Stocks bounce back after Wednesday’s sell-off. GM, Square & Uber rise while the stock market is still focused on the big short squeeze. Let’s talk about this and other stock market news
Hello everyone and Good Morning! So, let’s start with the recap of yesterday as we saw the stock market having a bounce back day after the Wednesday sell-off, with the Dow Jones gaining 300 points, the SP500 rising by almost 1% and the Nasdaq Composite adding 0.50%. Meanwhile the VIX plunged almost 20%, but remains at very high levels above 30… so, really anything can still happen right now with such high volatility in the markets
We saw almost 60% of the companies advancing yesterday on average volume, with the number of companies above the 50-day moving average remaining pretty much the same as all 11 sectors finished in the green with Financials, Materials & Industrials leading the way as Large-Cap Value plays were mostly the flavor of the day, while small-caps lagged behind.
Here is the HEAT MAP from yesterday, where we can see a big wall of green with a few exception in the big names that reported earnings the night before, with Apple which reported all-time record revenues and crushed estimates, Facebook that also delivered a solid beat and announced future buybacks & Tesla which did miss on earnings but delivered another solid revenue growth for the quarter, losing more than 2.5% for the day, while Microsoft continued to march forward after a spectacular quarter alongside most of the other big companies.
We have seen a big shift in stock performance after earnings results, with most companies overdelivering in EPS & revenues, but underperforming significantly afterwards, with the avg 1-day performance being almost a negative 2%, as we haven’t seen a negative 1-day performance since the end of the dot com bubble. I think the one big difference now is that most stocks have actually delivered great earnings and are profitable, but they are suffering from big run-ups from pre-earnings trading in a buy the news & sell the event set-up. So, I believe now is not the time to chase earnings reports, stay invested for the long-term and you will benefit from great companies.
In terms of economic data, we saw the 4th quarter GDP coming in at a 4% annualized growth, slightly lower than the 4.1% expected, as the economic recovery is still ongoing, but the rate of growth has significantly slowed down from the 33.40% we saw in the 3rd quarter.
We also saw jobless claims yesterday coming in a little better than expected, dropping to 847K as the continuing jobless claims also dropped to 4.77M while the Kansas FED and the retail inventories came in better than the previous month.
On the other hand, we saw the new home sales rising by only 1.6%, less than expected but are still up over 15% year/year, while wholesale oinventories rose less than expected and the December leading indicators came in-line with the expectations.
In some other stock market news, we saw Square jumping more than 8% as Retail Investors turned to their Cash app to trade stocks that have been blocked by numerous trading platforms. I think Square has become a very good play on both the digital currencies & stock trading, though they still have a lot of work to do to grow into their valuation.
We also saw UBER jumping more than 7% after Morgan Stanley pitched the company based on better-than-expected EBITDA for 2021, future disclosures on Uber Eats and the company being a very good re-opening play as their customers seem to have a healthy balance sheet that will allow them to spend a lot of money once the world re-opens. I also like & own Uber as a good re-opening play, while Uber Eats also makes them a good stay-at-home stock, so a win-win.
Meanwhile, GM announced they are planning to be carbon neutral by 2040 as they are planning to go all-electric by 2035 while planning to use 100% renewable energy to power their facilities by 2030 in the US. GM seems to be a very good play on the EV market, not only Tesla & NIO, as they are also planning to bring to the market their Ultium platform by 2025, and I believe with their Cruise venture, GM has a lot of room to run up in the next years.
So, let’s hope for a good day in the markets as the US Futures are pointing to a red open with the Nasdaq futures down more than 1.6% and are set for the worst performance since late October as we await to get the Consumer Sentiment Index, a couple of other economic numbers & some FED speakers later in the day while the world is still on pause watching the short squeezed stocks developments with some of the trading platforms planning to resume buying capacity on the stocks that have been the headlines of the year until now. One simple advice I’d give everyone, watch out and don’t be the last bag holder remaining, do take some profits by at least taking your cost basis out, because no one really knows when this will end or if and big players like the SEC will come down with restrictions or who knows what other measures.
For everyone that has read until the end, I wanted to let you know that I am going to change the posting schedule. I will only be posting 1 weekly news update probably on Monday Mornings but will do daily updates if something big happens in the markets while I will focus on doing a lot more stock analysis & price predictions posts. As not a lot of people seem to be interested in the daily news, and i have received a lot of hate for doing them. I won’t rule out more daily stock news in the future, but for now, this seems to be the best path to go on.
Thank you everyone for reading! Hope you enjoyed the content! Be sure to leave a comment down below with your opinion on the stock market!
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