The Bear Den by Shortside Jonny
Monday, October 12, 2020 – DIA 288.46 +.88%, QQQ 294.53 +3.09%, 352.43 +1.61%
Columbus Day holiday, there was no data released. The market gapped higher and continued higher for most of the day. The technology sector was a clear leader with Apple (AAPL) 124.40 +6.35% showing outside strength upon anticipation of the iPhone 12 5G release on Tuesday, which some are saying will be the most important since iPhone 6. JD.com (JD) 84.32 +5.68% benefited from the trend in tech on the day. Ford (F) 7.67 +5.79% received an upgrade and a $10 price target from a Wall Street firm. Cruise line companies Norwegian (NCLH) 18.08 -3.47%, Carnival (CCL) 15.21 -3.06% showed weakness.
Tuesday, October 13, 2020 – DIA 286.74 -.60%, 294.52 Flat, SPY 350.13 -.65%
Consumer Prices came in as expected for September @ .2% and yearly @ 1.4% (below Fed target of 2%). The market digested the previous session’s gains with some retracement. The management of Johnson & Johnson (JNJ) 148.36 -2.29% paused a COVID-19 trial and began a fact-finding determination as to why one patient had become sick. The halt was NOT ordered by the FDA. Cruise companies were again weak and traded to the downside, including Royal Caribbean (RCL) 60.61 -13.20%, Norwegian (NCLH) 16.59% -8.24%, Carnival (CCL) 14.03 -7.76%. On the upside Disney (DIS) 128.96 +3.19% announced a plan to emphasize its online streaming business. Medical diagnostic company Waters (WAT) 216.45 +7.08% was well bid and climbed all day leaving a large bar on the chart. Back on July 28, the company beat earnings estimates.
Wednesday, October 14, 2020 – DIA 285.13 -.56%, QQQ 292.06 -.84%, SPY 347.93 -.63%
Producer Prices ex-food and energy came in at + 1.2% vs. the expected + .9%. Earnings season started to kick in for real. United Healthcare (UNH) 321.85 -2.89% was a case of sell on the news. Wells Fargo (WFC) 23.25 -6.02% missed on earnings 32 cents vs. 37 cents per share and the stock was punished. Bank of America (BAC) 23.62% -5.33% also disappointed on earnings 51 cents versus 52.6 cents estimate. Goldman Sachs (GS) 211.23 + .02% had a big beat on revenue and earnings. On the M&A front, Concho Resources (CXO) 48.66 +10.24% was reported to be in merger talks with ConocoPhillips (COP) 34.53 -1.00%. Of note on the day Baidu (BIDU) 136.10 +7.10% broke out above resistance.
Thursday, October 15, 2020 –
Initial Jobless Claims came in much higher than consensus 898K versus 825K. Continuing claims took some of the sting away posting a lower rate of 10.018M versus the 10.7M expected. The Philadelphia Fed Manufacturing Index came in stronger at 32.3 versus the 14 expected (above zero shows expansion). On the upside, Walgreen’s Boots Alliance (WBA) 37.64% +4.82% released earnings better than expected $1.02 vs. $.96 estimate. Schwab (SCHW) 39.03 +5.15% beat on earnings $.51 vs. $.468 expected. On the downside, United Airlines (UAL) 34.25 -3.82% had a much greater loss than expected -$8.16 vs. -$7.632 estimate. Vertex Pharmaceuticals (VRTX) 215.28 -20.70% plunged on the news it would halt the development of a much-anticipated drug.
Friday, October 16, 2020 – DIA 285.97 +.37%, QQQ 288.51 -.55%, 347.32 -.05%
Retail sales ex-autos came in much better than expected at 1.5% vs. the .5% estimate. Industrial production disappointed at -.6% vs. an expected growth of .5%. The market was mostly quiet and closed mixed to down on the day. The good retail numbers were offset by the lack of a stimulus agreement on COVID-19 relief. Boeing (BA) 167.35 +1.89%, led the Dow Industrials, as talk that the 737-max might fly again by the end of the year buoyed prospects for the ailing aircraft maker. The optimism spread to fellow aircraft engine maker General Electric (GE) 7.29 +6.11% which responded well to the news. On the downside, we saw continued weakness in the oil names, as the fiscal year for many mutual funds approaches energy service stocks continued selling off; Schlumberger (SLB) 14.97 -8.83% reported better than expected earnings but missed on revenue, Halliburton (HAL) 12.25 -6.27%, Devon (DVN) 8.95 -4.99%, Occidental (OXY) 10.09 -4.90%. Keep an eye on these for a potential tax bounce after selling abates.
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