The Bear Den by Shortside Jonny
Monday, October 26, 2020 – DIA 277.00 -2.24%, QQQ 280.47 -1.50%, SPY 339.39 -1.85%
Chicago Fed National Activity Index came in weaker than expected .27 vs. .39 expected. The previous number was 1.11. Home Sales were weaker .959M vs. 1.025M expected. Equity markets gapped down on the opening on worsening COVID-19 news both in Europe and the U.S. About mid-morning the equity markets broke support and continued lower until 1:30 pm when a rally commenced, with the market still closing down on the day but significantly off the session’s lows. Being close to the end of the accounting period for many mutual funds (10/31) stocks that have underperformed over the last year during the pandemic were down again on the news. Cruise companies- Royal Caribbean (RCL) 58.26 -9.65%, Carnival (CCL) 14.03 -8.66%, and Norwegian (NCLH) 16.80 -8.45 were hit especially hard, along with Energy companies Apache (APA) 8.56 -7.76% and EOG Resources (EOG) 34.93 -6.98. As one might figure, utilities were a flight to safety with American Electric (AEP) 93.59 +1.86%, and Consolidated Edison (ED) 83.74 +1.4% escaping the carnage. As a group in general, utilities (UTY) have outperformed the market since 9/2.
Tuesday. October 27, 2020 – DIA 274.79 -.30%, QQQ 282.66 +.78%, SPY 338.33 -.31%
Durable Goods Orders came in 1.9% vs. the .5 expected. Durable goods Ex-Trans. came in at .8% vs. the .4% expected. On an Ex-defense basis, orders came in +3.4% vs. .2 expected. Housing prices came in up 1.5% vs. .6 % expected. The S&P Schiller Housing Index showed a Year over Year 5.2% vs. 4.2% expected. The equity markets were mixed on the day. With the tech-heavy Nasdaq 100 (QQQ) up and the Dow (DIA) and S&P500 (SPY) down. The day’s big M&A deal was Advanced Micro Devices (AMD) 78.88 off -4.08% purchase of Xilinx (XLNX) 124.35 +8.56% in an all-stock deal for $35 billion. Harley-Davidson (HOG) 35.40 +22.07% was a standout. The company announced that it will be leaving 40 markets, downsizing the product line, and eliminating discounts. DexCom (DXCM) 380.63 -9.94% was down ahead of the evening’s earnings release. Franklin Resources (BEN) 19.73 -13.62% disappointed on earnings coming in at .56 vs. .68 expected.
Wednesday, October 28, 2020 – DIA 265.46 -3.35%, QQQ 271.64 -3.90%, SPY 326.70 -3.41%
The preliminary GDP growth forecast set a record up 35%. The Atlanta Fed GDP Nowcast estimate came in at up 13.75%. Markets gapped down 2% on the opening and continued to sell-off in reaction to the news out of Europe on the COVID-19 virus resurgence and lockdowns. Microsoft (MSFT) 202.47 -5.06% beat revenue and earnings estimates handily, but the shares succumbed to a sell on the news reaction. Visa (V) 180.87 -4.47% came under pressure of the market ahead of earnings which were released post-market beating earnings by 3-cents. DexCom (DXCM) 349.12 -8.28% was another case of more selling on the good news. The company beat both revenue and sales growth estimates. Insurance companies Traveler’s (TRV) 121.50 +2.02% and Chubb (CB) 127.42 +3.25% were bright spots on the day. Chubb had released earnings that missed estimates by .16 a share but management characterized an improving underwriting margin, and a strong commercial P&C revenue growth.
Thursday, October 29, 2020 – DIA 226.59 +.42%, QQQ 276.39 +1.75%, SPY 329.98 +1.02%
Continuing Jobless claims came in higher than expected 7.756M vs. 7.7M. Initial jobless claims came in better-than-expected 751K vs. 775K. In a sign that inflation is working its way into the system GDP price index printed at +3.7% far exceeding the 2.8% consensus. Apple (AAPL) 115.32 +3.71% was up going into the evening’s earnings report. Chevron (CVX) 68.80 +2.87% beat earnings coming in at .11 vs. an expected loss of - .28. KLA Tencor (KLAC) 201.95 +5.98% beat earnings handily coming in at $ 3.03 vs. $2.73 expected. On the downside, EBAY 49.28 -7.46% came in with earnings of $.85 vs. $.70 expected, but the stock traded off on the earnings guidance given by management. DexCom (DXCM) 335.29 -3.96% continued under selling pressure.
Friday, October 30, 2020 – DIA 265.21 -.52%, 269.38 -2.54%, SPY 326.69 -1.00%
Personal income came in showing a growth of .9% vs. .4%. Personal spending was higher at a growth of 1.4% vs, 1%. Chicago Purchasing managers index (PMI) came in at 61.1 vs. 58 expected. Above 50 is a sign of expansion. Apple (AAPL) 108.86 -5.6% came in with earnings beating top and bottom-line estimates, but the sales of current iPhones disappointed. SeaGen (SGEN) 106.80 -13.28% beat both top and bottom-line estimates, earnings of $3.50 vs. an expected loss of - .07 for the quarter but importantly management trimmed sales estimates on a key drug, Adcetris used in stage 3 and 4 cancer Hodgkin’s Lymphoma. Twitter (TWTR) 41.36 -21% beat estimates $.04 vs. an expected loss of - $.06. User engagement was high with the return of sports, the presidential election, and COVID-19, but the service showed much slower user growth than anticipated. On the plus side, Mohawk Industries (MHK) 103.19 +10.9% was the day’s standout with Earnings that came in at $ 3.26 vs. an expected $ 2.31.
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