Posts by Jeff Macke
- Jeff Macke at Yahoo Finance6 hrs ago
Caterpillar (CAT) treating the bears like litter-box filler and driving the whole market higher. Shares of the Dow (^DJI) member pushing $100 after the company reported $1.72 in earnings per share, trumping analyst expectations for $1.36. It's all about expectations here. Bears will quibble about flat revenue but when so little is expected of you simply controlling expenses is more than good enough. For the full year CAT raised guidance to $6 a share in earnings versus $5.75 prior to the call. "Isn't beating by 36-cents in Q3 and raising guidance for the year by a quarter tantamount to an earnings warning?" It's a trick question. The answer is "stop thinking and enjoy the rally.”
- Jeff Macke at Yahoo Finance9 hrs ago
Hope you're feeling rested because this is the biggest day of the year, at least so far. That's because we've got a confluence of technicals, fundamentals and for want of a better term, "collective mojo" coming to a head in the next eight hours. Can stocks really pull off a third "V" bottom in one year? How's the consumer? Does Ebola matter? Is oil good or bad for shipping? Is anyone, anywhere using Surface tablets as anything other than 3lb paperweights?
We know where the market is technically. The S&P 500 (^GSPC) pulled back yesterday just like it was supposed to. Since last Thursday the S&P 500 has gone up more than 100 points. That's a lot, even in the most V-bottom friendly tape I can remember. Stocks "want" to rally if only because no fund manager can afford to miss a fourth enormous trade in one year. In a vacuum traders would buy the dip. Today is not a vacuum. It's a clutter-filled hell chamber of earnings reports.
- Jeff Macke at Yahoo Finance1 day ago
What a difference a week makes! Sound the trumpets and wave the flags! The sell-off is over! Naturally that means sell but first the good news.
Traders are also mellowed by a return to normalcy in markets and the volume of ghost stories most people don't want or need to pay attention to very much. The yield on a 10-year note (^TNX) has gone back above 2%. Traders don't mind low; they just don't want a free fall. Remember the illusion of control is the Fed's strongest weapon.
- Jeff Macke at Yahoo Finance1 day ago
The greatest strength of a man or methodology is often its greatest weakness. A gentle heart can be mistaken for a lack of resolve. A singular focus can hide a lack of vision.
As is true of philosophy, so it is in investing. Fundamentals are how stocks are “supposed” to be valued but an even cursory examination of market history reveals countless, often massive dislocations between reality and financial promise.
In financial markets as volatile as we’ve seen over the last month the simplicity of charting can be a Godsend. Fast markets are emotional, almost by definition. The S&P 500 (^GSPC) dropped 9.8% in three weeks, reversing sharply last Wednesday and now sits about 2% from where it was at the beginning of the month.
If you can think of anything that has fundamentally changed the discounted value of all the future cash flows of the S&P 500 by 10% in the last three weeks I’m all ears. Otherwise you’re just going to have to accept that there’s some value in using investing disciplines beyond accounting.
- Jeff Macke at Yahoo Finance2 days ago
Coca-Cola (KO) shares are down 6% and are now negative for the year. The world's number one soft drink company reported a profit $0.53 a share for its third quarter. That was in-line with estimates but the company added that volumes and margins would be hurt by macroeconomics, currency headwinds and a bunch of other stuff that doesn't seem to be preventing anyone from buying iPhones. What do you do with a stock that can drop more than 6% in a day, sells at a price-to-earnings multiple of 21X and has no growth? It's not a trick question. You sell and that's what shareholders are doing right now. By comparison, rival Pepsi (PEP) shares are 13% higher for the year.
- Jeff Macke at Yahoo Finance2 days ago
Every so often Apple (AAPL) posts one of those quarters where it seems almost petty to criticize it using normal metrics. Questions are raised, sure, but within the context of this being a real company and thus constrained by physical and practical barriers what the company has done so far transcends other organizations that it becomes impossible to even model the results.
By now you all know. The world’s biggest company recorded an enormous 4th quarter. Revenue beat, driven by absurdly huge iPhone sales of 39.3 million. Expectations were for 38 million but the best part was the average selling price was $602, a huge improvement over last year. iPhones are now responsible for 70% of Apple’s profits.
Mac sales were also great and they took share from PCs.
The only question was in iPads where sales not so shockingly fell to 12.2 million units, down from 14 million last year. Obviously the debut of the iPad Air2 this month took a bite out of those sales and it’s clear Tim Cook is still getting his arms around the replacement cycle for tablets versus phones and macs.
- Jeff Macke at Yahoo Finance3 days ago
Since Ebola emerged as a threat late last Spring it’s been great catalyst for story stocks. Ebola kills at a 70% rate! It was a global threat of large but unknowable size. A stock promoter’s dream.
Fortunes have been made already in biotech companies rumored to be working on cures for Ebola over the last six months. In the attached clip OptionMonster.com’s Jon Najarian says the easy money has been made but there are still some potential opportunities in company’s that, for want of a better way to put it, profit from Ebola.
NewLink Genetics (NLNK) was up 50% last week despite a large drop on Friday afternoon. It's up more than 15% today alone. It brought to mind huge pops and plunges from past epidemics and health scares. In all but a very few of those cases the companies that were supposed to be the next big thing in defense against, say, Bird Flu or SARs turned out to be duds.
“July 26th is when we flew those two patients back here,” Najarian says. That’s when those stocks were cheap. They are no longer cheap.”
- Jeff Macke at Yahoo Finance6 days ago
Time for your daily dose of Trending Tickers, the stocks that you're tracking as measured by Yahoo Finance ticker searches:
Carnival Cruise Line (CCL) shares are bobbing higher after an early dip. The cruise company's shares were hit earlier on reports that one of its ships was being held out of port because a passenger had been exposed to Ebola. The stock recovered after management assured investors that the passenger was showing no signs of the disease. Though cruise lines get a bad rap as being floating Petri dishes the reputation is overblown. It's been months since Carnival has even had dozens of passengers hit with the crippling gastrointestinal symptoms associated with the norovirus and more than a year since the Carnival Triumph drifted at sea with no power or working toilets for more than a week.
- Jeff Macke at Yahoo Finance7 days ago
Stocks are set to tumble on the open on the usual list of global tensions and a pandemic of uncertainty. This comes on the heels of a day that saw the S&P 500 (^GSPC) plunge nearly 3% before rallying into the close to finish down .8% at 1,862.
For the year the S&P 500 is now up less than 1% and the Dow Jones Industrial Average (^DJI) is in the red by 2.62% and is now 7.4% off its record high from September 19th.
Does Mr. Market have your attention yet? There were some signs of a trading low yesterday. Volume on the NYSE was 944-million shares, about 80% above average. Volatility (^VIX) spiked as high as 31.
The biggest problem for bulls is that there are just too damn many of you. The AAII.com weekly sentiment survey showed an increase in self-described bulls for the week ending yesterday. An increase! That’s bad. There are way too many uncertainties out there for individual investors to be blithely buying dips.
- Jeff Macke at Yahoo Finance8 days ago
Very, very early this morning the Texas Department of State Health Services confirmed a second health care worker has been diagnosed with Ebola. The news sent shivers down the spine of markets still trying to find a footing after the recent pole-axing to stocks around the world. Futures took a slight dip around the time the story hit the newswires but let’s be honest, just about anything could take two or three points out of the futures given the restive state of investors these days.
According topolls run by Gallup, Americans are still relatively unconcerned about the risk posed by the disease. At least they were as of last weekend. In their most recent poll 77% of those asked were unconcerned about getting Ebola, the same level reported when the question was asked the prior weekend.
Beyond hyper speculative drug stocks and sector-specific concerns (airline industry, I’m talking to you) history suggests investors are better off ignoring health scares when it comes to their investing decisions.