Posts Tagged ‘materials’

WILL OIL KILL THE STOCK MARKET RALLY?

WILL OIL KILL THE STOCK MARKET RALLY?

WILL OIL KILL THE STOCK MARKET RALLY?Courtesy of The Pragmatic Capitalist

With oil and materials names now accounting for over 25% of the S&P 500 it is imperative that you understand where the price of oil is heading as these stocks are likely to correlate closely.  Bloomberg reports that oil prices have surged over 60% this year, but could be facing a wall at $80 per barrel as spare capacity spikes.

“The numbers have gotten much larger over the past year,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The Saudis alone probably have close to 3 million barrels excess capacity. The excess shows how effective OPEC’s been in managing the market.   The Saudis are happy with oil in the $70-to-$80 range,” Mueller said. “It’s low enough to stop development of some oil sands and alternative energy sources while not hurting the economy. If prices rose above $75 they would open the spigot.”

capac

Sounds like OPEC wants oil prices in the $75-$80 range.  This could hinder the recent run-up in stocks.  If seasonality, a weak hurricane season or economic concerns influence the picture don’t be surprised if oil trades much lower and takes the stock market with it….

Source:  Bloomberg

 

 


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EARNINGS UPDATE – WHAT TO EXPECT FOR Q2 AND BEYOND

EARNINGS UPDATE – WHAT TO EXPECT FOR Q2 AND BEYOND

momentum, earningsCourtesy of The Pragmatic Capitalist

Earnings season is about the pick-up momentum and will certainly dominate the market direction over the coming 6 weeks.  Preliminary results have been much better than expected.  Analysts have backloaded their 2009 earnings estimates due to their expectations for a second half recovery.  This puts us at an odd juncture in the market.  The current quarter’s estimates appear to be relatively low, but the second half estimates appear a bit optimistic.  Analysts currently expect a 14% decline in EPS versus Q2 of 2008.   Third quarter is expected to decline 22% and full year results are expected to be down 14%.   Full year expectations are for $59 in EPS while 2010 estimates are calling for $75.  Both appear a bit optimistic.  Thus far, there have been 6 positive surprises for every negative in Q2 earnings.  Although there haven’t been many reports this quarter this likely bodes well for more of what we saw last quarter when the overwhelming majority of companies beat expectations.

My proprietary expectation ratio continues to show near-term deterioration.  The data of late has been relatively light, but the change in trend is a certain sign that analysts are getting more aggressive with their earnings expectations.  It’s important to note that the ER is an intuitive forward looking indicator.

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So, what do I expect to see in Q2?  Expect a huge amount of bottom line beats and in-line or worse than expected revenue figures.  The economy is still incredibly weak so the top line growth has been about in-line with analyst’s expectations, however, companies are cutting costs much more efficiently than expected.  This has created a huge divergence between the analysts revenue estimates and their top-line estimates. Our recent analysis of ths situation highlighted this phenomenon:

Cost cuts are no recipe for organic growth.  That can only be achieved through top line growth.  The implications here are that we are likely to see another quarter of “better than expected” bottom line earnings as analysts have adjusted their EPS estimates very little over the prior quarter.  This could further juice the stock market.  The more important factor to keep in mind, however, is that this is no recipe for long-term growth.  We will need to see a sharp expansion in the economy before revenue


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Phil's Favorites

CULTS, LIES, AND MORE SADOPOPULISM

 

CULTS, LIES, AND MORE SADOPOPULISM

Courtesy of Teri Kanefield (follow Teri on Twitter here)

Mindy asked me these questions about Trump’s Town Hall yesterday: 

Her questions assume that the ...



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Politics

CULTS, LIES, AND MORE SADOPOPULISM

 

CULTS, LIES, AND MORE SADOPOPULISM

Courtesy of Teri Kanefield (follow Teri on Twitter here)

Mindy asked me these questions about Trump’s Town Hall yesterday: 

Her questions assume that the ...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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ValueWalk

Financial Strategies for Businesses During COVID-19

By Ankur Shah. Originally published at ValueWalk.

The COVID-19 pandemic has left no business unaffected in many different ways. Most are taking a financial hit across industries. Some may not last through it all.

Q2 2020 hedge fund letters, conferences and more

In order to keep your organization afloat, you’ll need to employ a variety of strategies, technological and otherwise. Here are some ways to plan ahead and help your business survive.

Plan for Different Time Periods and Scenarios

Nobody knows how lon...



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Zero Hedge

Nano-X Shares Plunge After Muddy Waters Says Company Has "No Product To Sell Other Than Its Stock"

Courtesy of ZeroHedge View original post here.

Nano-X shares are plunging this morning after well known short seller Muddy Waters Research has published a new report comparing it to Nikola on numerous occasions (this year's short reference du jour, we guess) and saying it "has no product to sell other than its stock." Shares have fallen 20% in the pre-market.

...



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Kimble Charting Solutions

Could It Be "Schitts Creek" For Technology Stocks If Selling Starts Here?

Courtesy of Chris Kimble

The Nasdaq has been the unparalleled leader of the stock market in 2020, having rallied furiously off the COVID-19 crash market bottom in March.

But all of the excitement around tech stocks and the comeback in the stock market may be coming to an end… that is, if a key Fibonacci price target has anything to do with it!

In today’s chart, we look at the long-term “monthly” chart of the Nasdaq Composite Index (IXIC) and focus in on the 18-year rally.

As you can see, the Nasdaq peaked in 2000 and bottomed in 2002. Applying Fibona...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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