Micron Warns Market Outlook For 2023 Has Weakened

Key Insights

  • Micron announced that it would have to make adjustments to its plans due to weaker market conditions. 
  • The company stated that it would need to significatly improve total inventory in the supply chain.
  • Micron’s announcement put significant pressure on semiconductor stocks.

Micron Cuts Capex Plans For The Next Year

Micron stock is down by 6% in today’s trading session after the company presented a weak outlook for the next year.

Micron said that it would reduce DRAM and NAND wafer starts by approximately 20% compared to the fiscal fourth quarter 2022. The company will also work towards additional capex cuts.

The company commented: “Recently, the market outlook for calendar 2023 has weakened. In order to significantly improve total inventory in the supply chain, Micron believes that in calendar 2023, year-on-year DRAM bit supply will need to shrink and NAND bit supply growth will need to be significantly lower than previous estimates.”

Micron also noted that it remained confident in the secular demand drivers for its markets. The company expects that memory and storage revenue growth would outpace the growth of the rest of the semiconductor industry.

Micron Prepares For Weaker Economy

The semiconductor industry is trying to adjust to the potential recession in the developed countries and the consequences of the new U.S. export controls on China.

Recently, semiconductor stocks managed to rebound together with the general market. In addition, the meeting between Biden and Xi at G20 did not lead to more tenstions between U.S. and China, which served as an additional positive catalyst for semiconductor stocks.

Today, Micron’s report put significant pressure on the semiconductor segment. AMD is down by almost 5%, while NVIDIA is losing 3% in today’s trading session.

The weak performance of the semiconductor segment pushed NASDAQ Composite towards the 11,250 level. The market will remain extremely sensitive to any changes in company’s outlooks for the next year as traders are worried that a potential recession could deal significant damage to companies’ profits.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Pulls Back As Amazon And Alphabet Test New Lows

Key Insights

  • The strong JOLTs Job Openings report put pressure on stocks. 
  • Amazon and Alphabet tested new lows, pushing S&P 500 towards the 3850 level. 
  • AMD is up by about 2% in the post-market session despite missing analyst estimates on both earnings and revenue. 

Stocks Move Lower As Traders Prepare For Key Fed Decision

S&P 500 remained under pressure today as JOLTs Job Openings report exceeded expectations. Strong job market data is bearish for stocks as hopes for a less hawkish Fed fade.

In addition, it looks that traders wanted to take some profits off the table ahead of the Fed Interest Rate Decision, which will be released tomorrow.

The sell-off in Amazon and Alphabet shares put significant pressure on the S&P 500 today and pushed Nasdaq Composite towards the 10900 level. Meta managed to rebound from multi-year lows, but it remains to be seen whether the stock will be able to gain sustainable upside momentum in the upcoming trading sessions.

Meanwhile, energy and basic materials stocks moved higher amid a broad rebound in commodity markets. The leading copper producer Freeport-McMoran gained about 4%, while the oil services company Baker Hughes was up by more than 3%.

In the post-market session, traders will likely focus on AMD results. The company reported revenue of $5.57 billion and earnings of $0.67 per share, missing analyst estimates on both earnings and revenue. In the fourth quarter, AMD expects to report revenue of $5.2 billion – $5.8 billion. While the revenue target for the next quarter implies no growth, the stock managed to gain upside momentum in the post-market session and moved above the $61 level.

Electronic Arts stock declined by 2% in the post-market session after the company released its quarterly report, which indicated that net bookings for the trailing twelve months was $7.4 billion, up by 4% on a year-over-year basis. The company noted that it expected a negative FX impact of about $200 million due to the strong U.S. dollar.

S&P 500 Faced Strong Resistance Near 3915

S&P 500

S&P 500 did not manage to settle above the resistance at 3915 and pulled back towards the 3860 level. The resistance at 3915 has been tested several times in recent trading sessions and proved its strength. In case S&P 500 manages to settle above this level, it will gain strong upside momentum and move towards the next resistance at 3960. A move above this level will open the way to the test of the resistance at 4000.

On the support side, S&P 500 needs to settle below the support near the 50 EMA at 3835 to continue its pullback. The next support level is located at 3805. If S&P 500 gets below this level, it will move towards the next support at 3760.

For a look at all of today’s economic events, check out our economic calendar.

Will Fed Matter This Time?

It’s worth noting that despite the massive volatility witnessed throughout October, all three indexes closed out the month with double-digit gains.

Bulls vs Bears

For the Dow, a gain of +14% in October was its best performance since 1976. Bulls are hoping any signs that the central bank will slow down rate hikes in December and beyond will fuel another surge in stock prices and perhaps even help indexes turn positive by the end of the year.

Bears argue that more accommodative monetary policy from the Fed is not enough to push stocks into positive territory as companies still face a multitude of problems, including a slowing economy on top of elevated operating costs that may be much slower to come down than Wall Street is hoping.

Expectations that the Fed will need to maintain tighter monetary policy for longer is continuing to roil bond markets as well with yield’s on the 2-year Treasury note firmly above that of the 10-year.

Yields

When shorter-term yields are higher than longer-term yields, aka a “yield curve inversion,” some believe it is a signal of a future recession. Others argue that typically reliable bond market signals are skewed right now because of the Fed’s rapid pace of interest rate hikes.

There are concerns that the fallout in bonds risks creating a liquidity crisis in the $24 trillion US Treasury market, with volatility making it more expensive for the primary dealers to operate.

Remember, as bond yields rise, bond prices drop. Demand for US government debt already in circulation has fallen off a cliff due to the far lower interest rates it was issued at, and some worry this could grow to a glut of unwanted debt that further forces down the price of bonds.

That in turn is raising expectations for some sort of intervention from the US Treasury, likely in the form of buybacks as a way to inject liquidity and stabilize the market.

Bond investors are hoping the Treasury department will outline a plan this week, though the beginning of actual buybacks isn’t expected to be immediate. If the Treasury fails to address the issue, some insiders worry that bond market volatility could spike further and again put stocks under pressure.

Data to Watch

Today, investors will be digesting ISM Manufacturing, Construction Spending, and the Job Openings and Labor Turnover Survey (JOLTS). The JOLTS report in particular will be closely watched after job openings fell by over -1 million in August. Wall Street insiders are expecting a less steep decline in September with consensus looking for a number around 9.875 million, versus 10.05 million previously.

On the earnings front, highlights today include Advanced Micro Devices, Airbnb, BP, Eli Lilly, Pfizer, Phillips 66, and Uber.

S&P 500 Drops 2.5% As Traders Prepare For Hawkish Fed

Key Insights

  • The unexpected decline in the Unemployment Rate put significant pressure on stocks. 
  • Semiconductor stocks were hit hard by bad news from AMD and U.S. decision to impose additional export controls on China. 
  • Energy stocks gained ground as WTI oil tested new highs.

Stocks Retreat Ahead Of The Weekend

S&P 500 is down by 2.5% as traders react to the better-than-expected Unemployment Rate report, which indicated that Unemployment Rate declined from 3.7% in August to 3.5% in September.

The surprising decline in the Unemployment Rate will force the Fed to be even more hawkish, which is bearish for stocks.

Most market segments have found themselves under strong pressure today, although energy stocks continued to move higher as WTI oil rallied. Leading energy stocks like Halliburton, APA Corporation, and ConocoPhillips are up by more than 3% today.

Tech stocks are among the worst performers today. The sell-off is led by AMD, which is down by 11% after its preliminary results for the third quarter missed analyst estimates.

Today, U.S. has imposed additional export controls to cut China off from key chips, which put additional pressure on semiconductor stocks. NVIDIA, ON Semiconductor, and Monolithic Power Systems are down by 6-8%.

The sell-off is broad as traders want to cut their risks ahead of the weekend. The strong job market data may soon push Treasury yields to yearly highs, which will be bearish for stocks.

Traders should also monitor the situation in the European government debt markets. In Europe, yields are rising at an alarming pace, which may ultimately lead to a debt crisis. The strong dollar and significant problems in the European economies will hurt profits of U.S. multinational companies and may push S&P 500 to new lows.

S&P 500 Tries To Settle Below The Support At 3640

S&P 500

S&P 500 managed to settle below the support at 3675 and is trying to get below the next support level, which is located at 3640. In case this attempt is successful, S&P 500 will move towards the support at 3615. A move below 3615 will push S&P 500 towards the 3585 level. If S&P 500 declines below this level, it will head towards yearly lows at 3560.

On the upside, the previous support at 3675 will serve as the first resistance level for S&P 500. A move above this level will open the way to the test of the resistance at 3700. If S&P 500 climbs above 3700, it will head towards the resistance at 3725.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Dives To 3635 As Initial Jobless Claims Decline

Key Insights

  • S&P 500 found itself under pressure after the release of Initial Jobless Claims report.
  • Auto stocks are losing ground as traders react to the disappointing report from CarMax. 
  • A move below the support at 3635 will open the way to the test of the next support level at 3600.

Traders Worry About Hawkish Fed

S&P 500 is down by more than 2% in today’s trading session as traders react to the better-than-expected Initial Jobless Claims report.

The report indicated that 193,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 215,000. The Fed has previously stated that job market remained too tight. The report confirmed that the job market was in good shape. This is bearish for stocks as the Fed is forced to raise rates aggressively to cool demand and fight inflation.

Auto stocks found themselves under pressure after CarMax report missed analyst estimates on both earnings and revenue. The stock is down by 23% in today’s trading session. Tesla, General Motors, and Ford are down by 5-6% as traders fear that rising loan rates have started to put pressure on demand for vehicles.

Tech stocks have also moved lower today, which is not surprising as the market prepares for higher interest rates. AMD, NVIDIA, and Apple were among the biggest losers in this market segment today.

The current sell-off is broad, and even energy stocks are under pressure despite the rebound in oil markets. The market views Fed’s actions as the biggest danger for stocks, so any news that signal that Fed will continue to raise rates aggressively lead to a sell-off.

S&P 500 Tests Support At 3635

S&P 500

S&P 500 continues its attempts to settle below the support level at 3635. RSI is close to the oversold territory, but there is enough room to gain additional downside momentum in case the right catalysts emerge.

If S&P 500 settles below 3635, it will move towards the next support level at 3600. A successful test of this level will push S&P 500 towards the support at 3580.

On the upside, the previous support at 3660 will serve as the first resistance level for S&P 500. In case S&P 500 climbs back above this level, it will head towards the next resistance at 3700. A move above 3700 will open the way to the test of the resistance at 3725.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Retreats As Treasury Yields Test New Highs

Key Insights

  • Stocks remain under pressure as Treasury yields keep moving higher. 
  • Traders stay focused on the hawkish Fed. 
  • A move below 3750 will push S&P 500 towards the support level at 3725.

Consumer Cyclical Stocks Decline Amid Recession Fears

S&P 500 remains under pressure as traders stay focused on hawkish Fed. Today’s Initial Jobless Claims report, which indicated that 213,000 Americans filed for unemployment benefits in a week, served as an additional negative catalyst for stocks. The job market remains tight, which pushes Fed to raise rates aggressively as it wants to cool demand.

Consumer cyclical stocks, which were among yesterday’s losers, are under strong pressure today. Caesars Entertainment, Expedia, Etsy are down by 5-8% in today’s trading session. The market prepares for a recession when consumers cut “unnecessary” purchases.

Treasury yields keep moving higher, which is bearish for tech stocks. Currently, the yield of 10-year Treasuries is trying to settle above the 3.70% level. Such yields were last seen back in 2011.

AMD and NVIDIA are among the biggest losers in the tech segment. Traders fear that weakening PC demand will hurt their results.

Energy stocks are gaining some ground today. Leaders include refining stocks like Valero Energy, Phillips 66, and Marathon Petroleum.

From a big picture point of view, the market remains bearish. Rising Treasury yields indicate that bond traders continue to prepare for aggressive rate hikes from the Fed. In case Treasury yields move to new highs, stocks may find themselves under more pressure.

S&P 500 Tests Support At 3750

S&P 500

S&P 500 is currently trying to settle below the support level at 3750. In case this attempt is successful, it will head towards the next support, which is located at 3725. A move below this level will open the way to the test of the support at 3700. If S&P 500 declines below 3700, it will head towards the support at 3660.

On the upside, the nearest resistance level for S&P 500 is located at 3780. If S&P 500 gets above this level, it will head towards the next resistance at 3800. A successful test of this level will push S&P 500 towards the resistance at 3825.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Moves Towards 3900 As Chip Stocks Retreat

Key Insights

  • The strong Manufacturing PMI report raised chances for an aggressive rate hike at the next Fed meeting. 
  • NVIDIA and AMD retreated as U.S. banned exports of some advanced chips to China. 
  • Traders have started buying stocks from defensive sectors. 

U.S. Export Ban On Advanced Chips Pushed Stocks To New Lows

S&P 500 declined towards the 3900 level amid worries about aggressive rate hikes from the Fed and an export ban on advanced chips to China.

The strong ISM Manufacturing PMI report pushed the U.S. dollar to new highs. Treasury yields have also moved higher. The FedWatch Tool indicates that there is a 76% probability of a 75 bps rate hike at the next meeting, which is bearish for stocks.

S&P 500

Interestingly, RSI remains in the moderate territory despite the strong pullback, so there is enough room to gain additional downside momentum in the upcoming trading sessions.

If S&P 500 manages to settle below the support at 3915, it will head towards the next support level at 3875. A move below this level will push S&P 500 towards the support at 3830.

On the upside, the previous support at 3950 will serve as the first resistance level for S&P 500. If S&P 500 manages to settle back above this level, it will head towards the resistance at 3980.

Traders Show Some Interest In Defensive Sectors

NVIDIA stock is down by about 12% amid worries that U.S. export ban will deal a material blow to the company’s revenue. AMD is down by 7%. The ban targets sophisticated and expensive chips that are used in AI work.

The market is worried that the ban marks the beginning of a multi-year assault on China’s capabilities in the high-tech segment, and that additional restrictions will be announced in the future.

As the relations between U.S. and China continue to deteriorate, Chinese stocks like Alibaba and NIO have also found themselves under material pressure.

Leading tech stocks, like Apple, Microsoft, and Alphabet, are also moving lower today.

Meanwhile, investors are trying to find safe-haven assets after the strong pullback, as stocks like Johson & Johnson, Walmart, and Philip Morris are moving higher.

Traders should keep an eye on the trading dynamics of such stocks as their rebound may signal that buyers’ interest is growing after the sell-off in S&P 500.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Drops More Than 2% As Traders Rush To Take Profits After Recent Rally

Key Insights

  • S&P 500 retreated as traders continued to take profits after the recent rally. 
  • Recession fears, strong dollar, and rising yields served as additional bearish catalysts. 
  • The tech sector was hit hard, while the energy sector managed to stay in the positive territory. 

Traders Prepare For The Jackson Hole Symposium

S&P 500 found itself under strong pressure at the start of the week and moved below the 4150 level as traders took profits ahead of the Jackson Hole Symposium, which starts on August 25.

Recession worries, strong dollar, and rising yields have also contributed to the sell-off. However, it looks that traders searched for an excuse to move out of long positions after the strong rally from June lows.

While the FedWatch Tool indicates that there is a 56.5% probability of a 75 bps rate hike, bulls are afraid that they will hear something too hawkish from Fed Chair Jerome Powell, who is scheduled to speak on Friday.

At this point, a 100 bps rate hike looks extremely unlikely, but traders often become nervous when they want to take some profits off the table.

Semiconductor Stocks Retreat As Yields Rise

Semiconductor stocks were hit hard, and Intel retreated to multi-year lows. Competitors like AMD and NVIDIA have also declined by 3 – 4% today.

While semiconductor stocks have been under pressure for months, some stocks in this market segment, like NVIDIA, remain richly valued. High valuation levels may them more sensitive to rising yields.

Meanwhile, Ford put pressure on Dow Jones as it announced that it would cut 3,000 jobs. Ford noted that it wanted to focus on electric vehicles and software.

However, the market is worried that job cuts signal that demand for cars is not as strong as previously expected. Electric vehicle makers like Tesla and Rivian have also moved lower today.

It was a hot day for the followers of meme stocks as AMC stock collapsed on worries about Cineworld bankruptcy. Bed Bath & Beyond lost more than 15% amid worries about the financial health of the company. The current market sentiment may present a problem for meme stocks, which may find themselves under more pressure in the upcoming trading sessions.

In general, there was nowhere to hide except energy today. Energy stocks received support due to strong performance of the oil and natural gas markets. Shares of Chesapeake and Range Resources moved closer to yearly highs.

For a look at all of today’s economic events, check out our economic calendar.

Uncertainty Remains in the Chip Industry

Even though US inflation eased slightly in July, especially on lower oil prices, the CPI index is still extremely high at 8.5% year over year. As inflation continues to plague numerous industries across the globe, the impact it’s having on the semiconductor industry continues to cause concern as experts fear it may be heading into a possible downturn.

This past Tuesday, the 9th of August, Micron Technology Inc, the U.S Semiconductor manufacturer, dramatically reduced its current-quarter revenue forecast, citing a recent slowdown in the demand for personal computers and smartphones. Meanwhile, on the Monday prior, the U.S tech company Nvidia also advised of a decline in its gaming business, which has caused its second-quarter revenue to drop by a dramatic 19%.

In immediate light of the news, Nvidia’s shares dropped 8%, and on Tuesday, Micron’s shares fell 5.7%, pushing the Philadelphia SE Semiconductor index, composed of 30 members who are largely engaged in the creation of semiconductors as well as their distribution, manufacturing, and retail sales, down 4.3%. Since then, they’ve all bounced back to their pre-fall levels. Sony, Advanced Micro Devices, Qualcomm, and Intel have also all reported a softening in demand.

Daily charts of Nvidia and Micron – Source: ActivTrader platform

Micron has even warned of a negative free cash flow situation in the next few months as a result, a condition not seen since the beginning of 2020. The company now has plans to spend less on new manufacturing plants and equipment and is cutting the number of chips they create in response, to ensure the integrity and stability of their chip prices.

The company’s chief business officer, Sumit Sadana, told Reuters in late June that the shift from high to low demand had been “bigger than anyone was anticipating.” And that the changes would already be rippling through the ecosystem.

A highly cyclical business

In the last few months, the decline in orders has mostly been seen in chips that are used in technologies for smaller consumer products and gadgets, but more recently it’s been broadening to other markets too, including industrial, automotive, and data centers.

Some companies were understandably banking on a surge in demand post-covid, with the population supposedly heading back to work and experiencing better economic conditions, but inventories of chips and accessories continue to pile up in factories as sales stagnate.

After years of shortages across the globe, when wait times for certain chips were around six months at one point, and major companies like Apple lost out on countless millions of dollars worth of sales as a result, investors are now anxiously watching the industry as it experiences a sharp market correction, the likes of which have not been seen in around a decade.

During the height of the pandemic, smartphones, personal computers, and other technology were in unusually high demand, as the population moved to working and studying from their own homes. Naturally, companies worked hard to meet this new boom in demand, putting more and more capital into technology, manufacturing, and data centers to support the massive shift in consumer spending.

Now it seems that the tables have turned since the worst of the pandemic has apparently passed, and an oversupply of stock and other expenditures for many companies may cause consistent losses in the coming months while they make adjustments and/or divest.

As the cost of everyday living also skyrockets as a result of growing inflation, and interest rates continue to be increased worldwide, consumers are re-working their household budgets and weighing up the importance of spending their disposable income on leisure activities such as gaming and keeping up-to-date with new devices and technology if what they have is already working fine.

Innovation helps growth

One company that has apparently skirted the latest downward industry trends, according to their July earnings report, is the Taiwan Semiconductor Manufacturing Co. (TSMC). The company boasted its second record-breaking month with a 6.2% sales bump in July above the previous month, with US$6.23billion.

Analysts credit the revenue increase to the superior processes that have been developed to meet the demand for emerging technologies in computing and automotive electronics, such as the 5-nanometer and 7-nanometer processes currently in use, and the new 3-nanometer and 2-nanometer processes to be developed and produced in the near future.

U.S set to boost local production

Despite the current waning demand, the U.S will now provide $52.7 billion in subsidies to boost its local production, research, and technology in a bill signed by President Biden on Tuesday the 9th of August. The bill aims to push the U.S to be more competitive with China and will affect industries including automotive, white goods, video games, and weapons systems, among others, while also creating thousands of jobs.

Companies out of Taiwan, such as the Taiwan Semiconductor Manufacturing Co. were responsible for around 60% of chip foundry revenue around the globe last year, and there are fears that the U.S is far too dependent on them for its key industries.

President Biden called it “a once-in-a-generation investment in America itself.” But skeptics argue that the grants for private businesses would be treated as blank checks. As expected, many of the major U.S Semiconductor company CEOs were present at the signing.

AMD Can Be Supportive For Bitcoin

Why Is AMD Correlated with Bitcoin?

Advanced Micro Devices – AMD is an American multinational semiconductor company that develops computer processors, graphic cards and related technologies for business and consumer markets. We know graphic cards are used for cryptocurrency mining and this is the reason why there’s positive correlation between AMD and Bitcoin.

AMD Elliott Wave Analysis

If we take a look at the weekly chart, we can clearly see bullish trend and from Elliott wave perspective, we still see it unfolding five waves up. Current decline from the highs, looks slow, choppy and overlapped which indicates for wave IV correction. So, we believe that AMD is now approaching important and strong support at the former wave (IV), EW channel support line and 200-Week moving average.

Well, if we are on the right path, then AMD could start bouncing and recovering within wave V soon and if we respect a positive correlation, then Bitcoin could easily follow.

Trade well!

If you like our analysis please check at www.wavetraders.com for more analysis

AMD Could Bottom Out in the Low 70s

Advanced Micro Devices Inc. (AMD) reports Q1 2022 results after Tuesday’s closing bell, with analysts forecasting a profit of $0.92 per-share on $5.58 billion in revenue. If met, earnings-per-share (EPS) will mark a 75% increase on profit compared to the same quarter last year. The stock rose more than 5% in February after beating Q4 2021 top and bottom line estimates but rolled over quickly and has lost more than 30% of its value in the last three months.

Bearish Sentiment Limits Upside

AMD’s innovative pipeline features the new Genoa server chip, which should compete forcefully with Dow component Intel Corp. (INTC) and Taiwan Semiconductor (TSM). However, PHLX Semiconductor Index has lost more than 26% this year, highlighting a painful deterioration in sentiment. Worse yet, chip stocks are showing no signs of bottoming out, with Intel nearing a breakdown and industry leader NVIDIA Corp (NVDA) trading at a 9-month low.

But not everyone is bearish on AMD’s outlook. Raymond James analyst Chris Caso upgraded the stock to ‘Strong Buy’ last week, insisted the company is well-positioned to thrive in a tough semi environment. As he notes “we have become more concerned about cycle risks given potential for slowing consumer demand and elevated inventory levels at customers, (but) we favor those semi companies with strong secular drivers, more muted cyclical exposure and attractive valuations, for which AMD appears well positioned.”

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 20 ‘Buy’, 4 ‘Overweight’, 14 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $100 to a Street-high $185 while the stock is set to open Monday’s session nearly $15 below the low target. This dismal placement highlights the failure of analysts to properly evaluate the financial and psychological impact of rising inflation, war in Eastern Europe, and chronic supply chain disruptions.

Advanced Micro broke out above 20-year resistance at 48.50 at the start of 2020, entering a powerful uptrend that stair-stepped to an all-time high at 164.46 in November 2021. The stock has been cut in half since that time, giving up nearly two-thirds of the gains posted since the March 2020 low. It broke through support at 100 in April and is now targeting the May 2021 low in the low 70s.  An active monthly sell cycle should keep pressure on price in the second quarter, favoring downside into that support zone.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Intel Struggling at Support after Q2 Warning

Dow component Intel Corp. (INTC) is trading lower by more than 4% after meeting Q1 2022 estimates and guiding Q2 results below consensus. The chip giant posted a profit of $0.87 per-share during the quarter while revenue fell 6.6% year-over-year to $18.4 billion. The company reaffirmed fiscal year 2022 numbers but the mixed outlook didn’t sit well, with rising inflation, chronic supply chain issues, and long-term instability in Eastern Europe weighing on sentiment.

Bad Year for Chip Stocks

The chip sector has struggled so far in 2022, posting year-to-date losses across the board. PHLX Semiconductor Index is down 23% and showing no signs of stabilization, with sector leaders that include Advanced Micro Devices Inc. (AMD) and NVIDIA Corp. (NVDA) sitting at 9-month lows. Intel is outperforming the sector with a 10% loss but has lost a stomach-churning 35% since April 2021 while accumulation has dropped to a 9-year low.

CEO Pat Gelsinger chatted up the mixed report, insisting that Q1 “was a strong start to the year, exceeding expectations on both the top- and bottom-line. With a $1 trillion market opportunity ahead of us, we remain laser focused on our IDM 2.0 strategy. We executed well against that strategy in Q1, delivering key product and technology milestones and announcing plans to expand our manufacturing capacity in both the US and Europe to meet the continued demand for semiconductors and drive a more balanced, resilient global supply chain.”

Wall Street and Technical Outlook

Wall Street consensus stands at an apathetic ‘Hold’ rating based upon 7 ‘Buy’, 2 ‘Overweight’, 22 ‘Hold’, and 3 ‘Underweight’ recommendations. In addition, six analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $40 to a Street-high $75 while the stock is set to open Friday’s session more than $5 below the median $50 target. Further downgrades at this point could trigger a rapid decline into the low target.

Intel sold off from 75.81 to 12.06 between 2000 and 2009 and has traded within those boundaries for the last 13 years. A slow motion uptick reversed at the .786 Fibonacci selloff retracement level in January 2020 while an April 2021 test triggered a reversal that’s relinquished more than 23 points into Friday’s opening bell. The stock is now sitting on horizontal support that’s been tested multiple times since 2017, with each occurrence raising odds for an historic breakdown.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Best Oversold Stocks to Buy for March 2022

Stocks are still getting slammed in 2022, especially technology stocks. Of the tech stocks my research firm MAPsignals follows, nearly all the recent activity has been selling (a whopping 92% of all tech signals):

See the red bars? Those are stocks we believe are getting sold. When red bars run rampant, good names can get crushed. They can become what I call “oversold.” When this happens, even great stocks can get caught in the selling rush – and that can mean opportunity.

There are some great stocks being sold right now (not all in tech either). They’re fundamentally sound companies with good histories, which means discounts for long-term investors. Here are five stocks seeing lots of red that appear to be near-term oversold: CRM, INTU, LULU, MNST & AMD.

Up first is Salesforce.com Inc. (CRM), the enterprise customer management software platform.

Even though great companies’ stocks can be volatile, like CRM over the past year, they’re worthy of attention, especially on pullbacks. Check out Salesforce:

  • 1-month performance (-12.9%)
  • Recent Big Money sell signals

To show you what our Big Money signals look like on a stock, have a look at all the buys (green bars) and sells (red bars) in CRM over the past year:

Clearly, that’s a lot of red, especially this year.

Looking more broadly, Salesforce has been a high-quality stock for years. The blue bars in the chart below show when CRM was likely being bought by a Big Money player and also a high-ranking stock, according to MAPsignals.

When you see a lot of blue, like CRM did in 2017, 2018, and 2020, it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Money buying and strong fundamentals. As you can see, Salesforce’s sales and earnings numbers have been super strong, making it worthy of attention:

  • 3-year sales growth rate (+26.6%)
  • 3-year EPS growth rate (+1,161.0%)

Next up is Intuit Inc. (INTU), the financial management software maker.

Check out these technicals for INTU:

  • Year-to-date performance (-25.2%)
  • Recent Big Money sell signals

It’s been getting sold a lot recently:

But now let’s look long-term. These are the top buy signals Intuit has made since 2017. The Big Money has been on it for a while:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Intuit has had rock-solid, double-digit growth in earnings and sales:

  • 3-year EPS growth rate (+17.5%)
  • 1-year sales growth rate (+25.4%)

Another growth name is Lululemon Athetlica Inc. (LULU), the athletic clothing company.

Strong candidates for growth usually have Big Money buying the shares. Lululemon has historically had that. But recently, it’s full of red, which could be an opportunity:

  • Year-to-date performance (-21.1%)
  • Historical Big Money signals

Below are the blue Big Money signals LULU has made since 2015. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s dig deeper. Lululemon’s growth in earnings is impressive, as is its sales growth. I expect more of the same in the coming years.

  • 3-year EPS growth rate (+39.6%)
  • 3-year sales growth rate (+18.6%)

Number four on the list is Monster Beverage Corporation (MNST), which is an energy drink company.

Here are the technicals important to me:

  • 1-month performance (-6.3%)
  • Historical Big Money signals

Recently, it’s been a steep downward slide, with more Big Money selling than buying:

But Monster Beverage is a cash magnet and Big Money favorite. Below are the Big Money Top 20 buy signals for MNST since 2015:

Source: www.MAPsignals.com

Let’s look under the hood. Despite the price slide, Monster Beverage has been growing earnings and sales at double-digit rates:

  • 3-year EPS growth rate (+22.6%)
  • 3-year sales growth rate = (+10.9%)

Our last growth candidate is Advanced Micro Devices, Inc. (AMD), a maker of powerful semiconductor chips. Like most technology stocks, it’s been getting beaten up this year:

Check out these technicals:

  • 1-month performance (-13.7%)
  • Historical Big Money signals

AMD is a high-quality stock since it’s made the Top 20 report. As you can see below, it’s been a Big Money favorite for years. Right now, it’s on a pullback and could be an opportunity.

Source: www.MAPsignals.com

Now let’s look below the surface a bit. Earnings have been skyrocketing, and there’s been big sales growth too:

  • 3-year EPS growth rate = (+196.2%)
  • 3-year sales growth rate = (+39.1%)

The Bottom Line

CRM, INTU, LULU, MNST & AMD represent the top oversold stocks for March 2022. They’ve been sold a lot lately…perhaps too much. Strong, fundamentally-sound stocks seeing near-term sell signals are worthy of extra attention because of their long-term potential.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in CRM, INTU & LULU in personal accounts and INTU & LULU in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

Best Stocks, Crypto, and ETFs to Watch – Walmart, Gold, AMD, NVIDIA, Shiba Inu in Focus

Dow component Walmart Inc. (WMT) is testing support in the 130s for the sixth time ahead of Thursday’s pre-market release, when the company is expected to post a profit of $1.49 per-share on $150 billion in revenue. If met, earnings-per-share (EPS) will mark a modest increase compared to the same quarter last year. A breakdown will expose a decline into the March 2021 low at 126.28, in turn completing a 19-month topping pattern.  WMT buying interest has taken a major hit since August 2021, undermined by rising inflation that should lower profit margins.

GLD

SPDR Gold Trust (GLD) rallied to a three-month high on Friday, fueled by the twin tailwinds of rising inflation and growing fears of a Russian invasion. The buying spike lifted the yellow metal into 13-month symmetrical triangle resistance, setting up a potential rally that would mark the next leg of an 11-year cup and handle pattern. A breakout could trigger an historic uptrend, lifting the fund to 300 and the futures contract to 3,000.

AMD

Advanced Micro Devices Inc. (AMD) traded below 100 for the first time since October in January and bounced, gaining more than 30% into last week’s reversal at 50-day moving average resistance. The turnaround carved a wide range distribution bar on Friday, dumping the chip stock below the 200-day moving average. The stage is now set for a test at last week’s low that could yield a downdraft into strong support in the low 90s.

NVDA

NVIDIA Inc. (NVDA) earnings on Wednesday will impact AMD as well, with the chip giant expected to post a profit of $1.22 per-share on $7.43 billion in earnings.  If met, EPS will mark a 60% decline in profit compared to the same quarter last year. The stock has struggled so far in 2022, posting a 19% loss-to-date, and is testing 200-day moving average support for the first time since March 2021. Price action at and above the psychological 200 level in coming sessions will test the staying power of long-term bulls.

Shiba Inu

Shiba Inu (SHIB) has traded well in recent sessions, rallying more than 30% to a six-week high. The rally began at the .786 Fibonacci retracement level of the September into October uptrend, a high odds turning point for steep corrections. Weekly relative strength readings have flipped into buy cycles, predicting bulls will control the ticker tape through quarter’s end. A monthly sell cycle could then resume control, forcing the crypto into a test of lower price levels.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held SPDR Gold Trust in a family account at the time of publication. 

Best Stocks to Buy Now for February 2022

But for those who stay strong, history shows that quality outlier assets – the best of the best – usually recover and rise with time.

See, the best outlier stocks have 3 traits: strong fundamentals, great technicals, and a history of Big Money activity in the shares. Outlier stocks see a lot of Big Money buying. Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit.

At MAPsignals, we believe Big Money trading can alert you to the forward fundamental picture of a stock. And we want the odds on our side when looking for the highest quality stocks.

Using the MAPsignals database to evaluate thousands of stocks and filter for just the best (i.e., stable, profitable companies with low debt and growing sales), we identified five we see as long-term candidates. They are AMD, EPAM, MASI, RGEN, & TER.

Up first is Advanced Micro Devices, Inc. (AMD), which is a computer chip and graphics card maker.

Even though great stocks can be volatile, like AMD this year, these companies are worthy of attention. Check out AMD:

  • 1-month performance (-6.3%)
  • Historical Big Money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals AMD has made the past few years in the chart below. Blue bars are showing it was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, like AMD did in 2019 and 2020 (when it was less than 1/2 its current price), I call it the stairway to heaven:

Source: www.MAPsignals.com

But, what about fundamentals? As you can see, AMD’s sales and earnings have been strong:

  • 1-year sales growth rate (+45.0%)
  • 3-year earnings growth rate (+405.6%)

Next up is EPAM Systems, Inc. (EPAM), which is a technology company focused on automation software.

Check out these technicals for EPAM:

  • 1-month performance (-17.9%)
  • Recent Big Money signals

Let’s look long-term. These are the top buy signals EPAM Systems has made since 2014. The Big Money seems to have found a gem:

Source: www.MAPsignals.com

Let’s dive deeper. As you can see, EPAM Systems has had rock-solid growth:

  • 3-year sales growth rate (+22.5%)
  • 3-year earnings growth rate (+83.2%)

Another name we like is Masimo Corporation (MASI), which provides noninvasive health monitoring and hospital automation solutions.

Strong candidates for growth usually have Big Money buying the shares. Masimo has that. Also, the stock has slid recently:

  • 1-month performance (-12.9%)
  • Historical Big Money signals

Below are the Big Money signals Masimo has made since 2016. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s look under the hood. Masimo’s sales and earnings growth is impressive. I expect more in the coming years:

  • 3-year sales growth rate (+12.9%)
  • 3-year earnings growth rate (+21.3%)

Number four on the list is Repligen Corporation (RGEN), which develops processing technologies for biological drug manufacturing.

Here are the technicals important to me:

  • 1-month performance (-4.3%)
  • Historical Big Money signals

Below are the Big Money signals for RGEN since 2014:

Source: www.MAPsignals.com

Let’s examine a bit more. Repligen has been growing nicely:

  • 1-year sales growth rate (+35.5%)
  • 3-year earnings growth rate (+41.8%)

Our last growth candidate is Teradyne, Inc. (TER), which is a top semiconductor industry supplier.

Check out these technicals:

  • 1-month performance (-27.1%)
  • Historical Big Money signals

Teradyne is beaten down right now, but it’s still a high-quality stock, as it’s made the Top 20 report many times since 2016:

Source: www.MAPsignals.com

Now look under the hood. The company has been growing quite well:

  • 3-year sales growth rate (+21.3%)
  • 3-year earnings growth rate (+39.0%)

The Bottom Line

AMD, EPAM, MASI, RGEN, & TER represent top stocks to buy now for February 2022. Strong fundamentals and historical Big Money buy signals make these stocks worthy of extra attention, despite them being down recently (it could be a sale for long-term investors).

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in TER in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Brace Yourself For Another Wild Month In Stock Markets

For the year, the Dow is down -6%, the S&P 500 is down just over -9%, and the Nasdaq has lost -14.7%. The previous record-holder is January 2009, an ugly moment for the economy, when the stock market fell -8.6%. In addition, the VIX – aka the CBOE Volatility Index – has actually dropped back to around 31 after topping 37 earlier this week, its highest point since November 2020.

Keep in mind, the index isn’t registering anywhere close to levels reached during other periods of “extreme” volatility. For example, the index, which is measured between zero and 100, hit its highest point of almost 83 during the financial crisis in 2008. Its most extreme point during the pandemic was around 66 in March 2020. So, by comparison, this week’s volatility has been rather mild.

Federal Reserve

Some insiders equate the wild swings in stock prices to investors, particularly “big money,” trying to establish a new baseline for stock valuations minus the Fed’s easy money policies that have driven a massive amount of cash into markets since the pandemic began in 2020.

At its height, the Fed was pumping as much as +$120 billion per month into the system via its asset purchase program, ballooning its balance sheet to now nearly $9 trillion.

At the same time, the Fed has held its benchmark rate at near-zero and, before that, hadn’t even attempted to raise rates since 2018, and then only briefly. The last full-cycle of rate hikes was 2015. What’s more, investors haven’t really had to factor for inflation since the early 90s and it hasn’t been this high since the 80s.

Bottom line, whatever the new “normal” ends up looking like, it will be dramatically different from the pre-pandemic investing landscape. I’ve heard several large stock traders saying it seems to be the return of Alpha instead of the race to levered Beta. I hear others on Wall Street referencing it to a bit of league recreational youth baseball team where everybody now gets an award simply for participation, but then kids run into a rude awakening when performance really starts to matter.

It feels like we are there in the stock market; every business that was coming into the market was simply being rewarded with participation points, now people are starting to keep a real scorebook and counting the strikeouts and runs scored.

Economy still roars

The good news is that the U.S. economy continues to roar. Historically, a combination of moderate inflation and moderate interest rates has led to some of the biggest boom times for U.S. Last week, the Commerce Department said Q4 Gross Domestic Product (GDP) grew at an annualized rate of +6.9%, stronger than Q3’s +2.3% and well above Wall Street expectations of around +5.7% growth.

Consumer spending climbed at a +3.3% annual pace led by a +4.7% increase in services spending. But the real stand out was private investment which rocketed +32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, contributed nearly +5% to Q4 GDP growth.

On the one hand, the inventory build is positive because it indicates an easing of supply chain dislocations that should in turn help with inflation pressures. On the other hand, many economists note that the big boost from retailer and wholesaler restocking is not likely to be repeated.

Companies will also likely start to unwind at least some of that inventory in the quarters ahead, which could drag overall 2022 GDP, especially if consumer spending also drops off. And investors are more closely tracking consumer behavior as inflation continues to rise.

With consumer spending accounting for about 70% of the U.S. economy, any signs that belts are tightening or moods are getting overly pessimistic will likely set off some alarm bells.

Data to watch

Turning to next week, it will be another busy one for both key economic data as well as earnings. The main economic data highlight will be the January Employment Situation on Friday. Other key data includes ISM Manufacturing, Construction Spending, and the JOLTS report on Tuesday; ADP’s private payrolls report on Wednesday; Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index on Thursday.

Earnings wise, results are due from NXP Semiconductor and Trane on Monday; Advanced Micro Devices, Alphabet, Amgen, Chubb, Electronic Arts, Exxon, General Motors, Gilead Sciences, Match Group, PayPal, Sirius XM, Starbucks, and UPS on Tuesday; AbbVie, Aflac, Allstate, Boston Scientific, CNH, Corteva, D.R. Horton, Ferrari, Humana, Johnson Controls, Meta (Facebook), MetLife, Novartis, Novo Nordisk, Qualcomm, Siemens, Thermo Fisher, TMobile, and Waste Management on Wednesday; Activision Blizzard, Amazon, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, Snap, SnapOn, Wynn Resorts, and Xylem on Thursday; and BristolMyersSquibb, CBOE, Phillips 66, Regeneron, and Sanofi on Friday.

Bottom line, brace for another huge week of extreme volatility.

Best Stocks, Crypto, and ETFs to Watch – AMD, Meta Platforms, Amazon, Ethereum in Focus

SPDR SP-500 Trust (SPY)

SPY fell to a six-month low on Monday and worked its way into a Friday close near the weekly high. This price action has carved a high volume bull hammer reversal on top of the 50-week moving average near 431, indicating the selloff has probably run its course, at least for now. The next test may come between 455 and 460, where the fund broke down from 50-day moving average support about two weeks ago.

Advanced Micro Devices Inc. (AMD)

AMD posted a fabulous 56% return in 2021, with gains stretching to 79% when the stock topped out in November. It’s been all downhill for shareholders since that time, with the chipmaker breaking down from a head and shoulders pattern and shedding nearly 40% into Friday’s intraday low. The stock has now reached support at the September low and psychological 100 level, generating tailwinds that could yield 20% short-term upside.

Meta Platforms Inc. (FB)

Market players will be focused squarely on the impact of iPhone privacy changes when Meta Platforms Inc. (FB) reports Q4 2021 results after Wednesday’s closing bell. The mega-cap is expected to post a profit of $3.83 per-share on $33.44 billion in revenue, which would mark zero profit growth compared to the same quarter last year. The privacy update has made it harder for social media companies to target narrowly-defined demographics in their advertising.

Ethereum (ETH)

ETH had a constructive week, selling off to a six-month low on Monday and bouncing into a weekly bull hammer reversal at the .786 Fibonacci retracement of the mid-year uptrend. Weekly Stochastics has crossed into a bull cycle at the oversold level at the same time, raising odds for a bounce that tests 50-week moving average resistance at 2,900. Just keep in mind that Biden is set to issue an executive order on crypto regulation that could upset the recovery effort.

Amazon.com Inc. (AMZN)

AMZN reports Q4 2021 earnings after Thursday’s closing bell, with analysts looking for a profit of $3.64 per-share on $137.6 billion in revenue. If met, earnings-per-share (EPS) will mark a painful 74% profit decline compared to the same quarter last year. The stock has fallen 18% since the October report, breaking down from a topping pattern and dropping to a 19-month low. A buy-the-news reaction is possible after the downdraft but heavy resistance above 3,200 could end the upside.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in the aforementioned securities at the time of publication.

Wall Street Week Ahead Earnings: Alphabet, PayPal, Exxon Mobil, Meta, Qualcomm and Amazon in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion will hit the stock market hard next week, making the big tech earnings that much more critical. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of January 31

Monday (January 31)

TICKER COMPANY EPS FORECAST
CBT Cabot $1.06
CRUS Cirrus Logic $1.91
FN Fabrinet $1.28
HLIT Harmonic $0.09
NXPI NXP Semiconductors $2.67
PCH PotlatchDeltic $0.48
RYAAY Ryanair Holdings $-0.15
SANM Sanmina $0.91
TT Trane Technologies $1.31
WWD Woodward $0.83

 

Tuesday (February 1)

IN THE SPOTLIGHT: ALPHABET (GOOGLE), PAYPAL, EXXON MOBIL

ALPHABET: The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its fourth-quarter earnings of $26.71 per share, which represents year-over-year growth of about 20% from $22.3 per share seen in the same period a year ago.

The Mountain View, California-based internet giant would post revenue growth of nearly 27% to $72.133 billion from $56.9 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“Key Alphabet (GOOG) ’22 Ad Buyer Survey conclusions: i) Google Search remains highest ROI platform; ii) YouTube expected to gain ad share ’21-’23; & iii) GOOG Search & YouTube are the top platforms for ad buyers reallocating budget due to iOS changes. We est. GOOG’s share of WW Digital adv. (x-China) goes from 41% to 37% ’22-’27. We extended model to ’27, PT to$3,500 vs. prior $3,360, reiterate Outperform,” noted John Blackledge, equity analyst at Cowen.

PAYPAL: The digital payments company is expected to report its fourth-quarter earnings of $0.86 per share, which represents year-over-year growth of about 15% from $0.75 per share seen in the same period a year ago. The San Jose, California-based company would post revenue growth of over 12% to around $6.9 billion.

EXXON MOBIL: The oil company will see its earnings rise multi-fold in the fourth quarter thanks to higher energy prices and a waning pandemic that helped it bounce back after a tough period in 2020.

The Irving Texas-based company is expected to report its fourth-quarter earnings of $1.73 per share, which represents year-over-year growth of over 5,666%, up from $0.03 per share seen in the same period a year ago.

The U.S. largest publicly traded oil company is expected to report a 97.3% increase in revenue to $91.845 billion from $46.54 billion a year ago. On Dec 30, the Irving Texas-based company in its regulatory filing said that higher oil and gas prices would enable it to achieve annual profitability starting in 2021 with an operating profit increase of up to $1.9 billion.

The U.S. largest publicly traded oil company hinted that oil and gas earnings could decrease by up to $1.2 billion as a result of one-time charges for asset impairments and contractual costs. Exxon announced late last year announced that a sharply higher operating profit in oil and gas, prompting Credit Suisse, Scotiabank, and JPMorgan to raise their fourth-quarter earnings estimates.

“Improving FCF outlook and dividend sustainability. With a more constructive commodity price outlook, lower capital spending, and additional cash operating cost savings, the dividend is covered in 2021 and averages >100% over the next 5-years on our estimates. Improving dividend sustainability supports yield compression for Exxon Mobil (XOM) relative to CVX,” noted Devin McDermott, Equity Analyst and Commodities Strategist at Morgan Stanley.

“Cost cuts defend the dividend. In 2020, Exxon Mobil (XOM) reduced 2022-25 spending plans to $20-25B from $30-35B (recently extended to 2027), improving dividend sustainability while limiting further pull on the balance sheet. Additionally, Exxon Mobil (XOM) is targeting $6B in structural operating cost reductions by 2023 which should put upward pressure on consensus FCF estimates.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 1

TICKER COMPANY EPS FORECAST
AMD Advanced Micro Devices $0.69
AMCR Amcor $0.18
ASH Ashland Global Holdings $0.93
CTLT Catalent $0.79
CB Chubb $3.34
EA Electronic Arts $2.81
XOM Exxon Mobil $1.73
GM General Motors $0.84
NMR Nomura Holdings $0.2
SBUX Starbucks $0.8
UBS UBS Group $0.24
UPS United Parcel Service $3.05

 

Wednesday (February 2)

IN THE SPOTLIGHT: META PLATFORMS (FACEBOOK), QUALCOMM

META PLATFORMS (FACEBOOK): The world’s largest online social network is expected to report its fourth-quarter earnings of $3.78 per share, which represents a year-over-year decline of over 2% from $3.88 per share seen in the same period a year ago.

The Menlo Park, California-based social media conglomerate would post revenue growth of over 30% to around $33.04 billion. The social media giant has consistently beaten consensus earnings estimates in most of the quarters in the last two years, at least.

QUALCOMM: The world’s biggest mobile phone chipmaker is expected to report its fiscal first-quarter earnings of $2.77 per share, which represents a year-over-year decline of over 40% from $1.97 per share seen in the same period a year ago.

The chip manufacturer would post revenue growth of nearly 27% to $10.45 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

Qualcomm forecasts GAAP revenue in the first quarter of fiscal 2022 to be between $10 billion and $10.8 billion. On a non-GAAP basis, earnings will likely range from $2.90 to $3.10 per share, while GAAP earnings will likely range from $2.53 to $2.73 per share, according to ZACKS Research.

“After underperforming the SOXX for most of 2021 until a sharp rally late in the year, we see a strong setup for a now Apple-overhang-free Qualcomm in 2022 as investors begin to appreciate the diverse revenue drivers beyond Wireless. Expect solid print and guide, with focus on execution and growth in the connected intelligent edge and update our estimates accordingly,” noted Matthew Ramsay, equity analyst at Cowen.

“We reiterate our price target of $210 based on 17.5x our F2023 EPS estimate of $12.0 and our Outperform rating.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 2

TICKER COMPANY EPS FORECAST
EAT Brinker International $0.5
CHRW C.H. Robinson Worldwide $1.85
CPRI Capri Holdings $1.67
CTSH Cognizant Technology Solutions $1.03
RACE Ferrari $1.08
FB Meta Platforms $3.78
MET MetLife $1.63
TMUS T-Mobile $0.2

 

Thursday (February 3)

IN THE SPOTLIGHT: AMAZON

The e-commerce leader for physical and digital merchandise, Amazon, is expected to report its fourth-quarter earnings of $3.9 per share, which represents a year-over-year decline of over 70% from $14.09 per share seen in the same period a year ago.

However, the Seattle, Washington-based multinational technology giant would post revenue growth of about 10% to around $138 billion. The company has beaten earnings per share (EPS) estimates most of the time in the two years.

“We are reiterating our BUY rating and our price target to $3,900. Our price target is based on our updated discounted cash flow model, including our long-term adj. EBITDA margin forecast of 22.0% versus 13.7% in 2020,” noted Tom Forte, MD, Senior Research Analyst at D.A. DAVIDSON.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 3

TICKER COMPANY EPS FORECAST
ABB ABB $0.38
ALL Allstate $2.72
COP ConocoPhillips $2.23
LLY Eli Lilly $2.37
HON Honeywell International $2.09
PRU Prudential Financial $2.44
SU Suncor Energy $0.95
SYNA Synaptics $2.63

 

Friday (February 4)

TICKER COMPANY EPS FORECAST
APD Air Products & Chemicals $2.51
AON Aon $3.33
BMY Bristol Myers Squibb $1.85
CBOE Cboe Global Markets $1.41
ETN Eaton $1.73

 

Intel on a Slow Boat to Nowhere

Dow component Intel Corp. (INTC) reports Q4 2021 results after Wednesday’s closing bell, with analysts forecasting a profit of $0.91 per-share on $18.36 billion in revenue. If met, earnings-per-share (EPS) will mark a 40% decline in profits compared to the same quarter last year. The stock fell 11.7% in October after missing Q3 revenue estimates and lowering Q4 EPS guidance, and has traded sideways below 200-day moving average resistance for the last three months.

Competitors Take Market Share

Intel’s problems are well documented, with poor management causing rollout delays in key product lines. The failures have allowed competitors NVIDIA Inc. (NVDA) and Advanced Micro Devices Inc. (AMD) to take market share that’s unlikely to return in the next three to five years. INTC has responded by shifting focus to foundry construction, in order to meet the worldwide chip shortage.  Although vital to the industry’s survival, this segment will generate lower margins going forward.

KeyBanc Capital Markets analyst John Vinh just posted a cautious outlook, noting “While we are still optimistic INTC will ultimately be able to turn things around long-term, IDM 2.0 and IFS represent long-lead time initiatives that we believe will take longer than we had originally anticipated to yield proof points. Additionally, with Sapphire Rapids being delayed again, we see limited catalysts for the stock on the horizon. While INTC does have an analyst event in February, we’re skeptical any announcement can change the bearish narrative.”

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Hold’ rating based upon 8 ‘Buy’, 2 ‘Overweight’, 21 ‘Hold’, and 3 ‘Underweight’ recommendations. More importantly, 6 analysts recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $40 to a Street-high $80 while the stock will open Wednesday’s session about $3 below the median $55 target. These metrics are telling bulls and bears to lower their expectations, heading into the report.

Intel broke out above long-term resistance in the 30s in 2017, lifting into the upper 50s in 2018. It mounted that barrier in 2020 but the rally failed, yielding a decline that found support at a nearly horizontal 4-year trendline in the mid-40s. The stock failed an April 2021 breakout attempt and is now situated about 6 points above trendline support. Sadly, it’s now trading at the same level first hit in February 2018, yielding zero returns before dividends.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Can Intel Dominate the Bitcoin Mining Industry With the Bonanza Mine?

The University of Pennsylvania recently announced Intel’s intention of releasing a new Bitcoin mining ASIC chip which will be released during the 2022 IEEE International Solid-State Circuits Conference on February 23.

The Bonanza Mine

Described as an Ultra-Low-Voltage Energy-Efficient Bitcoin Mining ASIC, the chip titled Bonanza Mine will make Intel the first major semiconductor company to jump into producing traditional Bitcoin mining ASICS.

Although AMD has been a part of the crypto mining industry for a while now owing to its super-powered GPUs, it never witnessed any competition as such.

But since Intel has a higher production capacity, and both ASICs as well as GPUs are priced almost similarly, Intel could bolster the production to give AMD serious competition.

But for Intel, the concern is bigger than just AMD since there are already better established ASIC production companies in the market. Bitmain, Bitfury, etc are some such companies that have dominated the ASIC-specific mining rig manufacturing industry for most parts.

However, Intel might have actually made this decision at the right time. The mining industry just a week ago finally recovered from the effects of The Great Migration and is currently growing at a quick pace.

Hash Rate marked an all-time high a few days ago after taking 7 months to recover from the dent made by China’s mining ban.

Bitcoin Hash Rate is at an all-time high | Source: Glassnode

Additionally, at the moment, miners are now entering the market. Chinese educational company Midland International is one of the most recent ones.

The company had already secured 147 cryptocurrency mining rigs and AGMH shipped another 1335 BTC mining rigs which are set to be operational this month.

Additionally, the success of mining Bitcoin is pushing companies to go public. Rhodium Enterprises is one such company, valued at $1.7 billion which is about to go public tomorrow.

So if Intel can tap the market properly, it could gain footing in the mining industry.

How Is Bitcoin Performing Though?

These developments are yet to have any major impact on the king coin’s price action since Bitcoin is still stuck in the lower $42k zone. Although price indicators do show an uptrend, we are yet to see how far up it could take Bitcoin.

Bitcoin yet to recover from $42,000 – Source: FXEMPIRE