What happened last week in the stock market? What are the next interesting earnings reports? Let’s talk about the stock market!
Hey everyone and Welcome so let’s start with the recap of what has happened in the stock market since Monday.
Monday the DOW rose by more than 1,12% with the broad stock market SP500 also gaining more than half a percent while the NASDAQ was the laggard barely up 0,2% to finish the day while The VIX had another big drop closing at 22.2. About 70% of the companies were gaining while 80% were trading over 50 and 200-day moving averages. The stock market was lead by the energy sector, which saw a major spike of almost 5% with Financials and Industrials also up more than 1% for the day. The rally was pushed mostly by small and mid-cap value stocks while large-cap growth companies were lagging as you can see in this HEAT MAP with the biggest company in the world, Apple, dragging down the sector, down almost 3% for the day. CHART / SECTORS / CHART
Reports also came in on Monday that the PS5 and the new xBox have been sold out the moment they are available in stock, as the two gaming consoles are enjoying great demand, this bolds well for the parent companies Sony and Microsoft especially if they can keep up with the demand for this holiday season including Black Friday, holiday RETAIL SALES are forecasted to rise between 3,6 and 5,2%. XBOX & PS5 NEWS
All this while Europe will start to re-open again after a contraction of the economy due to the latest lockdowns. As they saw the Eurozone PMI falling by almost 4% in October. EUROZONE NEWS
Some good news came from STORE CAPITAL as the rent collections for November remained at 90% with no new tenants requiring deferrals, this suggests that companies are managing to survive even with the current restrictions in place.
We also saw reports that Janet Yellen will be the next Treasury pick as she would become the first person to be at the top of the FED the White House Council of Economic Advisers and the Treasury and she will become the first woman to lead the Treasury. TREASURY NEWS
Moving on, Tuesday we saw the DOW spike more than 1,5%, the SP500 rising 1,6% and the NASDAQ up more than 1,3% in what was a very good day for the stock market with more than 70% of companies advancing and 167 new highs on above average volume. The leaders were once again Energy and Financials, as this 2 sectors, will be two of the fastest benefiting from the end of the pandemic. The rally was continued with value companies leading the way for the 2nd straight day. You can struggle to find red spots in the HEAT MAP from Tuesday but there were a few in healthcare and real estate. This was the first time that the DOW closed over 30k. CHART / SECTORS / CHART
NIKOLA stock tumbled after the recent rally as the GM deal seems less likely every day, as the deadline for the deal is December 3rd.
While October HOME SEARCHES surged over 200% as a Redfin report shows, this leads me to believe that the strong housing demand will keep remaining at this levels for a good period of time.
On Wednesday we saw the stock market take a breather, as the DOW lost 0,6%, the SP500 lost 0,16% while the pandemic plays regained some momentum with the NASDAQ being up almost half a percent before the stock market closed for Thanksgiving.
About 54% of companies were losing ground with below average volume for the day, as Technology and consumer discretionary and staples were the gainers for the day. Value plays did see some normal corrections after the huge gains in the last days as investors were cashing out some money probably before the day off. CHART / SECTORS / CHART
Here is the HEAT MAP from Wednesday as only a couple of companies Like Amazon, Apple, Nvidia and Shopify were gaining, while the energy sector was the biggest laggard.
Also the AAII investor sentiment SURVEY from Wednesday showed that people are getting more bearish or bullish as the neutral feeling fell way below the historical average as bullishness remains very high. This is usually a contrarian indicator, as more bullishness gives me reason to take profits and bearishness to invest in the stock market, though I don’t have the same confidence in this as in the past, as I expect this market rally to last until the end of next year.
News came in from Delta Airlines as pilots approved pay cuts and lower guaranteed hours that could avoid more than 1700 pilots getting cut off. This are great news both for the company and the pilots, as air travel will pick up again in the next years. DELTA NEWS
Also, Deere reported blowout EARNINGS and a beat of more than 1$ per share and a revenue only 0,6% below last year while also issuing strong 2021 forecasts as they see the equipment sales climbing more than 10% compared to 2020 with a strong net income guidance of 3,6 to 4 billion $ compared to the May guidance of 1,6 to 2 billion $. 4Q 2020 / 2021
We closed the week on a short day on Friday as the NASDAQ led the way up 0,93%, the SP500 up 0,24% and the DOW barely up 0,13%. As we saw about 55% of the companies advancing on way below average volume due to the short day of trading with 85% of companies trading below average volumes. Friday was a pretty divided day as Health Care and Tech lead the way while Utilities and Energy saw a slight pullback after the big gains this week. SECTORS / CHART /
Here is the HEAT MAP from Friday as we see that the market was dragged higher by the big tech companies and communication services while the rest of the market was pretty much lagging.
So for the week, the Nasdaq lead the way up 3% and closed at the 45th record of 2020, the SP followed up 2,3% and closed a 26th record of the year with the DOW also rising 2% in this shortened week. While the VIX closed the week just below 21, at the lowest level since February.
So great signs for the recovery of the economy still popped up almost every day, as the stock market is more forward looking than it is a reflection of the current economic conditions. As November will likely be the 7th straight month of job gains, though they will be the fewest in number since the recovery of jobs has begun. NOVEMBER JOBS
Also, Bitcoin has seen its price drop from almost all-time highs at 19,5k down more than 3k before bouncing back to around 17k. The cryptocurrency was due for a correction as it had seen a huge rally in since Labor Day and this correction came as news popped of the Treasury attempting to rush out regulation on crypto-wallets. This would be a big negative factor for people who own Bitcoin not for just it’s value but for using it also. But we will have to wait and see as the Treasury boss will be replaced when the Presidency changes. BITCOIN NEWS / BITCOIN CHART
Some company news from Friday were that PALANTIR saw it’s stock plunge from all time high of 33,5$ to 27,6$ after Citron tweeted that they are shorting the stock with a 20$ price target. This are common tactics that short sellers use in my opinion to get the fast results they expected. Citron also got into a short position on NIO recently and that news also made the stock take a plunged but that has since recovered and even made new all time highs since.
Great news came for sports betting companies like DraftKings and Penn national as Canada seems to be going the same way as the US as legalizing sports betting advances more and more. CANADA NEWS
Also, Tesla has seen a huge spike in the last weeks since the SP500 news, and the stock might see another spike as Musk TWEETED that the full self-driving feature will be released wider in the next weeks as the company finally approaches the end of software development as they collect more and more data. Tesla has surpassed Berkshire and is now the 6th largest company in the US as the stock is up more than 600% year to date making Elon Musk the second richest person in the world behind only Bezos. The company will go into the SP500 index at about 80% of its total market value cap as the index only counts the free-floating shares. I believe we won’t see such a big spike in price when the company will be added to the SP in December, just like it happened with the stock split its more of a buy the news sell the event type of thing. As I expected the stock jumped over the previous all time highs and it might see a little correction when the event actually happens, but in the long run this a company that I will continue to own in my portfolio. TESLA CHART / MUSK WEALTH /
Next week we will have some interesting earnings reports that I expect to beat the estimates from companies like NEXT WEEK EARNINGS
AUTOHOME which is a company that has great potential as it trades at a low P/E, they offer leads and services for auto consumers in China and they have a very wide consumer base to spread to.
With ZOOM also expecting to report on Monday after the close, I recently just sold out of my position in Zoom. I think there is too much positive expectations for the company as it trade at almost 200 times earnings per shares.
Also, Salesforce are expected to announce earnings on Tuesday, as the company saw it’s stock tumble after the news of a possible acquiring of Slack. In the long run that will be a very good play for the company as they have continued to buy more and more companies that allows them to keep growing.
Other companies that are reporting and are very interesting to watch are CrowdStrike and OKTA also on Tuesday with DocuSign , Dollar General, Marvell and Snowflake reporting on Wednesday.
Good news came this Saturday for online retailers as sales jumped more than 20% on Black Friday and are expected to grow between 15 and 35% tomorrow as Cyber Monday may set a new record for online sales. RETAIL EXPECTATIONS
Here are the most important economic data that we are looking for in the next week as it will be a week full of numbers that may impact how the stock market reacts in the near future. Hopefully we will see an improvement in PMI and a decrease in jobless claims and many more improvments. NEXT WEEK ECONOMIC DATA
Thank you everyone for reading! Hope you enjoyed the content! Be sure to leave a comment down below with your opinion and other thoughts on the stock market!
Have a great and see you next time!
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