl’s (KSS) shares are down 7.1% ahead of the open after missing fiscal Q1 profit expectations and slashing its full-year outlook. The retailer reported earnings of $0.11 per share on $3.72 billion in revenue. Analysts were expecting EPS of $0.70 on $3.68 billion in revenue. Comparable sales tumbled 5.2% year over year vs analysts’ expectations for a 0.5% increase. Kohl’s CEO blamed the profit miss on inflation. “Sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment,” she said. The company now expects full-year adjusted EPS between $6.45 to $6.85 vs the previous forecast for $7.00 to $7.50. Kohl’s also said final and fully-financed bids from potential buyers are expected in the coming weeks as it faces increased pressure to sell. Cisco Crashes On Revenue Miss, Weak Outlook Cisco Technologies (CSCO) shares are tumbling 11.3% in premarket trade after missing fiscal Q3 revenue expectations and calling for an unexpected sales decline in the current quarter. The networking company reported adjusted earnings of $0.87 per share vs analysts’ expectations for $0.86. But revenue of $12.84 billion missed analysts’ estimates for $13.34 billion. Cisco’s CEO said the Ukraine war reduced revenue by $200 million, added $5 million to the cost of sales last quarter, and added $62 million in operating expenses. The company forecast earnings between $0.76 and $0.84 per share in fiscal Q4. Cisco expects revenue to fall 1% to 5.5% annually this quarter. Analysts were estimating fiscal Q4 earnings at $0.92 per share on $13.87 billion in revenue, which would be up 6% year over year. Bath & Body Works Drops After Cutting Outlook Bath & Body Works (BBWI) shares are dropping 7.6% ahead of the open despite beating Q1 expectations. The specialty retailer reporting earnings of $0.64 per share on $1.45 billion in revenue. That was better than analysts’ expectations for EPS of $0.53 on $1.44 billion in revenue. Bath & Body Works forecast full-year earnings between $3.80 and $4.15 per share vs previous guidance of between $4.30 and $4.70 per share. The company said that adjusted outlook reflects its “decision to accelerate investments in information technology and its customer loyalty program, as well as projected increases in inflationary pressures.” Under Armour CEO Steps Down Under Armour (UAA) shares are sliding 5.7% in premarket trade after announcing its president and CEO will step down. Patrik Frisk will leave the position effective June 1. Current COO Colin Browne will take over as operating CEO while the company searches for a permanent replacement. Frisk will also step down from the Board of Directors but will remain with Under Armour as an advisor through September 1. Weekly Jobless Claims Hit 4-Month High Weekly jobless claims rose to a 4-month high. The Labor Department reported 218,000 Americans filed initial claims for unemployment benefits last week, up 21,000 from the previous week’s revised level. That was sharply higher than economists’ expectations for 200,000. Continuing claims fell by 2,000 to 1.32 million in the week ending May 7. Philly Fed Manufacturing Index Tumbles Manufacturing activity slowed sharply in the Philadelphia Fed region. The Philly Fed’s Gauge of Regional Manufacturing plunged to 2.6 in May vs 15 expected. That’s the lowest level of activity in two years but any reading above 0 still indicates expansion in the sector. The new orders index rose 4.3 points to 22.1 while the shipments index rose 16.2 points to 35.3, the highest since October 2021. But the employment index tumbled 16 points to 25.5, dragging down the overall reading. Respondents to the survey expect inflation to still be at 6.5% a year from now, up from the previous outlook for 5% in February. The 6-month business outlook also slumped by 5.7 points to 2.5 in May. Oil Prices Fall On Economic Growth Fears Oil prices are sliding on fears of an economic slowdown in the U.S. West Texas Intermediate crude futures are down 2.8% to $106.50 bbl while Brent crude futures are falling 1.7% to $107 bbl. Energy traders are growing concerned about the impact of high fuel prices on economic growth. But the EU’s still expected ban of Russian oil imports is supporting prices from falling further. U.S. Gas Prices Hit 10th Straight Record-High Average gas prices in the U.S. jumped more than 2 cents overnight . AAA shows the national average for a gallon of regular rose to $4.589 today, a new record for the 10th straight day. Diesel held steady at $5.577/gal. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for April at 10:00 a.m. ET. That report is expected to show sales fell last month to a seasonally adjusted annual rate of 5.64 million units. The housing market has suffered from high demand and low inventory over the past two years. But buyer demand has fallen in recent months as mortgage rates jump. In Case You Missed It U.S. oil inventories declined unexpectedly last week. The Energy Information Administration reported crude inventories dropped by 3.4 million barrels in the week ending May 13 vs expectations for an increase of 2.1 million barrels. The U.S. gasoline stockpile fell by 4.8 million barrels vs expectations for a 100,000 barrel decline. Retail stocks got rocked by weak earnings on Wednesday. Target (TGT) was the biggest loser in the sector, plummeting 24.8% after missing Q1 profit expectations. That was the largest one-day plunge for the stock since Black Monday in 1987. Walmart (WMT) shares tumbled 6.9% while Costco (COST) dropped 12.5%. American CEOs are expecting the Fed’s inflation battle to cause
Continue Reading -->Coffee With Greta: Inflation Wrecks Target
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -184 (-0.6%) SPX Futures: -32 (-0.8%) NASDAQ Futures: -144 (-1.1%) Good morning friends! Futures are lower following disappointing retail earnings. Let’s get right to it! Target Craters On Big Earnings Miss Target (TGT) shares are plunging 24.2% ahead of the open after sharply missing Q1 expectations. The retailer reported adjusted earnings of $2.19 per share on $25.17 billion in revenue. EPS came in below the $3.07 consensus but the revenue number beat estimates of $24.49 billion. Comparable sales rose 3.3% year over year, better than expectations for a 0.8% gain. Profits plummeted 41% compared to a year ago. Target’s CEO Brian Cornell blamed the profit miss on “unusually high costs”. Those challenges included inventory that arrived too early or too late, employee compensation, more employees at distribution centers, and changing merchandise sales. Target was also hit by higher freight costs as gas prices jumped, those issues are expected to be worse in Q2. The company reiterated its full-year forecast for revenue growth in the mid single-digits but did not provide earnings guidance. Lowe’s Dips On Revenue Miss Lowe’s (LOW) shares are down 4% in premarket trade after missing Q1 sales expectations. The home improvement retailer reported earnings of $3.51 on $23.66 billion in revenue. That was better than analysts’ expectations for EPS of $3.22 but missed estimates for $23.76 billion in revenue. Lowe’s CEO said sales in its outdoor seasonal categories “were impacted by unseasonably cold temperatures in April.” He said the company has already seen improvement in May. Same-store sales were down 4% year over year, worse than expectations for a 2.5% drop. Lowe’s reiterated its full-year outlook for revenue to range between $97 billion and $99 billion. Housing Starts, Building Permits Slump U.S. homebuilding slowed unexpectedly in April. The Census Bureau reported housing starts fell 0.2% to a seasonally adjusted annualized rate of 1.72 million units. That missed economists’ expectations for starts to rise to a SAAR of 1.75 million units. Building permits also tumbled but were in line with expectations. The number of new permits issued last month dropped 3.2% to a SAAR of 1.82 million units. The data is indicative of a new home market that is struggling amid surging material costs and falling demand due to rising mortgage rates. Weekly Mortgage Demand Tumbles Mortgage demand fell last week even as rates cooled a bit. The Mortgage Bankers Association says purchase applications fell 12% weekly and dropped 15% year over year. That was the first weekly drop since the third week in April. Refinance applications fell 10% weekly and were down 76% compared to a year ago. The average 30-year contract rate actually decreased to 5.49% from 5.53%, but those rates are still sharply higher than even a few months ago. Adjustable-rate mortgages made up 10.5% of all applications, up from about 3% at the start of the year. Oil Prices Rise On China Demand Optimism Oil prices are rising on optimism that easing Covid restrictions in China will boost demand. West Texas Intermediate crude futures are up 2.2% to $115 bbl while Brent crude futures are up 1.6% to nearly $114 bbl. Shanghai, China has had three consecutive days of no new Covid cases outside quarantine zones. Authorities allowed 864 of the city’s financial institutions to resume work Wednesday. The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 2.4 million barrels last week. Gasoline inventories declined by 5.1 million barrels. The Energy Information Administration reports official inventory data today. The EIA report is expected to show a 2.1 million barrel increase in crude inventories and a 100,000 barrel decline in gas stockpiles. U.S. Gas Prices Hit New Record Average gas prices in the U.S. jumped more than 4 cents overnight. AAA shows the national average for a gallon of regular rose to $4.567 today, a new record for the ninth straight day. Diesel jumped to a fresh record $5.577/gal. Analysts say U.S. households are now spending $5,000 a year on gas. That’s up sharply from $2,800 a year ago. In March, the annual rate of spending on gas was at just $3,800. Powell: Fed Won’t Hesitate to Move Rates Past Neutral Fed Chair Jerome Powell told the Wall Street Journal Tuesday that the bank is committed to doing whatever it takes to tackle inflation. Powell said, “If that involves moving past broadly understood levels of neutral we won’t hesitate to do that”. He said the Fed’s goal is to reach “a place where we can say financial conditions are in an appropriate place, we see inflation coming down. We’ll go to that point. There won’t be any hesitation about that.” The Fed Chair also warned those efforts do have the potential to cause a recession but said “there are a number of plausible paths to have a soft as I said softish landing. Our job isn’t to handicap the odds, it’s to try to achieve that.” CME Group’s FedWatch Tool shows 87% of traders expect a 0.5% rate hike at the June meeting after Powell previously said a 0.75% was not on the table. 13% of traders are still betting on a 75-basis point hike. Elon Musk Wants SEC Investigation of Twitter’s Fake User Claims Elon Musk escalated his dispute with Twitter (TWTR) over the number of fake users on the platform Tuesday. Musk responded to a tweet that said, “The SEC should investigate” whether Twitter’s estimates about fake users are true. In response, Musk tweeted “Hello @SECGov, anyone home?” Twitter shares have been tumbling as investors sell the stock in fear Musk will abandon his $44 billion deal to take the company private. TWTR is down 1.1% ahead of the open. The stock has given up all of its gains since Musk originally unveiled his stake in the company on April 4. In Case You Missed It The National Association of
Continue Reading -->Coffee With Greta: The People vs. Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +371 (+1.1%) SPX Futures: +56 (+1.4%) NASDAQ Futures:+213 (+1.7%) Good morning friends! Futures are rallying after some strong economic data. Let’s get right to it! April Retail Sales Jump The Commerce Department reported U.S. retail sales rose 0.9% in April to $677.7 billion as consumers remain resilient in the face of soaring prices. Although that was slightly lower than economists’ expectations for a 1% gain, March was revised higher to a 1.4% increase from the original 0.7%. Retail sales were up 8.2% compared to April 2021. Gasoline sales surged 36.9% year-over-year while restaurant sales jumped 19.8% annually. Core retail sales, which excludes gas stations and auto dealers, rose 1% last month. Adjusted for inflation on a monthly basis, retail sales were still up 0.6%. Walmart Tumbles On Earnings Miss Walmart (WMT) shares are falling 5.6% ahead of the open after missing Q1 earnings expectations. The retailer reported adjusted earnings of $1.30 per share on $141.57 billion in revenue. That was weaker than analysts’ expectations for adjusted EPS of $1.48 but beat estimates for $138.94 billion in revenue. Walmart’s CFO blamed the miss on high fuel costs, labor costs, and high inventory levels. The CEO said, “We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future”. The company raised its sales outlook, forecasting net revenue growth of about 4% this year vs the prior 3% outlook. But Walmart lowered profit expectations, now expecting full-year EPS to decline about 1% year-over-year. Home Depot Rallies On Earnings Beat Home Depot (HD) shares are up 3.6% in premarket trade after reporting a record first quarter. The home improvement retailer reported earnings of $4.09 per share on $38.91 billion in revenue. That crushed analysts’ expectations for EPS of $3.68 on $36.72 billion in revenue. Revenue jumped 3.8% and set a new record for Q1. Same-store sales increased 2.2%. Home Depot hiked its full-year outlook, now expecting revenue growth of about 3% and EPS growth in the mid-single digits. Berkshire Invests in Citigroup, Paramount Citigroup (C) shares are 5% higher ahead of the open while Paramount (PARA) is jumping 10% after Berkshire Hathaway (BRK.A) unveiled new investments in both companies. In an SEC filing Monday evening, Berkshire said it purchased more than 55 million Citigroup shares and had a $2.95 billion stake in the bank as of the end of March. Warren Buffett’s company also bought 68.9 million shares of Paramount, bringing that stake to $2.6 billion at the end of March. Oil Prices Rise, U.S. Gas Prices At Fresh Record Oil prices jumped to a 7-week high today as the EU continues efforts to ban Russian oil imports. West Texas Intermediate crude futures are up 0.3% to $114.50 bbl while Brent crude futures are 0.4% higher at $114.75 bbl. Brent rose to a high of $115.69 earlier today, the highest since March 28. The market is also expecting higher demand as China lifts Covid restrictions. U.S. gas prices hit a fresh record-high today as well. AAA shows the national average for a gallon of regular jumped 4 cents overnight to $4.523. Diesel also rose to a new record $5.573/gal. Musk Still Focused On Fake Twitter Accounts Twitter (TWTR) shares are falling 2% ahead of the open after Elon Musk said he will not move ahead on his take over deal without more clarity on fake users. In a tweet this morning, Musk said “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.” Twitter then filed a proxy statement with the SEC, saying it is committed to the deal at the pre-agreed price. Musk hinted Monday he could seek to renegotiate that $44 billion price. Bloomberg reported that Musk said a deal at a lower price wasn’t “out of the question” during an event in Miami Monday. Twitter shares tumbled 8.2% in Monday’s session and have erased all gains made since Musk disclosed his investment in the company in early April. The Tesla CEO estimates fake users make up at least 20% of all Twitter users while the company says it is less than 5%. United Airlines Rallies On Updated Outlook United Airlines (UAL) shares are up 4.2% in premarket trade after the company issued an updated Q2 outlook after-hours on Monday. In an SEC filing, the airline said, “the demand environment has continued to improve, resulting in a higher unit revenue outlook for the second quarter 2022.” United now expects total revenue per available seat mile (TRASM) to be 23% to 25% higher compared to Q2 2019, up from previous guidance of 17%. The company also expects capacity to be 14% higher versus previous guidance of 13%. Homebuilder Sentiment Expected to Fall The National Association of Homebuilders releases its April sentiment index at 10:00 a.m. ET. Economists expect the index to fall 2 points to 75. Homebuilders have enjoyed strong demand for new homes amid a severe shortage of existing homes in the market. But they have also struggled with high costs, supply chain shortages, and an ongoing labor shortage. In Case You Missed It The White House is in a spat with Jeff Bezos over inflation. In a statement Monday, the Biden Administration said “it doesn’t require a huge leap to figure out why” Bezos is opposed to their plans to raise taxes on the wealthy and corporations. Bezos responded in a tweet accusing the White House of trying to “muddy the topic”. The Amazon (AMZN) founder accused the administration late last week of “misdirection” for trying to link inflation to corporate taxes.
Continue Reading -->What Sami’s Taking Long This Week
Sami has been trailing out of a lot of his short positions and adding on some long positions… but all of the long stocks have something in common. What do these moves say about his thoughts on the upcoming week? In this video, Sami explains: – Why he doesn’t have any shorts on this week’s watchlist – What is so interesting about AKAN – How he plans to play stocks near their all-time lows – Why it might be too late to get in EYE (and what would keep it in play) – What makes LIQT an exception to the rule
Continue Reading -->Scott Redler’s Dog Bytes: RDR in FAANG
SPX made a low of 3858 Thursday. To see 4120-4157, it needs to prove it can hold 3963 for a session or so. SPX futures are down 15 but well off the overnight lows. We had chances to switch gears Thursday when my 3850 target was reached. The Oscillator was -75 and it’s now -20. We’ll see if this bear market bounce goes for a week or so. SPY needs to hold $395ish to stay in the game to clear $403 and see $410-$414.TSLA did a Red Dog Reversal around the $700 pivot after six down sessions. It hit a high of $787 Friday. This morning it’s flattish. It might participate in a market bounce but it doesn’t feel like a huge rally is coming. If it can hold $751ish, maybe it can see $845. FB was a nice focus for us Thursday into Friday as it did a Red Dog Reversal to get me long. I sold Friday afternoon as it hit $199.87. I’m looking to buy for a red to green trade. It might even try and clear Friday’s high. AMZN has been one of the weakest F.A.N.G. -type names for a while now. The gap down from earnings never got filled, and it’s been last to rally on all oversold attempts. It got interesting Thursday when it bounced off of $2049. I sold three sets of puts into the weakness to get synthetically long. Buying calls would have been better. It hit $2263. Now we’ll see if it can hold $2156ish to show commitment.Positions Disclosure as of 5/16/2022 at 8:48 a.m. ET
Continue Reading -->Did the Fed Kill the Metaverse?
The Fed sent Wall Street into panic mode in 2022. High-growth tech stocks have been pummeled after soaring through 2020 and 2021. And even the Metaverse isn’t immune. The metaverse was all the rage at the end of 2021. Facebook even changed its name to Meta Platforms (FB) on October 28, 2021. CEO Mark Zuckerberg said, “We believe the metaverse will be the successor to the mobile internet, we’ll be able to feel present – like we’re right there with people no matter how far apart we actually are.” People were even buying real estate in the metaverse — with real money. The Metaverse Group has sunk more than $10 million into digital real estate and is the de facto “landlord” of the virtual world. The 2021 Metaverse report from crypto asset firm Grayscale said, “the metaverse represents a $1 trillion annual revenue market opportunity.” Keep in mind that according to the World Bank, only 16 countries have a GDP over $1 trillion. Cryptocurrencies and NFT’s went mainstream. And then the Fed decided to tackle inflation and ruined the party. The Central Bank has hiked the federal funds rate twice, by 0.25% in March and 0.5% in May. The Fed will also begin the runoff of its $9 trillion balance sheet in June. And 5 more rate hikes are on the schedule this year, with the federal funds rate expected to top 3% by year-end. These actions are meant to reduce the money supply in the U.S. economy to squelch consumer demand that is outstripping the supply chain. But traders are worried that will cause a recession. And that fear has driven a major revaluation of high-growth tech stocks that soared throughout 2020 and 2021. Metaverse stocks are one sector that’s been hit particularly hard… even though it’s supposed to be a trillion-dollar opportunity. Let’s take a look at my previously chosen 5 Top Metaverse Stocks to Watch and how they’ve fared in the 2022 tech rout. Unity Software (U) Unity Software (U) has crumbled more than 70% in 2022. That makes it one of the biggest losers among “metaverse stocks” in 2022. The video game software company got rocked this week by earnings. Although Unity reported Q1 results in line with analysts’ expectations after-hours Tuesday, the market was focused on guidance. The company’s Q2 forecast missed expectations and Unity slashed its full-year outlook. The stock cratered 37% on Wednesday and notched a fresh record-low during the session. The drop wiped out $5 billion of Unity’s market cap. Unity’s plunge from its all-time high is even more severe than the YTD drop. The stock hit a high of $210 on November 18, 2021. Since then, Unity shares are down more than 80%. Autodesk (ADSK) Like the rest of this sector, Autodesk (ADSK) has fallen sharply in 2022. But this drawdown isn’t as severe as Unity Software. Autodesk shares are down about 30% YTD. The stock is faring worse in the 52-week range. ADSK shares have dropped more than 40% from the 52-week high at $344.39 Nvidia (NVDA) Nvidia (NVDA) has been pummeled in 2022. The chipmaker’s stock is down about 40% this year. And the stock is doing much worse in the 52-week range. NVDA ended Friday’s session down nearly 50% from the 52-week high of $346.67. Nvidia’s focus on gaming and graphics processors makes it a key company for the future of the metaverse. The company is scheduled to report fiscal Q3 earnings on May 25. Roblox (RBLX) Roblox (RBLX) hit a fresh record-low this week before bouncing back some. The company reported mixed Q1 results after the close on Tuesday. Those results initially dented the stock but traders turned around their sentiment after optimistic comments from the CEO Wednesday morning. Roblox ended Wednesday’s session up 3.4% at $23.97. But when you zoom out, the stock looks just like the rest of this sector. RBLX shares are down nearly 70% YTD. And it’s even more discouraging when you look at the drawdown from its record high. Roblox hit a high of $141.60 on November 19, 2021. Since then, the stock is down more than 75%. Meta Platforms (FB) The collapse of Meta Platforms (FB) has been one of the biggest stock stories this year. We all remember the stock plummeting 26% on February 3 following brutal Q4 earnings. That drop alone wiped out more than $250 million of FB’s market cap and was the worst day in company history. And it’s gotten worse since then. Meta is down more than 40% YTD. And FB has plummeted nearly 50% from its all-time high of $384.33 on September 10, 2021. The company now plans to cut its metaverse-related spending… less than a year after the rebrand. Reuters reported Thursday that the Reality Labs division at Meta is bracing for a slowdown in spending. The company’s chief technology officer reportedly told employees they would not be able to afford some planned projects and would need to postpone others. The company betting its entire future on the metaverse (so much so that it changed its name) is slowing down its spending on developing the metaverse. Meta lost $2.9 billion on Reality Labs in the first quarter and $3.3 billion in Q4. Although this sector has been beaten down in 2022, analysts still believe the metaverse is the future. Citigroup says the metaverse “represents a potential total addressable market of up to $13 trillion by 2030, made up of 5 billion users.” Is now the time to buy the dip? Let us know what you think in the comments below.
Continue Reading -->Coffee With Greta: Elon Musk Gets Cold Feet
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +341 (+1.1%) SPX Futures: +57 (+1.5%) NASDAQ Futures: +246 (+2.1%) Good morning friends! Futures are higher as traders look to shake off a dramatic week of selling. Let’s get right to it! Musk Puts Twitter Deal On Hold Twitter (TWTR) shares are plunging 12.4% ahead of the open after Elon Musk announced his buyout deal is on hold. In a tweet, Musk said the deal is “temporarily on hold pending details” on fake accounts. Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn — Elon Musk (@elonmusk) May 13, 2022 In a follow-up tweet, he said he is “still committed” to the acquisition. Still committed to acquisition — Elon Musk (@elonmusk) May 13, 2022 Musk included a link to a Reuters report on Twitter’s estimation that less than 5% of accounts on the platform are spam or fake accounts. He wants this confirmed before he moves ahead with purchasing the platform. If he were to ditch the deal, he would owe Twitter a $1 billion breakup fee. Fed Can’t Guarantee Soft Landing Fed Chair Jerome Powell knows getting inflation under control may cause some pain for the economy. In an interview with Marketplace Thursday, Powell said he can’t guarantee the Fed can accomplish a soft landing. “So a soft landing is, is really just getting back to 2% inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now, for a couple of reasons,” he said. His comments came after fresh stagflation fears swept across Wall Street Thursday. But Powell steered clear of saying a recession is imminent. He said avoiding a recession “will be challenging, it won’t be easy. No one here thinks that it will be easy. Nonetheless, we think there are pathways … for us to get there.” The Fed Chair reiterated the Fed’s target to get inflation back down to 2%. The CPI jumped 8.3% annually in April while the PPI rose 11%. Cryptocurrencies Bounce The crypto market is clawing back gains after a week of intense selling similar to the moves on Wall Street. Bitcoin is up nearly 9% in the past 24 hours and nearing $31,000. Ethereum is up nearly 9% as well, topping $2,100. The global crypto market cap has risen 8.2% to $1.38 trillion. Crypto was hit hard this week as traders sold-off risk assets. The collapse of Terra’s UST stablecoin also wreaked havoc across the market. The world’s largest stablecoin, Tether, briefly dropped below $1 on Thursday but has since reclaimed that peg. Oil Rises, Gas Hits 4th Straight Record Oil prices are rising despite fears of weaker demand. West Texas Intermediate crude futures are up more than 2% to over $108 bbl while Brent crude futures are up 2% to over $109 bbl. But oil is still on track for its first weekly loss in three weeks amid heightened concerns about slowing economic growth. In the meantime, U.S. gas prices hit a new record-high today. Data from AAA shows the national average for a gallon of regular is now $4.432 while diesel jumped to $5.56/gal. This is the 4th day in a row those prices have jumped to a fresh record. Affirm Rallies On Fiscal Q3 Results Affirm Holdings (AFRM) shares are rallying 36.1% in premarket trade after beating fiscal Q3 expectations. The buy-now, pay-later company reported a loss of $0.19 per share on $354.8 million in revenue. That was better than analysts’ expectations for a loss of $0.46 per share on $344 million in revenue. Affirm said it processed $3.9 billion in gross merchandise volume (GMV) last quarter, up 73% year-over-year and better than estimates for $3.85 billion. The CEO said 81% of those transactions were from repeat customers. Affirm forecast fiscal Q4 GMV between $3.95 billion and $4.05 billion with revenue ranging from $345 million to $355 million. That was in line with analysts’ estimates. Crypto Exchange CEO Buys Stake in Robinhood Robinhood (HOOD) shares are jumping 20.3% ahead of the open after the CEO of a major crypto exchange bought a large stake in the company. A new SEC filing shows FTX CEO Sam Bankman-Fried bought a 7.6% stake in Robinhood. The rally comes after HOOD tumbled to an all-time low at $7.71 Thursday. Bankman-Fried purchased $648 million worth of the stock through his firm Emergent Fidelity Technologies. The SEC filing says he bought the shares believing they “represent an attractive investment”. Consumer Sentiment Expected to Fall The University of Michigan releases the preliminary reading of its May consumer sentiment index at 10:00 a.m. ET. Sentiment is expected to fall more than 1 point to 64. So far, consumers have weathered inflation well with spending remaining high. But many economists see Americans reaching a breaking point soon as the threat of a recession rises. In Case You Missed It The Senate confirmed Fed Chair Jerome Powell for a second 4-year term Thursday. His nomination was approved on an 80 to 19 vote. 13 Republicans and 6 progressive Democrats voted ‘no’. Powell’s term will expire in February 2026. U.S. airline bookings tumbled 17% in April as flight prices surged 8% from March. Consumers spent $7.8 billion on domestic flights last month, down 13% from March. But demand is still higher than pre-pandemic levels. Bookings rose 5% compared to April 2019 while prices jumped 27%.
Continue Reading -->