Joel Elconin joins me today to share his thoughts on the negative comments out of Apple yesterday and the market moves out of risk on into risk off. It’s important to consider and understand where Apple’s stock has gone over the past 6 months and how this dip is already being bought back slightly. Overall the shift to risk off assets to start this week is noteworthy.
Joel Elconin joins me today to look past the Coronavirus and address some of the more fundamental drivers for the markets. Apple is reporting earnings today, and after more than doubling in 2019 this stock can be used as a barometer for the overall markets.
We also have the Fed statement tomorrow that could have implications on the markets. While nothing major is expected we will have to see if Powell address the balance sheet expansion or future rate policy.
Allison Ostrander kicks off today by sharing a new indicator that she recently developed. Claiming that this indicator can be a crystal ball we look at a few charts that Allison is trading heading into the weekend.
I asked Allison off mic about GLD, GDX, and SIL. Here is what she had to say…
Last week GLD printed a bullish divergent bar and saw follow through off a higher this week. This week appears to be a normal bar for GLD.
GDX and SIL were both similar to GLD bullish divergent bar last week and follows through with a higher high this week. And the current bar appears to be normal
I will note that GDX did make a bullish divergent bar last month (November) on a monthly chart, so this month or in next couple of months there is a high probability GDX will see a higher high above 28.16
While most everyone will be watching the Fed statements and press conference tomorrow there are a couple other important events to watch. Ed Moya, Senior Market Analyst at OANDA joins me to share his thoughts on the Fed meeting but also look to some earnings from big tech, Facebook and Apple. There is also jobs data that will be released and trade updates on the possible Phase 1 deal.
There’s a lot to cover today with Joel Elconin, Co-Host of the Benzinga Pre-Market Prep Show. We start off with the bounce in Bitcoin and address the comments that Bitcoin is the new preferred safe haven asset. Up next are some comments on Trump’s tweets and how they continue to dominate the short term market moves. Finally we end recapping some of the moves in the recent Uber and Beyond Meat IPOs.
Click here to learn more about the Benzinga Trading Summit in New York on June 20th. Or email Joel at email@example.com.
Joel Elconin, Co-host of the Benzinga Pre-Market Prep Show joins me today to recap the recent earnings released out of Google and Amazon. Google’s earnings miss has gaped the stock down 7% while Amazon’s good earnings are supporting the recent move higher (while not back to all-time highs). We also look ahead to Apple’s earnings and comment on the overall health of the US markets considering the almost 15% move so far year to date.
Joel Elconin, Co-Host of the Benzinga Pre-Market Show joins me today to outline the key stories and events for the markets. We discuss the Fed statement last week and following moves in the bond market. Also the rotation back into the FAANG stocks and the set up for gold is addressed.
This weekend, the stock market bull turned 10 years old, handing investors more than 17% in annualized total returns along the way.
According to my old S&P coworker, Howard Silverblatt, that performance is more than three times better than the annualized return from the end of 1999 (5.43%) and almost twice as good as the return since 1989 (9.64%).
Of course, plenty of people stayed on the sidelines and lots of experts encouraged them to do so.
This is pretty common.
When shares of U.S. companies are going up, they say stocks are getting too expensive.
When the market is falling, they say it’s too dangerous to jump in because more downside is certain.
And when stocks are going sideways, they repeatedly say the action proves investing in U.S. shares is an outdated strategy.
This kind of hyperbole makes for interesting reading, but it can also end up dooming your nest egg to a life of anemic gains. Or worse, repeated losses.
So today, I want to talk about three major market myths that continually float around out there…
Myth 1:Buying and Holding Good Stocks Doesn’t Work
Market watchers have loved saying “buy and hold” approaches don’t work for as long as stocks have been trading.
Traditionally, you would hear this from stock brokers who stood to make a lot more in commissions by encouraging their clients to trade in and out of positions. But even in today’s world of low-cost brokerage accounts, there are still plenty of experts telling investors that long-term investing is a stupid move.
I agree that a buy-and-hold approach isn’t ideal for some investors and there are plenty of active trading strategies that work well.
However, the idea that you can’t make very good money by sticking with big companies and holding them for years on end is patently false… especially if their stocks pay nice dividends.
Here’s an illustration that will probably surprise you…
The top three contributors to the S&P 500’s performance during this bull market have been Apple, Microsoft, and JPMorgan.
No real surprises there.
But in fourth place? General Electric.
Yes, the same General Electric that has been absolutely decimated in recent times!
Despite all that pain, the fact that the stock was even lower in the throes of the Great Recession – along with all the dividends it paid along the way – still manage to put its total return toward the very top of the list.
So you can make LOTS of money by simply buying solid dividend payers at fair prices and then doing nothing more for years at a time.
Of course, a lot of folks will say it’s impossible to find good values now that the market has run up so much over the last ten years.
Myth 2: Buying Stocks Right Now Is a Sucker’s Move
The chorus of stock market naysayers grows with every new all-time high in the S&P 500. And to be sure, we are no longer seeing a huge smorgasbord of undervalued companies out there.
At the same time, you CAN still find good bargains. In fact, some of my favorite blue chip names have actually been going down even as hot names continue to rise on hype.
What you have to remember is that generalizations like “stocks are now overvalued” don’t tell the full story. There are many thousands of individual companies trading out there – each of which needs to be evaluated on a case-by-case basis.
Just because the market is sitting at some particular P/E ratio doesn’t mean there isn’t a small tech firm experiencing tremendous growth or a large retailer being unfairly punished because of its latest earnings report.
In addition, there are plenty of ways to play stocks more aggressively or profit from short-term swings.
The key is determining your goals and then sticking with the plan you’ve made.
Which brings me to one last major market myth…
Myth 3: You Can’t Make Money If Stocks Aren’t Moving Up
Nothing could be further from the truth.
As I’ve already explained a million times, you can easily collect solid dividend checks month in and month out no matter what the underlying stock is doing (or not doing).
In addition, the market is always moving at least a little bit every day. So you can also use advanced timing tools to play the many peaks and valleys that occur within a longer period of sideways action.
Plus, there are two more ways to make money from stocks during sideways – or even down – markets:
For starters, you can sell options to generate additional income from stocks you already own or even on stocks you’d like to own.
You can also aim to profit as individual stocks – or the broad market – falls. And you can do this by buying put options… short selling… or simply using inverse exchange-traded funds (ETFs).
So the bottom line is that there are countless ways to make money from the stock market, especially if you choose to employ a combination of the ideas I touched on in today’s article.
Really, the only bad approach is letting others scare you away from one opportunity after another.
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap
This post Shocking Evidence: The Market is Rigged! But Here’s Why Things Aren’t as Bad as You Think! appeared first on Daily Reckoning.
My friend Chris had just hit another golf ball out of bounds. Only this time, it sailed into the adjacent fairway and nearly took the head off some guy lining up his pitch shot.
Chris was NOT a good golfer. In fact, he was undeniably the worst player in our group last spring.
And yet, despite hitting every other shot off-course, Chris still managed to beat me, my brothers, and our other friends at our informal golf tournament.
How did he do it?
It all ties back to a handicapping system that gave Chris an unfair advantage.
Fortunately for you, there’s a similar system in the market right now, setting up some big gains for investors who are paying attention.
Let me explain…
Leveling the Playing Field with a Weak Handicap
Chris was able to win the tournament because his golf “handicap” gave him a number of free strokes. If you’re familiar with the handicapping system, you know that scores from previous rounds are added up to reach an appropriate number of free strokes.
The only problem is, people can intentionally write down poor scores ahead of a tournament, to set the bar low. Then, with more free strokes, it’s easier to beat the competition. Most players call this “sandbagging” and it’s definitely an unfair way to win.
I’m not saying that’s what Chris did. But you never know!
Chris’ victory comes to mind as I look through first quarter earnings that have been driving stock prices for the past few weeks.
You see, corporate executives have been sandbagging in their own special way, telling investors to expect weaker earnings through the rest of the year. But if you look carefully at what’s going on behind the scenes, a different story emerges.
As report for fourth quarter earnings roll in, the average S&P 500 company has increased profits by about 28%. That’s a healthy rate of growth, and a big part of the reason stocks have been trading higher this year.
But there’s one problem with earnings season this month. Executives have been telling investors to expect weaker profits for the rest of the year. According to Bespoke Investment Group, the guidance numbers for this quarter are some of the weakest over the last 15+ years!
What’s driving this poor outlook?
Well, corporate executives have a number of concerns that are causing them to be more cautious when telling investors what to expect.
For starters, last year’s profits grew sharply because of the recent corporate tax cut. This year, companies will still enjoy lower tax rates, but they’re not going to change from last year. So we won’t get the same kind of growth seen in 2018.
Second, the government shutdown has been a big issue as these executives put together their talking points. With so much uncertainty (and potential fallout with millions of Americans missing paychecks), it makes sense for companies to be a little cautious moving forward.
Finally, the trade war with China may be on hold, but it’s not solved yet. We’re still waiting to see whether the U.S. and China will be able to hammer out a deal. And that deal could have an impact on how different companies generate profits this year.
Add it all up, and you can see why executives are managing investor expectations. They certainly don’t want to wind up with a weak report later in the year that misses expectations and sends their company’s stock plummeting.
The Evidence Says Something Different
While I don’t necessarily blame managers for being cautious with their guidance, the evidence that I’m seeing right now points to a much stronger environment for stocks this year.
For instance, sales growth has been rising at the fastest level in several years. Keep in mind, sales numbers aren’t directly affected by the corporate tax cuts. So this gives us a more accurate picture of how the economy is growing and how consumers are spending money.
And that picture is very strong!
Corporate spending is also picking up.
Recent reports from the mighty Facebook, Amazon, Netflix and Google corporations have been increasing capital expenditures to grow their businesses.
And this year, that spending will continue to grow.
Google’s chief financial officer Ruth Porat noted that the company will undergo an uptick in purchases of servers and other equipment. Facebook will spend an extra $4 billion to $6 billion more than last year’s $14 billion on growth opportunities. And Amazon will be spending more this year to build out its AWS cloud service business.
All of this spending will help companies that supply key products and services for growth projects. And these suppliers will need to hire workers driving strong employment, healthy consumer spending, and overall economic growth.
In other words, despite the cautious guidance from corporations this year, the overall economy is strong and profits should continue to grow.
That leaves us with an interesting situation…
The Bar is Low, So the Future is Bright
With corporations encouraging caution, and the economy exuding strength, something’s gotta give this year.
Think about what is going to happen in the second and third quarters when companies continue to grow profits and the economy keeps on trucking. What about when a new government spending bill is reached? Or what happens if we reach an agreement with China?
At this point, investor expectations are fairly low. Much like our expectations for my friend Chris’ golf game.
With the bar set so low, it won’t take much for companies to perform better than expectations.
Investors with cash on the sidelines will scramble to get more of their capital in play.
And as their buy orders hit the market, stocks will naturally rise.
Of course, here at The Daily Edge, we’ll continue to highlight the stocks with the biggest chance of beating investor expectations and trading sharply higher. But you need to make sure you’re locking in your investments ahead of time, before prices start moving higher.
Don’t be misled by the sandbagging corporate executives!
Here’s to growing and protecting your wealth!
The post Shocking Evidence: The Market is Rigged! But Here’s Why Things Aren’t as Bad as You Think! appeared first on Daily Reckoning.
Allison Ostrander, Director of Risk Tolerance at Simpler Trading shares her insights in the the charts of Apple and Gamestop. We also discuss the short positions that entered Apple before the recent earnings report. These shorts are a large contributor to helping drive the stock higher right now. These stocks also tie into the broader retail sector.