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

Advanced Micro Devices Completes Head and Shoulders Top

Advanced Micro Devices Inc. (AMD) completed a two-month head and shoulders topping pattern on Monday, raising odds for a breakdown that targets psychological support at 100. Accumulation, as measured by On Balance Volume (OBV), has dropped steadily since the stock carved the left shoulder in November, in another sign that shareholders are taking profits and moving back to the sidelines. Of course bulls could save the day, as they often do, but its best to prepare for a volatility surge as market participants react to the set-up.

Semiconductors Under Pressure

Chip stocks have had a tough time so far in 2022, with the PHLX Semiconductor Index dropping nearly 10% in five sessions into Monday’s midday low.   The decline is worse than it looks at first glance because 400-lb gorilla and perennial laggard Intel Corp. (INTC) has gained 7% so far this year, skewing broad sector averages. NVIDIA Corp. (NVDA) highlights typical damage to 2021’s biggest winners, dropping 13% before Monday’s bounce.

Advanced Micro Device’s 2022 outlook remains strong but fundamentals may not power the upside because growing worries about rising inflation could undermine buying interest. CEO Lisa Su outlined the bull case in a Monday interview, noting her expectations for a strong year, powered by new chips for laptops and commercial PCs. She also confirmed “very strong” demand that’s forced AMD to ramp up supply and chatted up new investments in artificial intelligence.

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Moderate Buy’ rating based upon 19 ‘Buy’, 4 ‘Overweight’, 15 ‘Hold’, 1 ‘Underweight’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $115 to a Street-high $180 while the stock is set to open Tuesday’s session about $9 below the median $144 target. A short-term bounce looks likely, given this humble placement, but a rally above 155 is needed to negate the bearish pattern now in play.

Advanced Micro Devices cleared 20-year resistance in July 2020, entering a multi-legged advance that lost steam above 155 in November 2021. A breakout attempt three weeks later failed, carving the head of the H&S pattern, while the December bounce failed at the early November peak. The selloff since that time has reached the neckline in the mid-120s, with 20 to 25-point downside potential into the 100 level, which also marks support from the July breakout.

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. 

Sector Themes In Play In The Markets For 2022

Years like 2021 saw a solid broad-based performance in many stock market sectors. Relatively simple approaches such as Indexing and Sector Rotation did well. But with macro changes in play and many uncertainties for 2022, we may very well see broad indexes underperforming while individual sectors dominated by a few stocks really shine.

Dips will continue to be bought unless something significant changes. But let’s not forget that we’re long overdue for a substantial correction. Significant risk catalysts are:

  • Fed actions.
  • International conflicts (i.e., Russia and China).
  • Pandemic developments that are not currently known.

There’s always the risk of the unknown – the literal definition of a “Black Swan” event. We shouldn’t get too complacent, knowing that we may need to get defensive to protect capital suddenly. When it’s time to be defensive, let’s not forget that CASH IS A POSITION!

Sector theme DRIVERS FOR 2022

Many uncertainties about Covid and the lingering effects on the economy remain. Inflation has roared back to 30-year highs. Strong employment numbers and consumer spending are fueling significant growth in corporate earnings. We also have a shift in bias at the Fed on interest rates and quantitative easing. These are the “knowns” and are theoretically priced in.

For these reasons and more, we should expect more of a “Stockpicker’s Market” in 2022. Certain sectors will do well and weather corrections better than the broader markets.

Even short-term traders can gain an edge by paying attention to what sectors are strongest. Traders tend to benefit most from playing the strongest stocks in the strongest sectors for bullish trades and choosing the weakest stocks in weaker sectors for bearish trades. That “tailwind” can make a significant difference in results.

Let’s look at some sector themes and individual names to keep an eye on in 2022.

ECONOMIC NORMALIZATION

A long-anticipated return to a “normal” economy will continue to be a theme — we just don’t know if that will be Post-Covid or Co-Covid. Or when. Air travel, theme parks, hotels, cruise lines, etc., have all suffered in the persistent Pandemic. What does seem to be changing is the idea of a “new normal” where virus variants may be with us for years to come. We will adjust socially and economically to that for the foreseeable future. DAL, UAL, LUV, AAL are airlines to watch, and the JETS ETF may be a good way to play a general recovery in this sector.

5G INTERNET

The much-hyped rollout of 5G network technology had its share of setbacks and technology disappointments. But 2022 should see the 5G deployment start to take off as technical issues are worked out, and the promise of widespread coverage with transformational performance becomes real. In the background supplying the 5G infrastructure are AMD, QCOM, ADI, MRVL, AMT, XLNX, and KEYS. Along with infrastructure and testing companies, shares of major carriers T, TMUS, and VZ languished for much of the second half of 2021 and looked poised for recovery in the coming year.

ARTIFICIAL INTELLIGENCE

In all its various forms (including autonomous vehicles), AI will remain a developing trend. Big players in the space to watch include MSFT, AMAT, GOOGL, NVDA, AAPL, and QCOM.

EVs and AUTONOMOUS VEHICLES

Electric Vehicles (EVs) are nearing an inflection point where widespread adoption is poised to take off. Technology and cost competitiveness has improved where some EVs will reach price parity with their traditional internal combustion counterparts.

While there are many smaller players in the EV space, automotive stalwarts F, GM, and TM are investing very heavily. TSLA has been grabbing the headlines, but many others want to stake out their territory in the space, including whole tiers of manufacturers and infrastructure enablers like WKHS, XPEV, NKLA, and CHPT.

MATERIALS and MINING

Gold, silver, and related miners underperformed for much of 2021 and now look poised for a recovery year as inflation, and monetary concerns grow. GLD, SLV, GDX, GDXJ, SIL, SILJ look good as both longer and mid-term plays. Metals and miners may get hit initially with a significant downturn in stocks but could ultimately demonstrate their safe-haven potential.

Specific to the growth in EVs, battery technology, etc., copper, lithium, and related basic materials should see stronger demand ahead. FCX looks particularly interesting as a dual play on gold and copper. LIT may be a good ETF play on lithium battery technology.

SEMICONDUCTORS

The market for chips is primed for exponential growth. EV’s have about ten times the number of specialty semiconductors as conventional vehicles. AI, crypto, 5G, mobile devices, and ubiquitous computing should drive growth in the semiconductor sector for some time to come.

REAL ESTATE

Real Estate and Homebuilders should continue to do well while employment numbers remain strong and if interest rates don’t rise too quickly. The inventory shortage in most real estate markets will likely persist well into the new year.

Storage REITs like PSA, LSI, and CUBE have been big winners in the Covid economy and still have room to run.

SUMMARY

Many sectors still look bullish after gains in 2021. But there are “storm clouds” on the horizon, and we must not take future performance for granted.

Lastly, one of the simplest ways to assess how sectors are measuring up is to watch the charts for the S&P SPDR series sector ETFs and a few others. Here are some notable ones to watch:

https://www.thetechnicaltraders.com/wp-content/uploads/2021/12/Dec-31-article.png

These can give us a good starting place to look for leading stocks in winning sectors as the year unfolds.

Let’s remain vigilant for possible market corrections and may the wind be at our backs!

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TheTechnicalTraders.com

 

SMH: Portfolio Rebalancing Is a Positive to Navigate Uncertainty While Metaverse Demand Materializes

The reason is simply that required technologies, be it augmented reality (“AR”), AI, 5G, or blockchain, all require the utilization of semiconductors. The pie chart below shows the relative revenue per sector, with Computing and Wireless with a combined portion of more than 60% seen as the main beneficiaries of metaverse-related investments.

Source: Chart prepared by author to highlight metaverse demand using data from IEEE Spectrum

For this purpose, the VanEck Semiconductor ETF (NASDAQ:SMH) provides exposure to a portfolio of semiconductor stocks ranging from the equipment makers like Applied Materials (NASDAQ:AMAT) to designers of graphics processing units like NVIDIA (NASDAQ: NVDA) who are fabless, or without foundries where the chip are manufactured. It also includes the world’s largest producer, Taiwan Semiconductor Manufacturing (TSM), which, according to the Wall Street Journal planned to raise prices by 10% to 20% back in August depending on the type of chips.

This is due to the supply crunch not only implying that chips have become unavailable, but more expensive too. The increases, expected to be applied towards the end of the year or from 2022 will also impact large customers, marking the end of discounts applied on big orders. The Taiwanese company also revealed that it faced a steep rise in the cost of raw materials and has to incur a three-year $100 billion investment plan aimed at increasing production in view of current shortages and developing chips.

Now, a change in the costs of raw materials in an industry already impacted by supply imbalance can have unforeseen effects on the price of finished goods, in the form of everything from consumer electronics, smartphones, Bitcoin mining equipment, cars, etc. Added to these are inflationary concerns not auguring well for next year. It is precisely here that portfolio rebalancing as effected by VanEck, SMH’s fund manager becomes handy.

In this case, with 25 holdings, SMH is an actively managed fund carrying an expense ratio of 0.35% and tracking the performance of the MVIS US Listed Semiconductor 25 Index (MVSMHTR), which provides exposure to semiconductor production and equipment. As for the rebalancing act, I noticed a crucial change between the holdings as of July 31 and December this year. The changes pertain to the percentage of assets for TSMC which has been reduced from 13.62% as shown in the table to the left to 9.89% (right-side table). This constitutes a significant reduction and is not only appropriate in an environment characterized by increasing geopolitical tensions between the U.S. and China but also to navigate short-term turbulence in the industry.

https://static.seekingalpha.com/uploads/2021/12/23/49663886-1640312564473821.png

Source: Tables built with data from vaneck.com

Conversely, this reduction in TSMC’s assets has resulted in the portfolio being relatively more exposed to NVidia, thereby benefiting SMH’s price performance from the end of October (blue chart below). Now, whether its GPU-based computing power is produced for gaming or for crypto mining, the company should benefit from more sales in 2022, as long as it is able to source raw materials in a profitable way. Still, in the event that it is not able to do so, SMH as an ETF provides for investment diversification by encapsulating other plays in the chip ecosystem.

Another key player, Advanced Micro Devices (NASDAQ:AMD) could lessen chip supply woes by outsourcing some production to other foundries like Samsung Electronics (OTCPK:SSNLF), which is investing heavily in its foundry business in a bid to win more clients. Here, I also like VanEck cautiously increasing exposure to Intel (NASDAQ:INTC), from 4.66% to 5.14%, in light of the latter investing $20 billion to set up two plants in Arizona.

Description: https://static.seekingalpha.com/uploads/2021/12/23/49663886-164027899237196.png

Source: Table prepared by author from data in finance.yahoo.com

Furthermore, as seen by the dotted blue line, the VanEck’s fund is on an upwards trajectory and should reasonably cross the $325 level in the first quarter of 2022, with this forecast supported by data from the Worldwide Semiconductor Trading Statistics which predicts that the market is expected to increase by 25.6% in 2021, and continue to grow by 8.8% in 2022. This prediction does not take into consideration chip requirements to build augmented reality around Facebook’s social media platform, Microsoft’s (NASDAQ:MSFT) work-oriented “metaspaces”, and blockchain-powered metaverses like Decentraland, which require enormous computing power for millions of digital coins to be mined (produced) and where virtual plots of land are priced at millions of dollars.

Pursuing on a cautionary note, investors should beware of short term volatility, especially in the first week of January 2022 when the Semiconductor Industry Association (“SIA”) which represents a large chunk of the U.S and foreign chip firms covering all regions of the world will reveal sales figures for the month of November 2021. In this case, any global or even major regional shortcomings may cause a dip in SMH’s, in contrast to the more than 5% surge on December 6, when the SIA announced upbeat news for the month of October.

Finally, with fewer holdings compared to the SPDR S&P Semiconductor ETF (XSD) but bearing the same expense ratio, SMH carries more concentration risks, but, despite all the volatility grappling the stock market in 2021, it has outperformed its peer by 2.38% during the last year. Consequently, looking forward to 2022, with a higher dose of market volatility to be potentially induced by factors like more intensive “metatalks”, geopolitics, Omicron spread, and regulatory scrutiny impacting cryptocurrency like Bitcoin, SMH is a better choice for the longer term.

 

Samsung to Spend $17 Billion on a New Chip Plant in Texas

Tech giant Samsung has concluded plans to build a semiconductor factory in Texas over the next few years.

Samsung’s New Chip Plant Will be in Taylor

South Korean tech conglomerate, Samsung, has announced earlier today that it will build a semiconductor factory in Taylor, near Austin, Texas. The plant will be built over the next three years as Samsung looks to increase its effort in manufacturing chips and to address the current global chip shortage.

The company announced that the plant would be a 5 square meter facility, and it will aim to boost the production of advanced logic semiconductors, used mostly in smartphones and computers. This latest development doesn’t come as a surprise as Samsung, like other major chip manufacturers, needs to boost its capacity.

There is currently a global chip shortage, which has affected numerous industries, including smartphones, computers, automobiles and more. Samsung said work is expected to commence in the first half of 2022, and it intends to start operating by the second half of 2024.

The $17 billion allocated to the plant is Samsung’s largest investment in the United States to date. The amount includes buildings, property improvements, machinery and equipment. Samsung has been planning this investment for the past few months.

Samsung Continues to Expand in the United States

The South Korean tech giant has been operating in the United States since 1978 and currently employs more than 20,000 people in the country. Its latest investment brings its total investment in the United States to more than $47 billion, the company added.

In addition to Samsung, other leading semiconductor manufacturers, including Intel, Nvidia, Qualcomm and AMD, could boost their chip production capacity over the coming years after President Joe Biden said earlier this year that domestic semiconductor manufacturing is a priority for his administration.

Kinam Kim, vice chairman and CEO of the Samsung Electronics Device Solutions Division, pointed out that the company is optimistic that the new facility will help Samsung to better serve the needs of its customers and boost the global semiconductor supply chain.

Nvidia’s Crypto Mining Processor Falls Flat Amid Heightened Competition

Cryptocurrency prices might be off their peak, but the market has still achieved new heights this year. One company that is poised to benefit from the market is chipmaker Nvidia. Its hardware has been in high demand in crypto mining circles, leaving the company unable to satisfy its core market, gamers.

Earlier this year, Nvidia tailored a GPU specifically for professional crypto mining with a focus on Ethereum. It’s called the Cryptocurrency Mining Processor, or CMP, but things haven’t worked out exactly as planned.

Nvidia revealed in its Q3 earnings report that its CMP revenue plummeted 60% vs. Q2 levels to $105 million. In Q2, Nvidia generated sales of $266 million from the CMP graphic cards. Worse, the bleeding isn’t over and the company forecasts that CMP sales will dwindle even further in Q4.

The weaker demand comes amid a disastrous supply chain situation in which chips are hard to come by on retailers’ shelves. In addition, the competitive landscape is also heating up, and crypto miners have other options.

Competitive Landscape

When it comes to cryptocurrency mining, there is competition coming from all angles. Gamers compete with cryptocurrency miners, while chipmakers compete amongst themselves.

Most recently, the tech community is watching a trend in which CPUs made by Nvidia rival Advanced Micro Devices (AMD), specifically the Ryzen 9 and Threadripper, are also in high demand among crypto miners due to dwindling GPU supply.

Instead of bitcoin or Ethereum miners, however, the culprit appears to be a lesser known cryptocurrency called Raptoreum. The mining process for Raptoreum involves CPUs, not ASIC machines or GPUs. Raptoreum relies on what’s known as the GhostRider algorithm, which was designed specifically for this project. According to the Raptoreum website,

“It was built to discourage specialty hardware such as ASIC & FPGA enabling anybody to competitively mine it and increase overall decentralization.”

Ethereum Mining

Ethereum currently relies on a proof-of-work (PoW) consensus algorithm, like Bitcoin. With Ethereum moving away from PoW to a proof-of-stake (PoS) model, however, Nvidia is at risk of experiencing even weaker demand for its GPUs, at least from the crypto industry. Nonetheless, the transition to PoS won’t happen overnight. With the Ethereum price hovering above $4,000, miners are incentivized and profitable.

Nvidia’s other graphics cards also have the capability mine crypto. So while CMP sales might not be going over as hoped, it’s possible that crypto miners are just preferring Nvidia’s other hardware. Nvidia CFO Colette Kress stated,

“Our GPUs are capable of digital currency mining, though we do not have visibility into how much this impacts our overall GPU demand.”

Best ETFs For November 2021

October was a great month for markets. Given the up-and-down nature of this year, some people may think it’s time for a downward turn. I can’t predict what will happen tomorrow, much less a month from now or beyond (nobody can). But when thinking about the market going forward and reviewing the Big Money data, I like what I see.

Going to MAPsignals.com, we can scan Big Money ETF Buys and Sells. Big selling (red bars) led markets lower followed by huge buying (blue bars) lifting markets. This year has been wild, as you can see below. But we’re in a lift now, with minimal selling.

Chart, histogram

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Source: www.mapsignals.com

Long-term investors should look for ETFs (and their stocks), with great setups for the months ahead.

Remember: ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,000 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all strongest to weakest.

Let’s get to the 5 best ETF opportunities for November.

#1 Technology Select Sector SPDR Fund (XLK)

Technology stocks are hot. We see Big Money has been buying XLK this year, especially of late. The fresh buy signals are possibly a play to capitalize on the surging semiconductor sector:

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XLK holds solid stocks; one example is NVIDIA (NVDA). Here are Big Money signals for NVDA:

Chart

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#2 iShares PHLX Semiconductor ETF (SOXX)

Speaking of the semiconductor sector, it’s been on fire lately. An ETF play on the sector at large is SOXX, which contains THE JUICE – all the hottest names in semis. Big Money is there too, as you can see by all the green lines below:

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One great stock SOXX holds is Advanced Micro Devices, Inc. (AMD). It’s a long-time outlier with awesome fundamentals. Being around for multiple decades, the company has seen its share price fluctuate. But, as the multi-year chart below shows, when red appears on great stocks, it’s usually an opportunity:

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#3 SPDR Portfolio S&P 500 Growth ETF (SPYG)

The SPYG is a large-cap, growth-oriented ETF that holds some of the biggest names in the economy today. After a couple pullbacks over the past year, it’s rebounded substantially:

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One big winner within SPYG is Amazon.com, Inc. (AMZN). It’s an outlier stock:

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#4 Vanguard Small-Cap ETF (VB)

The first three ETFs were from the strong part of my ranked list. Now we look for bargains by identifying weaker ETFs holding stocks with strong fundamentals. Small-cap stocks were the stars leading the race as our economy began its recovery. While the momentum has dulled, VB shows we could be seeing a breakout:

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This ETF holds great stocks. One such winner is Entegris, Inc. (ENTG). Big Money loves it. The multi-year chart says don’t bet against it:

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#5 iShares MSCI USA Value Factor ETF (VLUE)

As happens with stocks, value stocks were darlings not too long ago, but now aren’t as much in favor. These are the situations that seasoned investors call opportunities. Some value stocks are moving the needle, making an ETF like VLUE a potentially nice play for a long-term investment:

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A great stock in VLUE that’s moving the needle is Ford Motor Company (F). Its push to become a full-on electric vehicle powerhouse is on. Big Money likes F, which helps make me a believer that stocks like these will recover and thrive:

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Here’s a Big Money recap:

  • When Big Money buying pours in, stocks tend to go up
  • Red selling on great quality can be a great opportunity
  • Repeated buying usually means outsized gains

Let’s summarize here:

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XLK, SOXX, and SPYG rank high. VB and VLUE however, rank lower on our list, due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

XLK, SOXX, SPYG, VB, and VLUE are my top ETFs for November 2021. October proved to be an outstanding month. But the remainder of 2021 can bring THE JUICE too (historically that’s been the case). Remember, volatility hits all stocks eventually. But, time helps them recover and thrive.

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

Disclosure: the author holds no positions in XLK, SOXX, SPYG, VB, VLUE, NVDA, AMD, AMZN, or F but holds long positions in ENTG in managed accounts at the time of publication.

Investment Research Disclaimer

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AMD Targets $200 After Company Announces Meta Partnership

The shares of AMD are up by more than 12% today after the chip manufacturer announced that it had won a partnership with Meta, formerly known as Facebook.

AMD Partners with Meta

Advanced Micro Devices Inc. (AMD) announced earlier today that it had secured a partnership with Meta, formerly known as Facebook. Its partnership with the social media and metaverse giant has sent its stock price soaring since the US market opened a few hours ago.

AMD has now become Meta’s chip customer as the social media giant seeks to start manufacturing metaverse hardware devices. Facebook rebranded to Meta a few weeks ago and is planning to launch its retail outlets. However, Meta hasn’t set an opening date for the retail outlets.

AMD securing a deal with Meta is a huge deal for the chip manufacturer, giving it an edge over the other competitors such as Qualcomm, Nvidia and Intel. The company also launched a range of new chips during its Accelerated Data Center Premiere keynote.

AMD Could Soar Higher in the Coming Weeks

The shares of AMD are up by more than 12% since the company announced its partnership with Meta a few hours ago. At press time, AMD is trading at $152.24 per share, outperforming numerous tech stocks in the market.

AMD could soar towards $200 before the end of the year as the company makes some bold moves in the market. Advanced Micro Devices Inc. is in the process of taking market share from its major competitor Intel as cloud provides such as Google, Amazon and Microsoft now purchase their chips from AMD.

AMD stock price. Source: FXEMPIRE

Year-to-date, AMD’s stock price has added 66.70% to its value, outperforming Intel, which has only gone up by less than 6% during the same period. AMD’s rally could see it make a move for the $200 before the end of the year. The company has the momentum and the demand from investors to reach $200 over the coming weeks.

Advanced Micro Devices Stock Is A Big Money Favorite

So, what’s Big Money?

Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And AMD has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares all year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals AMD has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

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Source: www.mapsignals.com

In 2021, the stock has attracted 17 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

  • 1-month outperformance vs. Technology Select Sector SPDR Fund (+22.85% vs. XLK)

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, AMD has been growing sales at a double-digit rate. Take a look:

  • 3-year sales growth rate (+23.5%)
  • 3-year earnings growth rate (+405.6%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, AMD has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

AMD has a lot of qualities that are attracting Big Money. And since 2015, it’s made this list 22 times, with its first appearance on 7/31/2018… and gaining 643.81% since. The blue bars below show the times that AMD was a top pick since 2015:

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Source: www.mapsignals.com

It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if AMD makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The AMD rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in AMD in personal or managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

Best Cheap Stocks to Buy Now October 2021

Oftentimes, Big Money buying is institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as undervalued candidates are AVTR, ENTG, CALX, AMD, & CTLT.

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

Up first is Avantor, Inc. (AVTR), which is a fast-growing materials company.

The best candidates tend to have strong performance. Check out AVTR:

  • YTD performance (+42%)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals Avantor has made the past few years.

Blue bars are showing that AVTR was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Avantor looks strong under the hood:

  • Forward P/E = 30
  • 3-year earnings growth rate (-5.5%)

Next up is Entegris, Inc. (ENTG), which is a leading semiconductor firm.

Check out these technicals for ENTG:

  • YTD performance (+30%)
  • Historical big money signals

Let’s look long-term. These are the top buy signals Entegris has made since 2015. Clearly the Big Money has been consistent for years:

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Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Entegris has grown earnings massively:

  • Forward P/E = 40
  • 3-year earnings growth rate (+70%)

Another name to consider is Calix, Inc. (CALX), which is a cloud/software company.

Strong candidates for growth usually have big money buying the shares. Calix has that. Also, the stock has been a rocket:

  • YTD performance (+61%)
  • Recent Big Money signals

Below are the big money signals CALX has made since 2015. It’s only recently came on our radar:

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Source: www.MAPsignals.com

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

  • Forward P/E = 40
  • 3-year earnings growth rate (+45%)

Number 4 on the list is Advanced Micro Devices, Inc. (AMD), which is a huge semiconductor firm.

Here are the technicals jumping out at me:

  • YTD performance (-7.5%)
  • Historical big money signals

Below are the big money signals for AMD since 2015:

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Source: www.MAPsignals.com

Let’s look under the hood. AMD has been growing earnings nicely:

  • Forward P/E = 43
  • 3-year earnings growth rate (+405%)

Our last cheap candidate is Catalent, Inc. (CTLT), which is a drug manufacturer.

Check out these technicals:

  • YTD performance (+27.8%)
  • Historical big money signals

Catalent has recently been showing up with top Big Money signals:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now look at these juicy growth numbers:

  • Forward P/E = 39
  • 3-year earnings growth rate (+80%)

The Bottom Line

AVTR, ENTG, CALX, AMD, & CTLT represent top cheap stocks for October 2021. Strong fundamentals and big money buy signals make these stocks worthy of extra attention.

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

Disclosure: the author holds long positions in ENTG in managed accounts and no positions in AVTR, CALX, AMD, & CTLT at the time of publication.

Investment Research Disclaimer

Is It Time to Buy Advanced Micro Devices?

Advanced Micro Devices Inc. (AMD) beat Q2 2021 top and bottom line estimates in July, posting a profit of $0.63 per-share on an historic 99.3% year-over-year revenue increase to $3.85 billion. The company also raised Q3 and fiscal year guidance, setting off a powerful breakout above 7-month resistance in the 90s. The uptick continued into August, posting an all-time high at 122.49, ahead of profit-taking that gave up more than 20 points into last week’s low at 101.98.

Analyst Sets $135 Price Target

The stock turned higher this week, leading investors to wonder if now is the right time to buy AMD, especially with Dow component Intel Corp. (INTC) throwing in the towel and shifting its focus to foundry construction. There’s no easy answer, given the 37% advance off the July 27th low, which has set off short-term overbought technical readings. However, there’s also no guarantee the pullback will slice through the recent low and test breakout support.

BofA Securities analyst Vivek Arya took the bull case when the stock hit 106, expecting 25% additional upside. As he notes “We reiterate our Buy on AMD with a $135 price objective, or 25% upside to current levels. We see strong catch-up potential, despite the strongest upward EPS revisions in semis and with a clear path to doubling EPS to $5/share on consistent roadmap execution/share gains against INTC, who is distracted by expanding into non-core foundry market”.

Wall Street and Technical Outlook

On the other hand, Wall Street consensus has deteriorated, yielding an ‘Overweight’ rating based upon 16 ‘Buy’, 5 ‘Overweight’, 16 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets now range from a low of $60 to a Street-high $170 while the stock is set to open Wednesday’s session just $3 below the median $110 target. This placement suggests analysts are squarely focused on chip shortages, rather than AMD’s quarterly performance.

AMD completed a breakout above the 2000 high at 48.50 in July 2020 and entered an historic advance that topped out in the 90s in September. December and January breakout attempts failed, yielding a steady decline, followed by a second quarter uptick and July breakout supported by heavy volume. The stock posted impressive gains before reversing in a correction that failed to reach the breakout level. Weekly Stochastics has now rolled into a sell cycle that could easily generate a final leg down into double digits and a lower risk buying opportunity.

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

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