Hey brother, I obviously can’t cover it all, and lest we forget, this is a 55/45 game at best. Despite our best Fundamental AND Technical analysis, there is still no better way to make and more importantly save money than forgetting the short term and just adding in and keeping it in LONGterm. Because NObody gets it right all or even most of the time.
But here are Some Notes as of today…. Bearing in mind this is of course all due to change.
The problem we have here today is multi-fold:
- In this kind of sell it all environment we have today, it doesn’t really matter what earnings are compared to normal. A Beat could still be met with a lukewarm reception. Which would fry the shit out of all those overpriced High IV Calls people bought.
Look at MSFT as a perfect example. A BIG beat. But it’s DOWN 7 from the days high and down 6-7 from its Open. I.E. all the action was in extended hours. Options holders got screwed.
- META. It’s been in and still is an admitted restructuring phase where it warned shareholders they’d be spending a lot more to build and grow over the next 4-6 quarters as it fully transitions into META from FB. If they Miss in any way, it’s going to drag this market down tomorrow in a way that makes today look like a day at the beach.
If it Beats, it could really help bring some life back to the DAQ. But a 2%+ reversal from today? No way. AMZN is next tomorrow. No one is expecting much. Because AMZN earnings are always a wash. A traditionally notoriously unprofitable company except for its AWS cloud services. BUT if GOOG’s massive Cloud services Miss was any indication, and businesses are truly moving away from Cloud, AWS could also decline, pushing AMZN down. And Putting even more downward pressure on the NAZ.
And then there's AAPL the most heavily weighted stock on the 3 Indices. Where AAPL goes so goes the NAZ. And this is why we've seen such ugly action in what's usually a great month, October. No one is expecting a Beat from AAPL this time. Too many problems. Too few new products that excite. Declining sales in China and the US advance notice already given. And a fully over-saturated market. (Hence perhaps todays announcement they're raising the price of AppleTV+. The one saving grace for AAPL and us all... It's burgeoning Services dept. If they can continue to show growing demand and revenue from Services, it might squeak by and save the day. My prediction: Services will show good steady growth. But it won't be enough to rally the stock. I am praying I am wrong on this and that AAPL absolutely blows the roof off of its release. Truly. Nobody wants a losing 4th quarter in the mkts. Except the hardcore Shorts. Markets in general. All four indices are now in clear downtrends. The Russell is actually down -5.7% on the year. This normally is a bearish indicator. The DJIA is only up 6% on the year. Ouch! For "the Index of Indexes" that ostensibly holds only the strongest healthiest and profitable 30 companies money can buy of all Sectors, this does not bode well. The S&P is still holding a decent 11%+. But it's sitting right on top of both it's 50 and 100 Day MAs. That needs to change. Fast. And then there's the beloved NASDAQ. Still up a whopping 26%! It has now almost transcended being an index of stocks and is more akin to a roulette wheel, with more and more mkt participants, and algos, trading solely off the NAZ itself with no knowledge or concern for what actual stocks comprise it. The 10 Day has now dipped below the 20, and the price is now below both. But it's got a LONG way to go to reach the 50 or 100 Day. So it's still far from worrisome. In fact a 26% return in a year is downright mouth watering. Of course META AMZN and AAPL could and will impact the index considerably. We just aren't sure which way.... One bright spot to note: although the VIX is up over 25% in the last month, it's still hovering around $20. That’s elevated to be sure, but it doesn't show massive protection buying going on. Not yet at least. We'll know more tonight. And next week. Inflation and Rates Simply put, Inflation is still too hot. Ask consumers. Ask Hedge Fund managers. Or Big Company CEOs (privately). As investors, fund managers and CEOs, of course we all want rates to come down. But nobody is kidding themselves. The Fed made a mistake by pausing too soon. Maybe it was the pressure from markets. Maybe it's an honest mistake. But the bond mkt -- some say THE leading indicator, is flashing rates need to go higher still if we're ever going to get inflation truly under control again. Sure it'll hurt. Again. Even more. But what we have here is just prolonged pain caused by this never ending feeling of indecision and distrust that inflation isn't going to come rallying back in 3-6 months. One might say that, frustrated with the Pollyanna style of the current Fed, the Bond Market is doing the Federal Reserve's job at the moment.