Fallback Friday – Earnings Give the Bulls a Reason to Pause

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ImageActually, the earnings are pretty good so far.  

BAC, BLK, DAL and JPM all had 10% beats while BK, FRC and UNH were pretty much in-line and we’re waiting for C and, of course, WFC missed – but that’s only because they got caught and had to take a $3.3Bn charge for fines for a total of $5.3Bn against $140Bn in earnings since the scandal broke in 2016 and hundreds of Billions more from the illegal practices they engaged in – not to mention whatever their peers have gotten away with…

As President Trump says, “It’s not a crime if no one catches you.”  I wonder if people still want their children to grow up and become Presidents?  Did people want their children to grow up and become Al Capone or John Gotti?  

ImageAh, C just came in and it didn’t help as they did beat expectations but earnings were 21% below last year – expectations were simply worse.  BLK was down about 20%, JPM down just 6% – all the banks were down but DAL and UNH were up over last year.  Are these the kind of earnings that should be breaking us out to new highs?  

And by highs, I mean highs for the year, of course (4,020 on the S&P yesterday) – you can forget about 4,800 on the S&P 500 the same way we had to forget about Nasdaq 5,000 for 16 years after the 2,000 high.  Nasdaq 16,500 was our high last year and we’re not likely to see that again this decade either – especially as we struggle to hold 11,000 at the moment.  

NDX Jan 13 2023

The real race on the Nasdaq Weekly Chart is that the 50-week moving average does not cross below the Strong Bounce Line at 12,000.  It’s at 12,450 and it’s dropping 25 points per week if the Nasdaq is under the 200 wma so we have 18 weeks to improve – either these earnings or the next.  Otherwise the bearish technicals will dominate the charts into the end of the year.  

None of this matters to long-term, value investors.  We are thrilled to once again be able to buy stocks for realistic prices (16,000 and 4,800 were NOT realistic) and the main reasons the Economy is having trouble are artificial: 

  • We have the Fed tinkering to keep Inflation down.
  • Inflation is up over supply chain issues caused by Covid and the War. 
  • Inflation is also up due to a strong demand for workers – an indication of a healthy economy.  
  • Wages are finally rising, which will give our economy a stronger base to build on.
  • A lot of the slowdown we see is due to the end of stimulus and the end of QE – don’t expect the economy to come off life support and run a marathon.  Like Damar Hamlin, we’re going to need a little time to recover, please.  

Bills gather for team prayer on field following Damar Hamlin injury | Fox  News

So let us pray for 2023 and what lies ahead – you never know when you are going to take a brutal hit, so it’s best to be prepared.  Like Dmar’s medical support – our cash is on the sidelines, ready to come to our rescue if this earnings season is unkind and, if it turns out to be strong and healthy – we can always join the game!  

Have a great weekend, 

    • Phil

 

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Good morning!

Looks like the banks are all increasing their loss reserve. Not a good sign!!

Do people want their children to grow up and be Hunter Biden? Sweet jesus, you are insane.

For the climate fear mongers, ask yourself how the Sahara desert has swung between a lush forest to desert and back again. Every 20,000 years. For 6 million years. 300 round trips.

I’m done here. Peace out.

WOW, not appropriate for a trading / investing site

my reply was to fkeithl, not Phil’s response.

I would suggest the climate change debate is a means to distract governments from making business pay for the pollution they release into the environment from their manufacturing, consumers using their products and discarded single-use packaging.
But, what do I know, I stopped watching the national news back in 2003 during the cheer-leading run-up to the Iraq war when I used to yell at the TV. 😋

Last edited 24 days ago by brucethenet

Bruce, my suggestion would be to watch a year in review program on dec 31 or jan 1. Most networks have a recap which would only “cost you” one hour of time, once per year. You get a whole years news condensed in to bite sized pieces. 😉

Thanks for the idea, Stockbern. Of course, I cheat a little with online articles and people asking me if I’m aware of something in the news  😊 

larry from blackrock is on cnbc with cramer he sounds almost evengelical says the main thing he sells is hope for a decent retirement that people have too much fear at the moment. he must be tired of withdrawls.

With my portfolio almost back to where it was near the end of November/start of December, what would you think of buying back profitable short puts to sell them again when (if?) the market goes back down? Do I just need to be patient/long term or is there a better strategy?

Phil,
Thanks for mentioning $700/month Portfolio that is dear to my heart  😍 

Any thoughts on /CL? I’m short 1 contract at $77.50. I’m thinking about shorting another at $79.50. Though with only 6 days left in the Feb contract I’m thinking about rolling out to March

You would think that the who with all the historical global data available to it could easily provide a fairly accurate estimate of the daily number of covid cases. i mean they know nobody has immunity and the day that the government said no more covid zero. It would likely produce a wave similar to what india experianced.

Yeah, but WHO’s data come from the member countries. That’s the first problem, although often they do have teams on the ground. Second, daily cases count is subject to a lot of problems with diagnosis, recording, reporting, sending the stats up the line to the appropriate agency. And that’s the US – China’s system probably functions better (not many worse than the US – Brazil, maybe), but it’s a huge place and the same biases apply.
I rely on the sewage stats to get a feel (eww) for what’s going on in my vicinity and to advise the people who ask me for advice (https://biobot.io/data/, http://publichealth.verily.com/).
Finally, back in late 2019-20 when this whole deal started, we epidemiologists understood what was happening (excluding Eric Feigl-Dingbat, who’s not an ID epidemiologist) – a novel virus in a naive population, easy enough to model. Where we stumbled was the argument with the virologists over transmission – is it contact, air-borne, or aerosol – so that screwed up the public message. I personally stumbled because the index cases in southern Korea and the US happened on the same date, and three months later Korea had a pretty good handle on the outbreak. I thought the US could perform that well, or close to. Nope.
So here we are in an entirely different situation, a theme and variations. Not a novel virus, and not an immunologically naive population. Most of us, if we’re honest, don’t have a solid idea of what happens next. More variants, more cases in vulnerable, i.e. non-immune sub groups, maybe more surges as we drop precautions like bringing lots of people back into poorly ventilated energy efficient office buildings, but it’s guesswork.

Ha! Sounds just like many of my colleagues when talking to the media.

sorry i forgot to mention i was talking about china

HA Larry Fink From BlackRock must be talking up their book, like an Author on a book tour. Right when I was reading tommyt’s comment is received a invite for a Webinar.
Join CEO Larry Fink and BlackRock’s top thought leaders as they discuss the path forward in a historically challenged market – and where they see opportunity.
I would include the link but I do not want to dox myself. It is for ” Financial Professionals” only. 😎 

AI-generated abstracts fool scientistsThe artificial-intelligence (AI) chatbot ChatGPT can write fake abstracts that scientists have trouble distinguishing from those written by humans. The chatbot was asked to create 50 abstracts on the basis of the titles of articles in five high-impact medical journals. Reviewers spotted only 68% of the ChatGPT abstracts performing roughly the same as AI-detector software. Researchers are divided over the implications: some find it worrying, but others think that serious scientists are unlikely to use AI-generated abstracts.

MSFT will probably charge extra for more recent, current research.

EQIX too expensive
DLR, not bad
DBRG ?
CD & GDS – Chinese, no way

Data storage:
PSTG good performance in 2022 but looks expensive
MU short term memory cycle problems
NTAP ?
STX value play

nice little run up in CAKE to start the year

VIX down to 18
nothing to worry about

Phil, I have 95 of the Jan 20 -$5 calls on Rig now at 0.6 ( avg purchase price of 0.89), would it make sense to roll them to the Aug $7 calls for 0.7$, net spend of 950$ or would it be better to just take a loss and close out and wait for a pull back?

Last edited 24 days ago by desi

Totally agree with you, the calls were a left over of my previous fallacy of buying naked calls until I picked up selling calls/ puts. I added some stock at lower prices instead of the calls and took my avg stock prices to 4.88/share!!

https://seekingalpha.com/news/3924582-why-are-defense-stocks-falling-goldman-downgrades-lockheed-northrop-raytheon

Goldman just downgraded LMT to a target price of $322? I hope it gets there, I didn’t think I would ever get another chance to buy LMT in the 300s, let alone below 350…