Tag Archives for " earnings "
Morning Call Express: Pressure Mix
In today’s Morning Call Express, Scott Redler talks about the headwinds that the market is facing this morning. Specifically AAPL, now with earnings behind it and the levels that is has trading pre-market. He also talks about the levels he will be watching to trade around. Scott also reviews other high beta tech names as well as the recent action in Oil.
Continue Reading -->Morning Call Express: Sluggish With a Constructive Feel
In today’s Morning Call Express, Scott Redler updates the key levels of support and resistance on the SPX. He also talks about some earnings names that have reported as well as other names that are looking constructive.
Continue Reading -->Earnings Season Review: When Not That Awful Is Good Enough
FactSet just updated their second-quarter earnings season stats for S&P 500 companies so let’s take a look at just how awful things are: -69% of companies are beating earnings estimates (vs. 5-year average of 67%) -54% of companies are beating sales estimates (vs. 5-year average of 55%) -Q2 earnings have declined -3.5%, which is less awful than the -5.5% estimated as of June 30. -Health care and tech have had the highest percentage of companies reporting earnings beats So the same trend that’s persisted for several quarters is still in place — earnings are nothing to write home about. But they are just a little better than expected, so investors are holding their noses and buying. Or maybe they’re just fooled by central banks drenching the market in monetary perfume? However, Q2 will go down as the fifth straight quarter of earnings declines, something we haven’t seen since the 2008-2009 crisis. I accept the market for what it is, and I always roll my eyes are melodramatic bear cases because they always omit the most important variable — WHEN. It does feel somewhat “wrong” for SPX earnings to be so weak while the index is regularly making new all-time highs. That’s creating stretched valuations. Aside from Telecom Services, all services have forward P/E’s is above 5 and 10-year averages: But consider the flip side. Stock prices are a current representation of the perception future earnings and cash flows. Pretty soon, companies will be facing weak comps, so stocks could simply be discounting a return to normalish growth. Maybe that’s simplistic thinking, but complex thinking has gotten the permabears absolutely nowhere.
Continue Reading -->Did We Just See the Return of Volatility?
Want to Kick Your Options Trading Up a Notch? My buddy Doug Robertson is hosting a FREE options trading webinar this Thursday where he’s teaching his secrets for generating major options profits in volatile markets. Click here for more information By Michael Comeau 1) The Return of Volatility Over the past two weeks, market volatility collapsed as the S&P 500 made a succession of all-time highs within an extremely tight trading range. And in fact, the S&P hasn’t had a real down day since June 27, when it fell -1.8% in the aftermath of the June 24 Brexit vote. The zero-volatility trend felt like it started to break today as the index dropped as much as -1.1% intraday before finishing at 2156.2, down -0.7%. The Nasdaq Composite and Russell 2000 showing even bigger losses as traders cut down risk. Japan set off the selling by announcing a much smaller-than-expected increase in government spending, which sent the yen higher and global equities lower. The yen is seen as a key safety asset, and thus it tends to rise when markets are uncertain. But that wasn’t the only issue today… 2) Oil, Economic Data, Banks Crude oil gave up an early gain to slide back below the $40/barrel mark, which means it’s nearly 25% off the highs. Given that crude oil’s ascent was a major driver of equity market sentiment in the rally off the February 11 lows, a fast drop down can’t be good. We also saw some disappointing economic data, with Personal Income and PCE Deflator numbers missing expectations. This followed Friday’s lousy GDP report, which ended a pretty impressive streak of economic data beats. And finally, Germany’s Commerzbank lowered its full-year earnings forecast, with its stock dropping -8.5% intraday to a 24-year low. That put a chill under US banks. 3) So What’s Next? The pickup in volatility is a good thing, because it means fear is coming back into the market. That could be exactly what we need to reload for another leg higher following this sideways consolidation. But near-term, there’s a decent chance the market goes nowhere until Friday, when the eagerly-awaited July nonfarm payrolls report hits. Traders’ rate hike expectations have been declining since Friday’s GDP report. But strong jobs numbers could flip that around in a jiffy, which could send positive reverberations throughout global markets, which is exactly what we saw last month. Wednesday Preview US Economics (Time Zone: EDT) 07:00 MBA Mortgage Applications (7/29): prior -11.20% 08:15 ADP Employment Change (Jul): exp. 170k, prior 172k 09:45 Markit US Services PMI (Jul F): exp. 51, prior 50.9 09:45 Markit US Composite PMI (Jul F): prior 51.5 10:00 ISM Non-Manf. Composite (Jul): exp. 55.9, prior 56.5 10:30 DOE U.S. Crude Oil Inventories (7/29): exp. -2000k, prior 1671k 10:30 DOE Cushing OK Crude Inventory (7/29): exp. 275k, prior 1110k 10:30 DOE U.S. Gasoline Inventories (7/29): exp. -1000k, prior 452k 10:30 DOE U.S. Distillate Inventory (7/29): exp. -500k, prior -780k 10:30 DOE U.S. Refinery Utilization (7/29): exp. 0.00%, prior -0.80% 10:30 DOE Crude Oil Implied Demand (7/29): prior 16713 10:30 DOE Gasoline Implied Demand (7/29): prior 10250.9 10:30 DOE Distillate Implied Demand (7/29): prior 5122.4 Global Economics 04:30 GBP Services PMI 21:30 AUD Retail Sales m/m Earnings Before the Open: 3D Systems (DDD) Charles River Laboratories (CRL) Humana (HUM) After the Close: Albemarle Corp (ALB) Allstate Corp (ALL) Continental Resources (CLR) J2 Global (JCOM) Oasis Petroleum (OAS) Tesla Motors (TSLA)
Continue Reading -->Earnings Season Stinks… Just Not As Much As We Thought
We came into earnings season with remarkably low expectations. But it turns out things don’t stink that much. FactSet just updated their earnings season stats, and as of Friday, things stink — just not as much as they were expected to. At the end of Q2, traders expected a revenue decline of -0.8%. And as of last week, actual results have dragged that number up to +0.1%. 57% of companies have beaten revenue forecasts, which is slightly above the 55% 5-year average. Consumer discretionary (namely AMZN), Tech (think AAPL), Health Care, and Financials have been leading the way The earnings side is looking decent too. Q2 is showing a -3.7% earnings decline. Now that’s pretty bad on its head, but at the end of Q2, analysts expected a -5.5% decline. The conclusion: once again, earnings season stinks… just not as much as we thought. And remember, these numbers don’t reflect today’s solid earnings reports from Pfizer (PFE), CVS (CVS), and others. This is another reason the market’s falling apart. Everyone’s been bracing for disaster and we’re clearly not getting it. And of course, it helps that economic data has been generally decent. Disclosure: Position in AAPL
Continue Reading -->The Morning Hammer: Apple Smashes Bears, Record Nasdaq Highs in Sight
Global markets are in a happy mood courtesy of Apple’s (AAPL) better-than-expected earnings report, and Japan’s signaling of more stimulus. Apple is up ~$6.50 in the early going after beating analysts’ earnings, revenue, and iPhone unit estimates, and offering strong forward guidance. Meanwhile, just as traders thought Bank of Japan stimulus was priced in (based on yesterday’s big rally in the yen), PM Shinzo Abe showed commitment to a $265 billion stimulus package. That’s pushing the yen back down, which is great for risk appetites. SPX futures are slightly green, while NDX futures are up 0.7%. If Apple generates some follow-through among other large-cap techs, we could see a new Nasdaq Composite all-time high above 5231.94. And the NDX may finally exceed its March 2000 high of 4816.35. Facebook (FB) reports after the close, and if it repeats another blowout, maybe we see those records fall by the weekend. In related news, Twitter (TWTR) dropped another guidance stink bomb last night and is getting smashed up. Meanwhile, Fiat Chrysler raised its forecast, and Comcast (CMCSA) and GlaskoSmithKline beat. Crude oil is down after the API showed a very small decline in crude oil inventories after the close yesterday. EIA data hits at 10:30 a.m. ET. Economists expect a 2 million barrel decline. We also have durable goods, pending home sales, and of course, the FOMC rate decision. Fed Funds futures show that traders are pricing in a mere 10% chance of a rate hike today. The forward outlook will be key. I would pay close attention to see if the Fed eases up on its concerns over the Brexit, given that global economic data has been generally strong as of late. Lately, I’ve been emphasizing that perception of the Fed, which impacts all financial markets, is incredibly volatile. Ths is especially true this year. 2 months ago, traders were pricing in a 74% chance of a December rate hike. That number dropped to 10% chance after the Brexit. Now those odds are back up to nearly 50%. And we act like Tesla (TSLA) is volatile… Now one thing I found really interesting yesterday was the action below the surface in biotech. IBB was red because of Gilead’s (GILD) weak earnings report and big decline. Yet XBI, which is much more diversified (GILD is 8% of IBB), was actually well in the green. So below the surface, biotech was strong (as was the Russell 2000) on an overall snoozer of the day. So pay close attention to biotech — if it turns out to be a coiled spring, the bulls might party like it’s 1999. And 1999 was a good year!
Continue Reading -->Apple Eats Bears, Bears Eat Twitter
1) Holding Ahead of Apple US markets entered a holding pattern ahead of Apple’s (AAPL) earnings report, which hit after the close today. (more on this below) The S&P 500 traded in an extremely tight range today before finishing at 2169.19, up a tiny 0.03% on the day. The Nasdaq and Russell 2000 indices showed solid outperformance today despite an intraday drop in oil and some biotech names. This was a bit of a surprise given that overseas markets indicated a risk-off posture in the early going, perhaps best exemplified by the sharp rise in the Japanese yen, which rallies when traders grow more cautious. Crude oil stayed weak, with WTI crude breaking the $43 handle, though energy stocks actually finished up. 2) Bio-Confusion Large cap biotechnology stocks took a tumble today after industry giant Gilead (GILD) reported disappointing second-quarter earnings results and poor guidance. Gilead, which accounts for 8% of the iShares Nasdaq Biotechnology ETF (IBB), fell -8.5% today, while IBB dipped -0.7% That wasn’t exactly a pretty picture, but outside of Gilead, biotechnology was actually pretty decent. The XBI ETF, which is much more diversified than IBB, was actually well in the green today. This indicates that many traders believe Gilead is facing company-specific problems that won’t impact the sector. 3) Post-Close Earnings Twitter (TWTR) beat analysts’ earnings estimates for the 6th quarter in a row, but it reported disappointing revenues and delivered atrocious third-quarter guidance. Many traders were surprised at Twitter’s dissappointment given the headline-heavy US election cycle and global geopolitical troubles, which should be driving significant news consumption and chatter via Twitter. Twitter shares were down sharply in extended trading. That’s not a surprise given that the stock just rose over 20% on takeover speculation. Meanwhile, Apple (AAPL) was up over 5% after-hours as the company beat Wall Street’s expectations for sales, earnings, and iPhone unit sales. Apple also offered strong forward guidance. This should mean good things for the Apple calendar spread trade I suggested today. And it may even be good for the Intel (INTC) calendar spread trade from last week if tech stocks get a lift.
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