2/15 Weekly Update

by Mahesh Kalbhor | Feb 15, 2022 | Earnings

News and Sentiments
Stocks traded fairly sideways till Friday’s 2/11/22 action pushed them to much lower levels for the week with the three major indexes all closing below their 200-day moving averages again. With chances increasing that the Federal Reserve may boost rates 50 basis points soon, and Russia will move into Ukraine, it may be tough sledding ahead for bullish traders. That said, the market has been resilient in the past, so a move higher would not and should never be out of the question. Earnings calls continue to slow, but there are several big-name companies expected to announce this week, including Alibaba, Baidu and NVDIA. As far as economic reports go, several are on tap, including the notes from the Fed’s last meeting. It’s unclear whether there will be any more insight to how the Fed is leaning before the next meeting, but it might be worthwhile to keep an eye on the market Wednesday 2/16/22 afternoon.
The overall picture for SPX is bearish. Both bulls and bears are hard-pressed to make money in bear markets. There is support near 4360 – the lows of yesterday (2/14/22) . The next important support level below that is in the 4200-4300 area, which if taken out will likely set off sharper downside action towards the next support level at 4000. As for resistance, it begins at 4600 and – after the long-time $SPX spent traversing the trading range in November and December – is evident all the way up to the highs above 4800

What happening this week:
• 2/15 – Tue PPI .
• 2/16 -Wed – Retail Sales data; FOMC meeting minutes
• 2/17 – Thu – Jobless claims
• Continue to watch the 2 year and 10 year treasury yield for a close in the gap between the two.
• VIX – popped up on CPI and Russia. Watch for more volatility
• US dollar continues to find some strength.
• Earning season continues.

Sectors in Play
• Energy very extended on oil but trend still is looking for higher.
• Financials continue to do OK in a rising interest rate environment. Pulling back so maybe an opportunity to add back
• Gold – ready to move. Geopolitical concerns pushing it higher .

Earnings:
•Monday – AAP, CAR amc
•Tues- VIAC, MAR bmo and RBLX, UPST, ABNB amc
•Wed – SHOP bmo and NVDA, AMAT and CSCO amc

Watchlist :

SPY – Add long put as hedge when SPY hits 452 / 458 area
PYPL – $120 did not hold, next support maybe around $107
USO and oil sector – still looking strong but extended run.
SQ – double bottom with support around $100.
WCC – long for infrastructure play. In and out this week. Will watch for another long entry at $120.
XLF – possible support around $37.5

Tech stocks- Dead ☠️ Cat 🐈‍⬛ Bounce

by Mahesh Kalbhor | Feb 10, 2022 | Earnings

Tech Stocks Are Bouncing Back. Here’s Why.

Technology stocks are rebounding this week from their harsh selloff. The stars appear to be aligning for a move higher in these stocks, for now. 
The technology-heavy Nasdaq Composite has risen more than 3% this week, as it tries to work its way out of correction territory. The index is still down about 10% from its Nov. 19 all-time high, though it had fallen as much as 17% from that level in late January.
The correction has been driven mostly by rising bond yields, as markets expect the Federal Reserve to lift interest rates to combat high inflation. The Fed will also soon reduce the size of its balance sheet, which means it will drive less money into the bond market—another factor dragging down bond prices and lifting yields. The 10-year Treasury yield hit a pandemic-era closing high of 1.96% on Tuesday, compared with 1.55% on Nov. 19. Higher long-dated bond yields make future profits less valuable—and many tech companies are valued based on their expected profits many years down the line. 
There are three main factors helping kick-start tech stocks’ recovery. The first is that bond yields are taking a break from surging. The 10-year yield stepped back from its Tuesday high, trading recently at 1.94%. While this is still an elevated level, investors are likely pleased to see the yield finally go somewhere besides up. It could also be a signal that tech stocks’ valuations are almost finished plummeting. The Nasdaq’s aggregate forward price-to-earnings ratio has already fallen to 28.3 times from 32.7 times Nov. 19. 
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
Higher-than-expected earnings could then lift these large market-cap stocks. Fourth-quarter earnings for S&P 500 tech companies, in aggregate, have beaten analyst estimates by 8.6% so far, according to Credit Suisse data.
Yes, Meta Platforms (FB) and Netflix (NFLX) released dismal earnings reports, but those resulted from company-specific problems. Earnings from Amazon.com (AMZN), Snap (SNAP), and Alphabet (GOOGL), all impressed investors.
“Despite the headlines on Meta and other visible tech companies, fourth quarter earnings for the sector are coming in really well,” said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.
As a result, some investors are allocating a little more money to tech stocks in their portfolios, after dumping such shares in January. This week’s move higher in tech stocks is “totally positioning,” said Dennis DeBusschere, founder of 22V Research. 
All of these developments are positive for tech stocks right now, but it remains to be seen whether the recovery will stick in the coming weeks. The 10-year yield could resume its rise and move above 2%, as annual inflation for the longer-term is expected to be above 2% (Investors normally demand a rate of return higher than the inflation rate.) That means earnings multiples for tech stocks might have a little more room to decline from here as well. Consistent with that, investors are only buying names in the sector “gingerly,” DeBusschere said. “I don’t think there’s any real desire for anyone to take a high-conviction view right now,” he adds.
At the very least, perhaps the worst is over for tech. 

2/5/22 Weekly update –

by Mahesh Kalbhor | Feb 5, 2022 | Earnings

SPX Analysis 🧐

Market had a very strong rally over the 4-day period, extending from January 28 through February 2 . The oversold conditions that existed just prior to that were massive and part of the rally was a reaction to those conditions. In addition, there is a verified positive seasonality to the end of January, as mutual funds and other large institutions put cash to work. Both of those conditions aided the rally greatly, but they are no longer in effect. Oversold rallies, generally look great until they reach the declining 20-day Moving Average, and then they don’t have much left – perhaps extending slightly above that 20-day MA, but then falling back again. That’s exactly what has happened so far: $SPX rose slightly above the 20-day MA to nearly 4600, but then fell back like a hot 🥵 pot. This is classic bear market action. There is now a downtrend line that can be drawn on the $SPX chart (See the blue line in Figure 1). That is, for now, the demarcation line between bear market and a possible reversion back to a bull market. As long as that trend line is there, the bears are in charge.

Put-Call Ratio Analysis

Equity-only put-call ratios remain in extremely oversold territory (), but they have not yet rolled over to buy signals. Put buying remains relatively strong, especially on down days such as yesterday, February 3rd, when our “all-exchange” equity-only ratios as well as the CBOE equity-only ratio were 75 (i.e., 75 puts traded for every 100 calls – a high number for equity options). These ratios are at levels last seen in the post-pandemic-Crash days of April 2020. They will only turn to buy signals when they roll over and begin to trend downwards.

SPY 🕵️‍♂️
– huge put volume 440; 430 ; 425
– Add long put if spx break below ⬇️ 4440

VIX analysis

Implied volatility seems to have largely returned to its “normal” bullish state. $VIX fell sharply from the day it generated a “spike peak” buy signal on January 24th. That buy signal is still in effect. Moreover, $VIX has not returned to “spiking mode,” even after the large selloff on February 3rd. There is something of a bearish concern in that both $VIX and its 20-day Moving Average continue to remain above the 200-day MA. That is a bearish intermediate-term state that has been in effect since late last November. In a similar vein, even though $VIX has declined, it is still above 20, indicating that large traders (i.e., traders of $SPX options) are still somewhat leery of this market and are still buying protection.

The construct of volatility derivatives has improved in that the term structure of the $VIX futures is once again sloping upwards (at least in the front end of the curve), and the front-month Feb $VIX futures are trading below the price of March $VIX futures. Similarly, the CBOE Volatility Index term structure is sloping upwards, too. All of this adds up to a bullish state for this indicator, as far as its prediction towards $SPX and the broad market.

Market Internals

Potential Breadth Oscillator Buy Signal
Last week, we had a cumulative count of +5,000 to reach a buy signal. The cumulative count did not quite get there (it was +4,800 or so), but an oscillator buy signal was achieved anyway, using daily figures. However, that buy signal was stopped out already, after the extremely negative action of February 3rd. So, we will set up a new count beginning today, February 4th.

Suppose declines outnumber advances by 800 issues today, Feb 4th. That makes the cumulative total –800. Suppose that on Monday, there are 1,100 more advances than declines. That would make the cumulative total +300. Continue this process, and enter the trade if the cumulative total reaches +1,200 issues.
IF
the cumulative total of NYSE breadth, beginning today February 4
THEN
Buy 1 SPY Mar (2 ) at-the-money call and
Sell 1 SPY Mar (2) call with a striking price 14 points higher.

What happening this week:.

• The short term $SPX chart is bearish. But there are some buy signals due to oversold conditions. There is an old saying that no one makes money in a bear market: the bulls lose
because prices are falling in general, but the bears lose too because the reflex rallies are so strong.The major indexes were able to close higher last week as only Nasdaq was unable
to retake its 200-day daily moving average.
• Heading into this week, the major indexes are still technically in a downtrend setting lower lows and lower highs but have pushed off recent lows.
• A trendline lower that may be considered potential resistance on the SPY around the $454 level could play a key role if the ETF can surge through or pull back from that point if
tested. Implied volatility levels are well off their recent surge higher.
• More earnings report driven market action.
• Continue to watch the 2 year and 10 year treasury yield for a close in the gap between the two.
• VIX – the direction of the fear gauge may give a hint on where the market is going. Continued drop in VIX will mean markets either range-bound or going higher.
• US dollar watch to see if it finds support here. Drop could be good for gold, silver and emerging markets.
• Earning season continues.

Sectors in Play
• Energy very extended on oil but trend still is looking for higher. Nat gas pulling back now after big run.
• Financials will do OK in a rising interest rate environment.

Earnings:
• Monday – ON, TSN, HAS bmo and AMGN amc
• Tuesday – PFE, BP, HOG bmo and PTON, LYFT, CMG amc
• Wednesday – CVS, CGC, TEVA bmo and DIS, UBER and TWLO amc
• Thursday – Coke, Pepsi bmo ; TWTR amc

Trade ideas

GLD – We modeled out a bull put spread on the ETF, and more may make sense with a potential move over its 200-day moving average.

Watchlist :
• AAPL – Nice response to earnings – support at $167 and resistance around $177.
• AMD – $130 was resistance after earnings report as expected. Support now maybe $115.
• AMZN – most of the earnings came from RIVN – no reason to be overly bullish. Upside resistance now and $3200. Possible sell upside calls at $3300.
• GDX and SLV – still sticking around support.
• PYPL – found support around $121 after big selloff.
• USO and oil sector – still looking strong but extended run.
• SQ – double bottom with support around $100. Got long some on Friday.
• TSLA – range-bound $850 to $1000.

Weekly Earnings Update – 1/31/22

by Mahesh Kalbhor | Jan 31, 2022 | Earnings

The big three (SPY, DOW and QQQ) are all well below their 50- and 200-day moving averages with the S&P 500 closest to touching the 200-day. The mighty 200-day can be a significant line in the sand so to speak, so if the indexes can get back above that level — where they have traded for a long time until recently — it would be a bullish sign.

$SPX is just now catching up. So far, it has found support in the 4200–4300 area, which is the September lows.

The SPY, DOW and QQQ managed a weekly gain thanks in part to a late day rally on Friday. Unfortunately, the IWM was still down but less than 1%. All this after the Fed came out with some comments that were more hawkish than expected on Wed.

The market is so oversold that a rally could occur at any time. An oversold rally usually can retrace all the way up to the declining 20-day Moving Average and a little beyond, before it runs out of steam. In this case, the 20-day MA of $SPX is still quite a ways above current prices – at 4600, but it is declining rapidly. Even so, that would be a substantial rally from current levels

Looking for a follow through move higher early next week but markets will likely continue to be volatile.

What’s Happening –
• Possible continuation bounce after January selling but there will be more volatility.
• Watch the 2 year and 10 year treasury yield as the gap closes between the two.
• VIX – pulled back on Friday on market strength.
• US dollar may be ready to consolidate after big pop up.
• Earning season continues. Lots of big names continue.

Sectors in Play –
• Energy looks a little extended and maybe due for pullback.
• Financials maybe found a bottom here – will do OK in a rising interest rate environment.

Earnings –

Quarterly earnings continue to roll with Amazon, Alphabet and Meta just a few of the well-known stocks expected to announce this week

Earnings on deck this week:

Tues
• XOM, UPS bmo –
• AMD, PYPL, SBUX and GOOGL amc
Wed
• ABBV, BABA bmo –
• META, SPOT and QCOM amc
Thu

• AMZN, SNAP, PINS amc

Watch List :
AAPL – Nice response to earnings – maybe range bound now trading $160 to $180.
AMD – very oversold – support at $100.
NVDA – Oversold – possible bounce
GLD (Gold) – very oversold, might be time to step in here for a bounce.
USO and Oil sector (XLF) – some oversold topping action on daily candles.
TSLA – caught a bid Friday after big earnings sell off. Very volatile stock with $800 support now.