SP500 Traders are Trying to Shift Through a Lot of “Noise”

The coronavirus situation in the U.S. is a clear bright spot with several health experts believing the country is close to reaching so-called “herd immunity” and expect to soon see a dramatic drop in new coronavirus cases.

Fundamental analysis

The good news is most people are getting back to normalcy and the economic activity is looking robust. That’s despite many businesses having a difficult time hiring help. As companies are having to offer higher and higher wages there is increasing worry about rising inflation. There is also more talk about the possible implications of looming tax hikes that are expected to pay for some of President Biden’s ambitious economic plans.

An investor note from Goldman Sachs warned that the planned corporate tax hike to 28% could decrease earnings for some of the mega-cap technology companies as much as -9% next year, while S&P 500 earnings overall could take an -8% hit.

The analysts also warned that the “FAAMG” stock complex (Facebook, Apple, Amazon, Microsoft and Google) could be at risk of a year-end selloff if the President’s capital gains tax hike is implemented.

These stocks account for nearly 30% of the S&P 500’s market cap gains over the last five years, meaning investors have earned close to $5 trillion over that time.

Investors may look to take some of those gains in 2021 to lock in the lower tax rate.

Some of the big money players and large funds have shifted to value and more traditional inflationary type plays. While the younger Robinhood and Wall Streets Bets crowd that was once pumping the high-flying tech sector are now looking at buying airline and concert tickets.

As always, you have to pay attention to money-flow and ask yourself who will provide the next round of big buying?

Today’s key economic data will be the Labor Department’s JOLTS report, which could provide a deeper look at what’s going on in the job market. Federal Reserve officials are also making the rounds today with at least five central bankers scheduled to speak, including Federal Reserve Governor Lael Brainard. Earnings on tap include Electronic Arts, Honda, Palantir, Toyota, and Vodafone

Continued Talk of Commodity Supercycle

The price of iron ore hit a record high on Monday in the latest sign of booming commodity markets, which have gone into overdrive in recent weeks as large economies recover from the pandemic. The steelmaking ingredient, an important source of income for the mining industry, rose 8.5 per cent to a record high of almost $230 a ton fueled by strong demand from China where mills have cranked up production. Other commodities also rose sharply, including copper. Keep in mind, in the past 12-months, corn and crude oil prices are up +95%, soybean oil up +125%, silver up +75%, lean hogs up +54%, cotton up +47%, sugar up +57%, lumber up +350%, stock market up +43%, Bitcoin up +215%.

Technical analysis

Yesterday’s levels played very well. SP500 is trading in a bearish zone now. The upper range is 4156. Middle-strength levels within this zone – 4124, 4092 and 4060. Weal levels – 4140, 4108 and 4076. Neutral zone 4156 – 4221. Middle strength level – 4188.5. Weak levels – 4172.25 and 4204.75. Keep in mind SP500 is close to first daily support around 4100. In order to place a trade, always watch price action at mentioned levels. Once level turns into support/resistance, consider going long/short.

Amazon Shares Hit Record High After A Blowout Quarter; Analysts Lift Price Targets

Amazon.com, the world’s largest online retailer, reported better-than-expected earnings and revenue in the first quarter of 2021 as online sales surged due to the COVID-19 pandemic, sending shares to a record high on Friday.

The multinational technology company based in Seattle said its net income increased to $8.1 billion in the first quarter, or $15.79 per diluted share, compared with net income of $2.5 billion, or $5.01 per diluted share, in first-quarter 2020. That was higher than the Wall Street consensus estimates of $9.49 per share.

The Seattle, Washington-based company said its net sales increased 44% to $108.5 billion in the first quarter, compared with $75.5 billion in first-quarter 2020. Operating income increased to $8.9 billion.

On the second quarter 2021 guidance, Amazon.com forecast net sales between $110.0 billion and $116.0 billion, or to grow between 24% and 30% compared with second-quarter 2020. Operating income is expected to be between $4.5 billion and $8.0 billion, compared with $5.8 billion in second-quarter 2020.

Following the upbeat results, Amazon shares rose about 2% to hit an all-time high of $3554.00 on Friday.

Analyst Comments

Amazon’s (AMZN) 1Q21 result reflected a broad beat, with rev 4% above cons, Op Inc +43% vs. cons, and strength across all segments, including International growth of +50% y/y, which paced above NA (+39% y/y) for the 2nd quarter in a row; while AWS & adv. accelerated. 2Q21 rev. and Op Inc. guide (high end) were well above consensus. We raised estimates, price target to $4,600 from $4,400, reiterate Outperform,” noted John Blackledge, equity analyst at Cowen.

Amazon Stock Price Forecast

Thirty-four analysts who offered stock ratings for Amazon in the last three months forecast the average price in 12 months of $4,300.00 with a high forecast of $5,500.00 and a low forecast of $3,750.00.

The average price target represents a 21.85% increase from the last price of $3,529.04. All of those 34 analysts rated “Buy”, according to Tipranks.

Morgan Stanley gave the base target price of $4,500 with a high of $5,300 under a bull scenario and $2,700 under the worst-case scenario. The firm gave an “Overweight” rating on the e-commerce giant’s stock.

Amazon’s high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest (last-mile delivery, fulfillment, Prime Now, Fresh, Prime digital content, Alexa/Echo, India, AWS, etc),” noted Brian Nowak, equity analyst at Morgan Stanley.

Amazon Prime membership growth drives recurring revenue and positive mix shift. Cloud adoption hitting an inflection point. Advertising serves as a key area for both further growth potential and profitability flow-through.”

Several other analysts have also updated their stock outlook. BofA raised the stock price forecast to $4360 from $4150. Canaccord Genuity raised the target price to $4400 from $4100. UBS lifted the price objective to $4350 from $4150. Oppenheimer upped the target price to $4400 from $4200. Raymond James increased the target price to $4125 from $4000. JP Morgan raised the target price to $4,600 from $4,400.

Moreover, Stifel lifted the target price to $4400 from $4000. Deutsche Bank raised the target price to $4500 from $4250. Truist Securities lifted the target price to $4000 from $3750. BMO increased the target price to $4300 from $4200. Mizuho upped the target price to $4400 from $4000. Guggenheim lifted the target price to $4,200 from $4,000. Wedbush lifted the target price to $4,300 from $4,000.

Check out FX Empire’s earnings calendar

Futures Hover at Record Levels as Focus Turns to Tech Earnings, Fed

By Medha Singh

Electric carmaker Tesla Inc dropped about 3% in premarket trading after it marginally beat analysts’ expectations for quarterly revenue, helped by a jump in environmental credit sales to other automakers and liquidating some bitcoins.

Focus is now on results from Microsoft Corp and Alphabet Inc when they report after markets close. Apple Inc, Facebook Inc and Amazon.com Inc are slated to report later in the week. The five companies combined account for about 40% of the S&P 500’s market capitalization.

Overall earnings for S&P 500 companies are expected to jump 33.3% in the first quarter from a year earlier, according to Refinitiv IBES data.

The S&P 500 and the Nasdaq ended at record levels on Monday, with the tech-heavy Nasdaq completing a full recovery from its 11% correction that began in February.

Recent data indicating that the U.S. economy was set for a strong rebound, backed by vaccine distributions and unprecedented monetary and fiscal support, has provided much of that support.

The Fed is not expected to change its policy guidance at the end of its two-day meeting on Wednesday but could shine some light on U.S. central bank’s thinking on inflation, bond buying and risks to the financial system posed by soaring asset prices.

At 06:19 a.m. ET, Dow E-minis were down 4 points, or 0.01%, S&P 500 E-minis were up 2.5 points, or 0.06% and Nasdaq 100 E-minis were up 11 points, or 0.08%.

(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)

Musk, Bezos Collide After SpaceX Wins Moon Landing Contract

The two richest men in the world have been sparring in a tightly fought global space race, vying for contracts from government agencies and businesses.

Blue Origin said on Monday it had filed a protest with the federal Government Accountability Office, accusing NASA of moving the goalposts for contract bidders at the last minute.

Musk fired back with a tweet that said: “Can’t get it up (to orbit) lol.” (https://bit.ly/3npEc0Z)

He did not elaborate on the tweet, but pasted a screenshot of a 2019 report about Bezos unveiling Blue Origin’s moon lander on the same Twitter thread.

Blue Origin has fallen far behind SpaceX and United Launch Alliance (ULA) on orbital transportation, losing out on billions of dollars’ worth of U.S. national security launch contracts that begin in 2022. ULA is a joint venture of Boeing Co and Lockheed Martin Corp.

The company was dealt another blow earlier this month, when NASA awarded SpaceX the contract to build a spaceship to deliver astronauts to the moon as early as 2024, choosing Musk’s company over Blue Origin and defense contractor Dynetics Inc.

The sought-after project aims to put humans back on the moon for the first time since 1972.

“NASA has executed a flawed acquisition for the Human Landing System program and moved the goalposts at the last minute,” Blue Origin said in an emailed statement.

“Their decision eliminates opportunities for competition, significantly narrows the supply base, and not only delays, but also endangers America’s return to the moon. Because of that, we’ve filed a protest with the GAO.”

Musk’s SpaceX bid alone while Amazon.com founder Bezos’ Blue Origin partnered with Lockheed Martin Corp, Northrop Grumman Corp and Draper.

The filing of the 50-page protest by Blue Origin was reported earlier by the New York Times.

(Reporting by Kanishka Singh and Subrat Patnaik in Bengaluru and Eric Johnson in Seattle; editing by Jane Wardell and Saumyadeb Chakrabarty)

Earnings to Watch Next Week: Tesla, Alphabet, Microsoft, Facebook, Apple and Amazon.com in Focus

Earnings Calendar For The Week Of April 26

Monday (April 26)

IN THE SPOTLIGHT: TESLA

The California-based electric vehicle and clean energy company Tesla is expected to report its first-quarter earnings of $0.79 per share, which represents year-over-year growth of over 240% from $0.23 per share seen in the same quarter a year ago.

The high-performance electric vehicle manufacturer’s revenue would grow over 70% to $10.2 billion. The electric vehicle producer has beaten earnings per share and revenue estimates by over 60% of the time in the last two years.

“Updating the model for the 1Q deliveries of 184,800 which were over 20% above our forecast. We also made adjustments to our volume forecasts for the remainder of the year to account for the strong start while allowing for potential supply constraints and other factors. The net result is we raise our FY21 delivery forecast by 3% to 809k units,” noted Adam Jonas, equity analyst at Morgan Stanley.

“We note our FY volume is modestly below consensus as we allow for a ‘margin of safety’ given highly fluid supply chain issues impacting the industry. Our forward year volume forecast increases very slightly (approx. 1%) to 1.1mm units. This impact, along with some other minor adjustments to the model lifts our target to $900 from $880 previously. We do not change our bull or bear case valuations at this time.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE APRIL 26

Ticker Company EPS Forecast
CBU Community Bank System $0.81
BOH Bank of Hawaii $1.18
DORM Dorman Products $1.02
FBP First Bancorp FBP $0.24
PHG Koninklijke Philips $0.29
OTIS Otis Worldwide Corp $0.62
CHKP Check Point Software Technologies $1.49
LII Lennox International $1.29
ACI AltaGas Canada $0.50
CAJ Canon $0.24
TSLA Tesla $0.79
RRC Range Resources $0.27
HTLF Heartland Financial USA $1.14
OMF OneMain Holdings $2.04
AXTA Axalta Coating Systems $0.42
AMKR Amkor Technology $0.41
TNET TriNet $1.32
SSD Simpson Manufacturing $0.92
PCH Potlatch $1.71
WRI Weingarten Realty Investors $0.41
CATY Cathay General Bancorp $0.78
IBTX Independent Bank $1.30
JJSF J&J Snack Foods $0.12
AIN Albany International $0.62
CNI Canadian National Railway USA $0.99
NXPI NXP Semiconductors $2.21
SBAC SBA Communications $2.45
AMP Ameriprise Financial $4.73
ARE Alexandria Real Estate Equities $1.85
SSNC SS&C Technologies $1.10
SUI Sun Communities $1.16
BRO Brown & Brown $0.56
PKG Packaging Of America $1.47
UHS Universal Health Services $2.15
MKSI MKS Instruments $2.17
AGNC American Capital Agency $0.64
CDNS Cadence Design Systems $0.74
MASI Masimo $0.88
RMBS Rambus $0.28
WWD Woodward $0.80
SANM Sanmina $0.82
TOP Topdanmark A/S kr5.74
KOF Coca Cola Femsa Sab De Cv $13.82
BAYRY Bayer AG PK $0.77
FIX Comfort Systems USA $0.56
SCCO Southern Copper $0.85
AMG Affiliated Managers $4.26
TV Grupo Televisa Sab $0.10
EGOV NIC $0.23
TOWN Townebank $0.65

Tuesday (April 27)

IN THE SPOTLIGHT: ALPHABET, MICROSOFT

ALPHABET: The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its first-quarter earnings of $15.45 per share, which represents year-over-year growth of about 57% from $9.87 per share seen in the same quarter a year ago.

The Mountain View, California-based internet giant would post revenue growth of more than 25% to around $42.2 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 25% in the last four quarters.

Alphabet’s better-than-expected results, which will be announced on Tuesday, April 27, would help the stock hit new all-time highs. Alphabet shares surged more than 30% so far this year. On Friday, the stock closed 2.1% higher at $2,299.93 – close to the record high of $2,304.09.

GOOGL still favorable set up after strong YTD gains. GOOGL has outperformed major indices YTD as investor sentiment turned positive. Our checks have been broadly positive, indicating accelerating momentum in the ad business and sustained strength in Cloud,” noted Brent Thill, equity analyst at Jefferies.

GOOGL remains a top large-cap pick as we believe it should benefit in 2021 from ad spend recovery, pent-up demand for Google Cloud, and call options on Waymo and other non-advertising initiatives.”

MICROSOFT: The Redmond, Washington-based global technology giant would report its fiscal third-quarter earnings of $1.76 per share, which represents year-over-year growth of over 25% from $1.40 per share seen in the same quarter a year ago. The world’s largest software maker’s revenue would rise over 17% to around $41 billion, up from the $35.02 billion a year earlier.

“An improving spending environment drives several sources of potential upside to Q3, most prominently around the hybrid cloud engine (Azure + Server Products) and Windows OEM. Strong positioning for multiple secular trends and an attractive valuation make MSFT a Top Pick in Software,” noted Keith Weiss, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE APRIL 27

Ticker Company EPS Forecast
PCAR PACCAR $1.29
ENTG Entegris $0.72
NVS Novartis $1.57
CROX Crocs $0.88
MMM 3M $2.25
MSCI Msci $2.29
JBLU JetBlue Airways -$1.68
PII Polaris Industries $1.54
GLW Corning $0.42
HAS Hasbro $0.66
AWI Armstrong World Industries $0.96
UBS UBS Group $0.52
ABB ABB $0.28
BP BP $0.43
UPS United Parcel Service $1.63
ST Sensata Technologies $0.74
CNC Centene $1.65
SYF Synchrony Financial $1.50
IVZ Invesco $0.62
TRU TransUnion $0.80
SCL Stepan $1.43
FELE Franklin Electric $0.39
RTX Raytheon Technologies Corp $0.88
ABG Asbury Automotive $3.58
LECO Lincoln Electric $1.18
ROP Roper Industries $3.32
SHW Sherwin-Williams $1.65
DTE DTE Energy $2.09
FISV Fiserv $1.13
MMC Marsh & McLennan Companies $1.70
GE General Electric $0.02
WM Waste Management $1.00
CEQP Crestwood Equity Partners $0.34
LLY Eli Lilly $2.12
ADM Archer-Daniels Midland $1.00
ECL Ecolab $0.82
PHM PulteGroup $1.19
HUBB Hubbell $1.67
PPBI Pacific Premier Bancorp $0.63
SSTK Shutterstock $0.70
UMBF UMB Financial $1.47
GPK Graphic Packaging $0.25
PSB PS Business Parks $1.67
RNST Renasant $0.63
CHE Chemed $4.20
MANH Manhattan Associates $0.32
USNA USANA Health Sciences $1.58
TXN Texas Instruments $1.56
SYK Stryker $1.98
MDLZ Mondelez International $0.69
MXIM Maxim Integrated Products $0.75
COF Capital One Financial $4.17
TER Teradyne $1.04
PFG Principal Financial $1.35
APAM Artisan Partners Asset Management $1.10
CALX Calix $0.20
VALE Vale $1.01
MATX Matson $1.86
AMGN Amgen $4.00
EIX Edison International $0.67
ENPH Enphase Energy $0.41
SBUX Starbucks $0.52
ATRC AtriCure -$0.41
AMD Advanced Micro Devices $0.44
TRMK Trustmark $0.61
EGP EastGroup Properties $1.39
WSBC WesBanco $0.70
ROIC Retail Opportunity Investments $0.24
OKE ONEOK $0.77
IEX IDEX $1.41
V Visa $1.27
NOV National Oilwell Varco -$0.23
CSGP CoStar $2.40
OLN Olin $1.34
MSFT Microsoft $1.76
BYD Boyd Gaming $0.44
ESS Essex Property $3.04
EQR Equity Residential $0.68
TX Ternium $2.29
EHC Encompass Health Corp $0.80
GOOGL Alphabet $15.45
QTS QTS Realty $0.65
BXP Boston Properties $1.55
UDR UDR $0.48
FTI FMC Technologies -$0.08
GOOG Alphabet $15.45
CHRW C.H. Robinson Worldwide $0.97
FFIV F5 Networks $2.39
FEYE FireEye $0.07
CB Chubb $2.45
TENB Tenable Holdings Inc $0.06
ILMN Illumina $1.36
NAVI Navient $0.78
HIW Highwoods Properties $0.87
AAT American Assets $0.35
JNPR Juniper Networks $0.25
ACGL Arch Capital $0.50
FIBK First Interstate BancSystem $0.73
NCR NCR $0.47
TKC Turkcell $0.17
AJRD Aerojet Rocketdyne $0.46
ZBRA Zebra Technologies $4.39
MKL Markel $12.29
AMX America Movil Sab De Cv Amx $0.33
MSTR Microstrategy -$0.19
VIST Vista Oil Gas $0.07
IBA Industrias Bachoco Sab De Cv $1.54
BSBR Banco Santander Brasil $0.19
SAN Banco Santander $0.11
OMAB Grupo Aeroportuario Del Centro Nort $0.37
NMR Nomura -$0.21
IRBT Irobot $0.06
HSBC HSBC $0.60
ATLCY Atlas Copco ADR $0.40

Wednesday (April 28)

IN THE SPOTLIGHT: FACEBOOK, APPLE

FACEBOOK: The world’s largest online social network is expected to report its first-quarter earnings of $2.35 per share, which represents year-over-year growth of over 37% from $1.71 per share seen in the same quarter a year ago.

The Menlo Park, California-based social media conglomerate would post revenue growth of over 33% to around $23.6 billion. It is worth noting that the company, on average, has delivered an earnings surprise of over 22% in the last four quarters.

“Monetization Potential: We are positive on FB’s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modeling ~28% GAAP opex (excl. one-time items) growth in 2021, implying an incremental ~$15bn in opex. Our base case model implies opex per employee moderates in ’21 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a ~29% CAGR (2019-2022).”

APPLE: The consumer electronics giant would post its second-quarter earnings of $0.99 per share, which represents year-over-year growth of over 54% from $0.64 per share seen in the same quarter a year ago. The iPhone manufacturer would post revenue growth of over 33% to around $77.6 billion.

“We expect the strength of Apple’s broad portfolio of products & services to help re-rate AAPL shares, amplified by today’s product launch event. We forecast Product growth of 43% Y/Y and Services growth of 19% putting us at $80.2B in revs and $1.03 in EPS for the March Q, 4-5% ahead of consensus,” noted Katy Huberty, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE APRIL 28

Ticker Company EPS Forecast
SHOO Steven Madden $0.19
IPG Interpublic Of Companies $0.16
SNY Sanofi $0.83
GD General Dynamics $2.31
APH Amphenol $0.44
SIRI Sirius XM $0.06
LIVN LivaNova PLC $0.15
SLAB Silicon Laboratories $0.76
HUM Humana $7.21
AVY Avery Dennison $2.01
OSK Oshkosh $1.14
NYCB New York Community Bancorp $0.27
DAN Dana $0.46
MAS Masco $0.66
TEVA Teva Pharmaceutical Industries $0.58
ETR Entergy $1.24
BA Boeing -$1.17
EVR Evercore Partners $2.63
ROL Rollins $0.11
YUM Yum Brands $0.85
PAG Penske Automotive $1.81
BCO Brinks $0.71
R Ryder System $0.58
CIT CIT $0.98
TDY Teledyne Technologies $2.59
TKR Timken $1.20
OC Owens Corning $1.42
SAIA Saia $1.37
SWK Stanley Black & Decker $2.56
MCO Moody’s $2.80
PB Prosperity Bancshares $1.38
BSX Boston Scientific $0.30
GIB CGI Group USA $1.03
CME CME $1.75
ROK Rockwell Automation $2.15
SPOT Spotify -$0.57
GRMN Garmin $0.88
SIX Swiss Exchange -$1.29
IART Integra LifeSciences $0.56
BPOP Popular, Inc. $1.91
BXMT Blackstone Mortgage $0.61
AER AerCap $1.13
LFUS Littelfuse $1.92
VRT Veritas Pharma $0.12
SLGN Silgan $0.71
HELE Helen Of Troy $1.56
HES Hess $0.36
ADP ADP $1.82
NSC Norfolk Southern $2.55
SC Santander Consumer USA $1.45
RJF Raymond James Financial $2.09
PPC Pilgrim’s Pride $0.27
PSA Public Storage $2.70
FORM FormFactor $0.39
PTC PTC $0.72
EQIX Equinix $6.63
VVV Valvoline Inc $0.37
ESI Itt Educational Services $0.32
MXL MaxLinear $0.50
CLR Continental Resources $0.30
BSMX Santander Mexico Fincl Gp Sab Decv $0.17
PDM Piedmont Office Realty $0.47
WCN Waste Connections $0.67
AVB AvalonBay Communities $1.94
PGRE Paramount Group $0.21
AGI Alamos Gold $0.13
EBAY eBay $1.07
MAA Mid-America Apartment Communities $1.61
OI Owens-Illinois $0.28
QCOM Qualcomm $1.67
ALGN Align Technology $2.00
DRE Duke Realty $0.39
NGVT Ingevity Corp $1.07
AZPN Aspen Technology $1.16
NLY Annaly Capital Management $0.26
FB Facebook $2.35
MC Moelis & Company $0.87
NOVA Nova Mentis Life Science Corp -$0.34
MGM MGM Resorts International -$0.86
MTH Meritage Homes $2.52
GRUB GrubHub $0.03
CNO CNO Financial Group $0.50
WERN Werner $0.63
CONE CyrusOne $0.98
AR Antero Resources $0.39
AMED Amedisys $1.43
KRC Kilroy Realty $0.99
EXR Extra Space Storage $1.48
AFL Aflac $1.20
AVT Avnet $0.56
BLKB Blackbaud $0.63
WELL Welltower Inc $0.75
TROX Tronox $0.27
AUY Yamana Gold USA $0.07
AM Antero Midstream Partners $0.22
CNMD CONMED $0.43
CHX ChampionX Corp $0.05
RE Everest Re $4.55
HOLX Hologic $2.62
CDE CoEUR Mining $0.08
MOH Molina Healthcare $3.78
TYL Tyler Technologies $1.31
AXS Axis Capital $0.65
SIGI Selective $0.97
NOW ServiceNow $1.34
CAKE Cheesecake Factory -$0.15
MUSA Murphy USA $0.83
MTDR Matador Resources $0.37
ALSN Allison Transmission $0.90
RNR Renaissancere $0.74
PEGA Pegasystems $0.02
CCS Century Communities $1.52
UCTT Ultra Clean $0.82
TTEK Tetra Tech $0.75
CINF Cincinnati Financial $1.27
F Ford Motor $0.15
ASGN On Assignment $1.10
AAPL Apple $0.99
WH Wyndham Hotels & Resorts Inc $0.25
ORLY O’Reilly Automotive $5.27
ISBC Investors Bancorp $0.29
LOGI Logitech Internationalusa $0.96
SID Companhia Siderurgica Nacional $0.28
YMZBY Yamazaki Baking ADR $1.17
GSK Glaxosmithkline $0.59
LPL Lg Display $0.29
TS Tenaris $0.06
TOTDY Toto $0.51
UMC United Microelectronics $0.10
ASX Advanced Semiconductor Engineering $0.12
DB Deutsche Bank $0.49
FNF Fidelity National Financial $1.28
WWW Wolverine World Wide $0.38
DISCA Discovery Communications $0.66
DISCB Discovery Communications Discb $0.66
DISCK Discovery Communications Disck $0.66
EAT Brinker International $0.79
FCNCA First Citizens Bancshares $12.11
PAC Grupo Aeroportuario Del Pacifico $0.64

Thursday (April 29)

IN THE SPOTLIGHT: AMAZON.COM

The eCommerce leader for physical and digital merchandise is expected to report its first-quarter earnings of $9.98 per share, which represents year-over-year growth of about 100% from $5.01 per share seen in the same quarter a year ago.

The Seattle, Washington-based multinational technology giant would post revenue growth of about 40% to around $105.1 billion. It is worth noting that the company, on average, has delivered an earnings surprise of about 187% in the last four quarters.

“We expect strong 1Q21 results with revenue and Op Inc. 3% & 11% above consensus estimates. Key rev. drivers include eCommerce, AWS, Adv., & Sub. rev. Our 1Q21 Op Inc. est. is driven by AWS & Adv., offset partially by COVID-19 costs. 2Q21 revenue guide is key, we expect AMZN eCommerce growth of +15% y/y despite tough comps. We remain bullish on’21 Op margin expansion, our est. is 17% above consensus,” noted John Blackledge, equity analyst at Cowen.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE APRIL 29

Ticker Company EPS Forecast
RDSA Royal Dutch Shell £0.83
AGIO Agios Pharmaceuticals -$1.23
STM Stmicroelectronics $0.39
JHG Janus Henderson Group PLC $0.82
THRM Gentherm $0.58
FBC Flagstar Bancorp $2.65
CAT Caterpillar $1.93
TFX Teleflex $2.44
CNX Consol Energy $0.28
CBRE CBRE Group Inc $0.70
AMT American Tower $2.32
BLMN Bloomin’ Brands $0.34
TREE LendingTree -$0.21
TAP Molson Coors Brewing -$0.12
MO Altria $1.04
SAH Sonic Automotive $0.94
TROW T. Rowe Price $2.90
VC Visteon $0.32
TW Towers Watson $0.43
HSY Hershey $1.82
CCOI Cogent Communications $0.18
KEX Kirby $0.14
SPGI S&P Global Inc $3.13
BAX Baxter International $0.64
SO Southern Co. $0.83
SWI Solarwinds $0.19
BGCP BGC Partners $0.19
COHU Cohu $0.79
CWT California Water Service -$0.06
CFR Cullen/Frost Bankers $1.42
LH Laboratory Of America $7.34
TMHC Taylor Morrison Home $0.76
GPI Group 1 Automotive $4.39
NEM Newmont Mining $0.80
FMX Fomento Economico Mexicano Sab $8.67
AOS A.O. Smith $0.56
WAB Westinghouse Air Brake Technologies $0.85
WEX WEX $1.58
COLB Columbia Banking System $0.63
WLTW Willis $3.26
PATK Patrick Industries $1.32
VLY Valley National Bancorp $0.29
MMP Magellan Midstream Partners $0.87
KHC Kraft Heinz $0.60
IP International Paper $0.59
BC Brunswick $1.45
KIM Kimco Realty $0.30
KDP Keurig Dr Pepper $0.31
TMO Thermo Fisher Scientific $6.69
EEFT Euronet Worldwide $0.35
MTSI MACOM Technology Solutions $0.47
EXLS ExlService $0.99
AIT Applied Industrial Technologies $0.98
COR CoreSite Realty $1.33
STRA Strayer Education $1.49
IDA IdaCorp $0.83
GNRC Generac $1.87
ALNY Alnylam Pharmaceuticals -$1.73
XEL Xcel Energy $0.61
AIMC Altra Industrial Motion $0.76
TPX Tempur Sealy International $0.51
OSTK Overstock $0.07
NOC Northrop Grumman $5.48
FCN FTI Consulting $1.18
MDC MDC $1.37
SYNH Syneos Health Inc $0.74
BMY Bristol-Myers Squibb $1.83
DPZ Dominos Pizza $2.94
ATI Allegheny Technologies -$0.24
CMCSA Comcast $0.59
CG Carlyle $0.54
MRK Merck & Co $1.62
PCG PG&E $0.27
MA Mastercard $1.57
MCD McDonalds $1.81
LKQ LKQ $0.63
CMS CMS Energy Corporation $1.19
AGCO AGCO $1.11
ICE Intercontinental Exchange $1.30
PH Parker-Hannifin $3.75
CFX Colfax $0.39
BCE BCE (USA) $0.58
EME EMCOR $1.17
ABMD Abiomed $1.10
ERJ Embraer -$0.33
TXT Textron $0.47
CARR Carrier Global Corp $0.38
PRFT Perficient $0.68
KBR KBR $0.46
CHD Church Dwight $0.80
WST West Pharmaceutical Services $1.42
ADS Alliance Data Systems $3.23
CTXS Citrix Systems $1.42
NVT nVent Electric PLC $0.35
CUZ Cousins Properties $0.70
RMD ResMed $1.22
CUBE CubeSmart $0.45
TXRH Texas Roadhouse $0.59
GLPI Gaming And Leisure Properties $0.83
KLAC KLA-Tencor $3.59
OFC Orate Office Properties $0.55
FIVN Five9 $0.13
TEX Terex $0.22
X United States Steel $0.91
CRUS Cirrus Logic $0.69
SWKS Skyworks Solutions $2.34
WDC Western Digital $0.67
SWN Southwestern Energy $0.25
ACHC Acadia Healthcare $0.45
DLR Digital Realty $1.57
BVN Compania De Minas Buenaventura $0.11
GILD Gilead Sciences $2.02
AEM Agnico Eagle Mines USA $0.57
COLM Columbia Sportswear $0.33
TWTR Twitter $0.14
AJG Arthur J. Gallagher $1.83
FHI Federated Hermes Inc $0.77
PEB Pebblebrook Hotel -$0.44
CWST Casella Waste Systems $0.04
CXP Columbia Property $0.33
CPT Camden Property $1.23
COG Cabot Oil Gas $0.33
SGEN Seattle Genetics -$0.59
ATR AptarGroup $0.90
LPLA LPL Financial $1.58
EVTC Evertec $0.53
EXPO Exponent $0.43
DXCM Dexcom $0.31
ZEN Zendesk $0.12
PFPT Proofpoint $0.39
THG Hanover $0.75
FSLR First Solar $1.00
FBHS Fortune Brands Home Security $1.04
FWRD Forward Air $0.56
MMSI Merit Medical Systems $0.37
SPSC SPS Commerce $0.38
INT World Fuel Services $0.28
SKYW SkyWest $0.89
ERIE Erie Indemnity $1.41
POWI Power Integrations $0.55
ROG Rogers $1.79
OMCL Omnicell $0.67
BIO Bio-Rad Laboratories $2.50
HIG Hartford Financial Services $0.75
EMN Eastman Chemical $1.91
HP Helmerich & Payne -$0.61
EBS Emergent BioSolutions $1.55
PACB Pacific Biosciences Of California -$0.45
AMZN Amazon $9.98
FTNT Fortinet $0.74
NATI National Instruments $0.31
ALGT Allegiant Travel -$2.59
FTV Fortive Corp $0.60
MHK Mohawk Industries $2.80
BMRN BioMarin Pharmaceutical $0.27
VRTX Vertex Pharmaceuticals $2.76
MGNX MacroGenics -$0.51
KMPR Kemper $1.35
MDRX Allscripts Healthcare Solutions $0.15
COP ConocoPhillips $0.60
SHEN Shenandoah Telecommunications $1.01
USM United States Cellular $0.43
MTZ MasTec $0.77
GT Goodyear Tire & Rubber $0.08
TDS Telephone Data Systems $0.44
ETN Eaton $1.25
REGI Renewable Energy $0.20
PRAH PRA Health Sciences Inc $1.34
HUBG HUB $0.46
TPR Tapestry Inc $0.30
PRGO Perrigo $0.56
BLDR Builders Firstsource $0.81
BBD Banco Bradesco $0.10
TPL Texas Pacific Land $5.79
ASEKY Aisin Seiki Co $0.88
NLSN Nielsen $0.32
ARW Arrow Electronics $2.27
CLGX CoreLogic $0.97
TFSL Tfs Financial $0.07
UBSI United Bankshares $0.74
GRA W.R. Grace $0.73
PTCT PTC Therapeutics -$1.59
INSM Insmed -$1.02
TOELY Tokyo Electron Ltd PK $1.25
BBVA Banco Bilbaoizcaya Argentaria $0.15
GOL Gol Linhas Aereas Inteligentes -$0.91
SRCL Stericycle $0.59
AUOTY AU Optronics $0.33
CX Cemex Sab De Cv $0.03
PBR Petroleo Brasileiro Petrobras $0.12
TOT Total $0.85
AMRN Amarin -$0.03
TWOU 2U -$0.23
LYG Lloyds Banking $0.07
BEN Franklin Resources $0.74

Friday (April 30)

Ticker Company EPS Forecast
LYB LyondellBasell Industries $2.51
AVNT Avient Corp $0.72
BCPC Balchem $0.80
JCI Johnson Controls $0.49
HOCPY Hoya Corp $0.81
CL Colgate-Palmolive $0.79
BCS Barclays $0.41
AON AON $4.05
HUN Huntsman $0.58
PNM PNM Resources $0.19
XOM Exxon Mobil $0.60
CHTR Charter Communications $4.25
PSX Phillips 66 -$1.28
ITW Illinois Tool Works $1.90
GWW Grainger $4.31
HRC Hill-Rom $1.43
POR Portland General Electric $0.87
BSAC Banco Santander Chile $0.41
ABBV AbbVie $2.81
WY Weyerhaeuser $0.88
WPC W. P. Carey $0.51
SHLX Shell Midstream Partners $0.35
CVX Chevron $0.90
NWL Newell Brands Inc $0.13
MITSY Mitsui & Company $10.53
CLX Clorox $1.47
LAZ Lazard $0.88
LHX L3Harris Technologies Inc $2.96
KMTUY Komatsu $0.32
BNPQY BNP Paribas ADR $0.59
APELY Alps Electric $0.27
ALNPY ANA Holdings ADR -$0.90
PSXP Phillips 66 Partners $0.83
AZN Astrazeneca $0.68

 

Using Alternative Assets to Build a Balanced Portfolio

However alternative assets tend to be what your banker wouldn’t recommend you to invest in because they’re not easily accessible, or it’s hard to get good guidance on what to do with them.

Because these investments aren’t as popular, they are often less liquid or are required to be held for longer before returning a profit. However, it could easily be debated if these assets are less liquid because they are alternative, or if they are labelled alternative because they are less liquid. In any event, the specific types of assets that are most often put in this category include private equity, venture capital, hedge funds, real estate, collectables and commodities. As well as the rising ecosystem of digital assets such as cryptocurrencies, Decentralized Finance tokens and NFTs which in some ways would also be considered ‘alternative’.

How Do These Investments Manage Risk in a Portfolio?

Diversification has always been at the heart of portfolio risk management. A well-diversified portfolio is one with a mix of assets and a mix of asset classes. The broader the diversity, the lower the risk involved. For example, investing in the public equity and bond market, as well as some real estate, has often been touted as being a solid strategy for diversification.

When you invest in the public market, you only have access to public companies. However, a lot of returns are to be found elsewhere, in the private market. In that market, you find upstarts big and small and it has been a hunting ground mostly reserved for the Venture Capitalists (VCs) and Private Equity (PE) firms. Unfortunately, the costs associated with running a VC or PE fund means that these firms only raise big tickets from wealthy investors. Hence, getting access to the private markets is difficult for many. The good old 60% equity, 40% bonds rule offers some diversification but can’t protect a portfolio against systemic market risk, as it is still 100% invested in the markets.

Digital Assets Can Bolster Diversification

For decades, hedge funds have looked for an asset class that can shield from such systemic risk problems, an asset uncorrelated by the volatility in the wider market. Many feel that cryptocurrency and the new use cases offered by blockchain technology are the answer to the above problems.

Some cryptocurrencies represent a new breed of young companies seeking to disrupt entire sectors of the economy such as you would typically find in the private markets. Others offer entirely novel use cases, and their valuation as such might offer better protection against traditional market risk. Most of these come with the added advantage of being highly liquid, as even some of the smaller digital assets still trade in the tens of thousands of dollars per day. On top of this, virtually all of them are available from very small amounts, such as less than €1, which enables even retail investors to build a diversified portfolio.

Parameters to Look at for Alternative Investments

There are of course still a variety of parameters you need to consider for each asset and asset class to know whether you should add them to a portfolio. We’ll go through each of these now:

Returns

How much of a return of investment are you likely to see, if any, with a given asset class over the period you are looking at investing for. For example, equity markets have returned 8% to 10% between 1926 and 2019. Meanwhile, the bonds market returned between 4 and 6% in the same timeframe.

Risks

What is the loss you are theoretically exposing yourself to with a given asset class over the period of time you are looking at investing for? It may look like equities are more interesting than bonds based on returns, but a portfolio with 100% equities could have lost as much as 43.13% in a given year between 1926 and 2019. There were, in fact, 26 out of those 94 years that represented a loss for equities. For a portfolio with 100% bonds, the worst year was only 8.13%, and only 14 out of 94 years had a loss. If you want to be sure to have your money in 4 years, equities might be a little too risky, meaning volatile, for your needs.

Liquidity

This is addressing how easily you can convert these investments into cash, meaning sell them. This is essential when looking at asset allocation. Say you need money in 5 years as you are planning on buying a house. In that event, it’s probably best not to invest that money with a Venture Capitalist who says any potential profits won’t come back to you before 10 years. In this scenario, while you might then be “paper rich” after 5 years, you still won’t be able to use any of that money for the house because you can’t sell your shares to anybody. Equities, on the other hand, can be traded fairly quickly and easily, on average.

Correlation to Other Assets and Asset Classes

For most of the past two decades, a negative correlation with equity has meant U.S. Treasury bonds have acted as a hedge when stock markets tumbled. So bond prices tended to rise when equities prices fell, and balanced portfolios suffered smaller losses than portfolios with 100% equity. The idea is that you want diversity across assets that aren’t all correlated. If you have a basket of investments that always rise and fall together, your returns will look more or less the same as they would if you had, say, gone all-in on any one of them.

Price

Looking at the unit price of the assets you’re interested in is also key to properly diversifying. If you had €5’000 to invest, for example, you probably wouldn’t want to purchase a single share of Amazon priced at €3’000, as this would immediately be over 50% of your portfolio and make further diversification fairly difficult. However, cryptocurrency, as mentioned can be bought in very small units, easily under €50, or even €1.

If you can find an asset or asset class that you can afford, is liquid enough for your investment horizon, has a return and risk profile that works with your goals, and is as un-correlated as possible to the rest of your portfolio, then you have likely discovered a solid opportunity.

A look at historical returns, with data

To emphasize the point we are trying to make, here are 3 simulated portfolios from 26 September 2019 to 12 February 2021, based on actual past performance of the IWDA ETF as well as a portfolio managed by the OSOM Crypto Autopilot.

Each line simulates investing €1000 a month the first month then €500 a month the following months.

  • In black, the line shows the portfolio growth if that money is “invested” in a savings account. With a final amount of €9000
  • In red, the line shows the portfolio growth if that money is invested 100% in IWDA, an index ETF tracking the MSCI World. Final value is €10,543.14
  • In blue, the line shows the portfolio growth if that money is invested 90% in IWDA, and 10% in the OSOM Crypto Autopilot basket. Final value is €13,592.69

As you can see, putting just 10% into a well-curated portfolio of crypto assets over that time period allows you to see 28.92% more returns as opposed to using just traditional assets. While it is true, this comes at a cost of increased exposure to risk, but the absolute worst that could happen to the crypto part of your portfolio is that it would go to 0. Even in this unlikely event, it would still only affect 10% of your overall holdings. Considering an expected return on equity investment of 8% – 10% p.a., you’d make up for that loss in about a year using your traditional asset portfolio.

The Benefits Are Clear

While there are many, many strategies out there for diversification, it cannot be overlooked how useful alternative assets can be in mitigating overall risk. Of all alternative assets out there, cryptocurrencies stand somewhat unique in their liquidity, accessibility and diversification inside of their own class. While going “all in” on crypto is a much more dangerous game, we have shown how allocating a modest 10%, or whatever makes sense for your investment goals, can have notable positive effects on your portfolio valuation over time.

About The Author
Anton Altement is CEO of Polybius and OSOM Finance. Prior to starting OSOM, Altement spent close to a decade with Credit Suisse as an investment banker in London and Zurich. He is focused on building a currency-agnostic ecosystem to facilitate the convergence of fiat and crypto.

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

How Might NFLX Share Price React to Q1 Earnings?

Recall that the pandemic prompted a massive front-loading of Netflix subscriptions, as households starved for entertainment amid lockdowns drove the company’s global customer base past the 200 million mark by the end of last year.

For Q1 2021, Netflix has guided for an additional 6 million subscribers, while Wall Street expects that tally to be closer to 6.3 million. That’s still a pretty healthy figure, even though it pales in comparison to the 15.77 million new paying members who signed on during the same period a year ago.

Sauntering subscriber and share price growth

Looking ahead, shareholders appear cognizant that Netflix would find it tough to replicate the growth spurts it experienced last year. The same can be said for its share price.

After surging by 67.1% in 2020, Netflix has only managed a gain of 2.54% so far this year. That’s slower in comparison to the year-to-date performances of:

Netflix has clearly been a laggard within the famed FAANG group, with the streaming company now languishing 5.44% below its record high, set on 20 January 2021, which was also the day after its last quarterly earnings announcement.

From a technical perspective, Netflix’s share prices found support at its 200-day simple moving average (SMA) in March, using it as a platform to launch back above its 50-SMA this month. However, with the bullish momentum in the stock plateauing, while a close above the $555 mark having proved hard to come by since mid-February, Netflix could do with a positive catalyst to catch up with the rest of its peers.

Perhaps that catalyst may arrive at the company’s earnings release later today.

What are markets expecting for Netflix’s Q1 financial results?

Three words: record setting quarter.

Wall Street expects Netflix to post its highest-ever revenue and net profit for a single financial quarter. The top line is expected to breach the $7 billion mark for the first time in the company’s history, thanks to price hikes in the US, Germany, UK and Ireland. Meanwhile, the company’s adjusted net profit is slated to come in at $1.45 billion, and that should translate into an adjusted earnings per share of $3.18.

However, look beyond the historic numbers and the broader industry harbors troubling signs for Netflix.

Streaming wars eroding Netflix’s advantage

According to a report by Parrot Analytics, just over half (50.2%) of the original series that viewers worldwide wanted to watch online over the past three months were by Netflix. While that figure still dwarves second-placed Amazon Prime’s share of 12.2% for the same period (January-March 2021), Netflix’s market share has clearly dropped from the near-65% share it enjoyed some two years ago.

Within the US alone, the decline in Netflix’s market share is even more obvious. According to Bloomberg Intelligence data, Netflix’s share of the US streaming pie has gone from near-total dominance of 96.04% in Q1 2018 to just 44.43% as of Q4 2020.

As the competition for eyeballs intensifies, Netflix is set to find it harder to gain more subscribers.

Netflix not taking things lying down

That doesn’t spell the end of Netflix. This year alone, the world’s largest streaming platform aims to release over 70 movies. The streaming giant earlier this month also announced a deal with Sony, which is reportedly worth over $1 billion. The agreement gives Netflix the rights to exclusively show Sony movies released from 2022 onwards after they’ve completed their theatrical runs.

That should keep their 210 million subscribers (estimated as of end-March) and counting, entertained with popular franchises such as “Jumanji” and “Spider Man” over the coming years, even with the potential prices hikes looming.

Armed with customer loyalty while flexing its pricing power, Netflix still has a lot within its arsenal to withstand the heightened competition for viewers’ attention.

How might Netflix’s share price react after Tuesday’s earnings?

Markets are pricing in a 7.2% move for Netflix’s share price when markets reopen on Wednesday. Although NFLX could go either way, it’s notable that shareholders typically sought to use these announcements as selling opportunities. The stock declined the day after 8 of the past 11 earnings.

Still, a 7.2% move to the upside would set a new record high for Netflix’s share price, while a similar-sized move to the downside could see the stock looking for support around its 200-SMA once more.

How exactly will this NFLX stock react this week? We’ll just have to stay tuned and watch the drama unfold.

Written on 20/04/2021 02:00 GMT by Han Tan, Market Analyst at FXTM

For more information, please visit: FXTM

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

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Microsoft to Invest $1 Billion in Malaysia to Set up Data Centres – Malaysian PM

The announcement on what would be the U.S. tech giant’s biggest investment in Malaysia comes after the country in February gave conditional approvals for Microsoft, Google, Amazon and state telecoms firm Telekom Malaysia to build and manage hyper-scale data centres and provide cloud services.

It also comes after the country saw foreign direct investments (FDI) plunge by 68% last year, the biggest decline in Southeast Asia.

Malaysia has defended itself as an investment destination, with the finance minister recently saying it was looking at incentives to help attract more FDI.

It has said the investments from these cloud service providers will total between 12 billion ringgit and 15 billion ringgit ($2.91 billion-$3.64 billion) over the next five years.

As part of the Bersama Malaysia initiative, Microsoft will establish its first “datacentre region”, which consists of multiple data centres, in Malaysia to manage data from various countries, Prime Minister Muhyiddin Yassin told an event marking the launch of the programme.

“The upcoming datacenter region will be a game-changer for Malaysia,” Microsoft Executive Vice President Jean-Philippe Courtois said in a statement, adding it will enable the government and businesses to “transform” their operations.

Under the programme, Microsoft will also assist up to a million Malaysians in getting digital skills by the end of 2023.

(Reporting by Liz Lee; Editing by Muralikumar Anantharaman)

Canada’s Telesat Takes on Musk and Bezos in Space Race to Provide Fast Broadband

By Steve Scherer

Musk, the Tesla Inc CEO who was only a year old when Telesat launched its first satellite, is putting the so-called Starlink LEO into orbit with his company SpaceX, and Amazon.com Inc, which Bezos founded, is planning a LEO called Project Kuiper. Bezos also owns Blue Origin, which builds rockets.

Despite the competition, Dan Goldberg, Telesat’s chief executive officer, voices confidence when he calls Telesat’s LEO constellation “the Holy Grail” for his shareholders – “a sustainable competitive advantage in global broadband delivery.”

Telesat’s LEO has a much lighter price tag than SpaceX and Amazon’s, and the company has been in satellite services decades longer. In addition, instead of focusing on the consumer market like SpaceX and Amazon, Telesat seeks deep-pocketed business clients.

Goldberg said he was literally losing sleep six years ago when he realized the company’s business model was in peril as Netflix and video streaming took off and fiber optics guaranteed lightning-fast internet connectivity.

Telesat’s 15 geostationary (GEO) satellites provide services mainly to TV broadcasters, internet service providers and government networks, all of whom were growing increasingly worried about the latency, or time delay, of bouncing signals off orbiters more than 35,000 km (22,200 miles) above earth.

Then in 2015 on a flight home from a Paris industry conference where latency was a constant theme, Goldberg wrote down his initial ideas for a LEO constellation on an Air Canada napkin.

Those ideas eventually led to Telesat’s LEO constellation, dubbed Lightspeed, which will orbit about 35 times closer to earth than GEO satellites, and will provide internet connectivity at a speed akin to fiber optics.

Telesat’s first launch is planned in early 2023, while there are already some 1,200 of Musk’s Starlink satellites in orbit.

“Starlink is going to be in service much sooner … and that gives SpaceX the opportunity to win customers,” said Caleb Henry, a senior analyst at Quilty Analytics.

Starlink’s “first mover” advantage is at most 24 months and “no one’s going to lock this whole market up in that amount of time,” Goldberg said.

Telesat in 2019 signed a launch deal with Bezos’ aerospace company Blue Origin. Discussions are ongoing with three others, said David Wendling, Telesat’s chief technical officer.

They are Japan’s Mitsubishi Heavy Industries Ltd, Europe’s ArianeGroup , and Musk’s SpaceX, which launches the Starlink satellites. Wendling said a decision would be taken in a matter of months.

Telesat aims to launch its first batch of 298 satellites being built by Thales Alenia Space in early 2023, with partial service in higher latitudes later that same year, and full global service in 2024.

‘SWEET SPOT’

The Lightspeed constellation is estimated to cost half as much as the $10 billion SpaceX and Amazon projects.

“We think we’re in the sweet spot,” Goldberg said. “When we look at some of these other constellations, we don’t get it.”

Analyst Henry said Telesat’s focus on business clients is the right one.

“You have two heavyweight players, SpaceX and Amazon, that are already pledging to spend $10 billion on satellite constellations optimized for the consumer market,” he said. “If Telesat can spend half that amount creating a high-performance system for businesses, then yeah, they stand to be very competitive.”

Telesat’s industry experience may also provide an edge.

“We’ve worked with many of these customers for decades … That’s going to give us a real advantage,” Goldberg said.

Telesat “is a satellite operator, has been a satellite operator, and has both the advantage of expertise and experience in that business,” said Carissa Christensen, chief executive officer of the research firm BryceTech, adding, however, that she sees only two to three LEO constellations surviving.

Telesat is nailing down financing – one-third equity and two-thirds debt – and will become publicly traded on the Nasdaq sometime this summer, and it could also list on the Toronto exchange after that. Currently, Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc are the company’s main shareholders.

France and Canada’s export credit agencies, BPI and EDC respectively, are expected to be the main lenders, Goldberg said. Quebec’s provincial government is lending C$400 million ($317 million), and Canada’s federal government has promised C$600 million to be a preferred customer. The company also posted C$246 million in net income in 2020.

Executing the LEO plan is what keeps Goldberg up at night now, he said.

“When we decided to go down this path, the two richest people in the universe weren’t focused on their own LEO constellations.”

(Reporting by Steve Scherer in Ottawa; Editing by Matthew Lewis)

Amazon CEO Bezos, Stung by Wide Criticism, Endorses U.S. Corporate Tax Hike

By David Shepardson

“We support the Biden Administration’s focus on making bold investments in American infrastructure,” Bezos said in a blog post. “We recognize this investment will require concessions from all sides — both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate).”

The largest online U.S. retailer, which has been widely criticized in recent years for paying little or no U.S. federal income tax, did not endorse raising rates to a specific figure.

The White House did not immediately comment.

Biden’s infrastructure plan proposes increasing the corporate tax rate to 28% from 21% and would revise the tax code to close loopholes that allow companies to move profits overseas

Biden said last week Amazon was one of 91 Fortune 500 companies that “use various loopholes where they pay not a single solitary penny in federal income tax,” in sharp contrast to middle class families paying over 20% tax rates.

Bezos is stepping down from the CEO role during third quarter of 2021.

After paying no federal income tax in 2017 or 2018, Amazon reported a $162 million current U.S. federal tax liability for 2019 and $1.835 billion U.S. federal tax liability for 2020.

Biden’s predecessor, Donald Trump, and Republican lawmakers cut the corporate rate to 21% in 2017 from 35%. Trump repeatedly promised to tackle the nation’s crumbling infrastructure during his presidency but never delivered on that.

The U.S. Chamber of Commerce, the largest U.S. business group, last month called Biden’s proposed hike in corporate taxes “dangerously misguided” and warned it would “slow the economic recovery and make the U.S. less competitive globally.”

In June 2019, Biden named Amazon and said no company making billions in profits should pay a lower tax rate than firefighters and teachers.

(Reporting by David Shepardson; Editing by Leslie Adler and David Gregorio)

Amazon Appoints New Cloud Chief – Shares Tumble

Shares in e-commerce giant Amazon.com, Inc. (AMZN) slipped 1.61% Wednesday after the company announced it had hired Tableau CEO Adam Selipsky to head its AWS cloud business. Selipsky, a former Amazon executive, replaces Andy Jassy, who is taking over from founder Jeff Bezos as CEO later this year.

The appointment comes at a critical time as more companies continue to move from local storage to the cloud – a trend that has accelerated during the pandemic as remote working took hold during shutdowns. Currently, Amazon controls around 34% of the cloud market share according to Synergy Research Group, per the Wall Street Journal. Moreover, the company’s cloud division continues to drive earnings, bringing in $51 billion in annual sales last year and growing 30% in the fourth quarter. In total, the unit accounts for around 10% of Amazon’s revenue.

Through Wednesday’s close, Amazon stock has a market value of $1.56 trillion and trades nearly 60% higher over the past twelve months. However, the shares have eased 5.22% since the start of the year. From a valuation standpoint, the stock trades at about 61 times projected earnings – 41% below its five-year average earnings multiple of 86 times.

Wall Street View

Following the company’s upbeat fourth-quarter earnings report, Credit Suisse analyst Stephen Ju bumped the investment bank’s price target on the stock to $3,940 from $3,860. He also kept his ‘Maintain’ recommendation on the shares. Ju believes Amazon sits well-positioned to retain the customers it gained throughout the pandemic, which should drive faster purchasing velocity in the quarters ahead.

Bullish sentiment follows the stock elsewhere on Wall Street. It receives 44 ‘Buy’ ratings, five ‘Overweight’ ratings, and two ‘Hold’ ratings. Currently, the shares trade around $1,000 below analysts’ twelve-month consensus price target of $4,000.

Technical Outlook and Trading Tactics

Although no brokerage research recommends selling the shares, the chart indicates possible falls in the coming weeks. Since breaking down below a multi-month symmetrical triangle, the price has retested the pattern’s lower trendline in recent trading sessions, where previous support looks to be flipping into resistance. The area also encounters selling pressure from both the 50- and 200-day simple moving averages (SMAs).

Those who take a short sale at this level should consider covering their position on a decline to crucial support at $2,515. Protect capital by placing a stop-loss order just above the March 23 high at $31.82.

For a look at today’s earnings schedule, check out our earnings calendar.

It’s The Risk-On Market Sentiment Taking Gold Fractionally Lower

Currently, the dollar is down 0.17% and fixed at 91.77. The 10-year note also declined from the highs witnessed last week and is currently fixed at 1.679%. Bitcoin futures are currently trading down by 5.13% and fixed at $55,910. It seems that the dollar, Bitcoin, and 10-year notes, which have been the primary reasons that the precious metals downside pressure, have subsided at least for the moment.

Rather it seems to be portfolio balancing as market participants moved back into the tech-heavy NASDAQ composite with specific companies rebounding after trading under pressure for the last two weeks. The NASDAQ composite showed gains head and shoulders above the S&P 500 as well as the Dow, gaining 1.26% in trading today. The composite index is currently at 13,374.94, up approximately 160 points.

Tesla, for example, is currently up to $22.84 and fixed at $677.50 per share. Amazon is up to $44 and is currently fixed at $3119. Shopify is up to $35.72 and fixed at $1156.98, And Nvidia is up to $13.28 and fixed at $526.94.

Another reason cited for today’s decline in precious metals was Turkey. Both their currency and equities markets tumbled after President Erdogan fired the head of their central bank. MarketWatch reported that “Turkey’s currency and stocks collapsed after the abrupt termination of its central bank head, a move that led investors to take a cautious stance toward risky assets on Monday.”

gold 2 march 22

In an article penned by Steve Goldstein, he quoted Phoenix Kalen, a strategist at the French bank Societe Generale, “With Naci Agbal’s removal from the CBRT, Turkey loses one of its last remaining anchors of institutional credibility. During his short tenure, Agbal had succeeded where various predecessors had not – in cultivating trust in the central bank’s inflation-targeting framework, in restoring monetary policy independence, in encouraging international investors to re-engage with the crisis-prone Turkish narrative, in driving an 18.0% rally in the lira against the dollar, and most crucially – in arresting and even reversing the damaging trend of dollarization in the economy.”

gold march 22

Market sentiment shifting towards equities and the issues reported in Turkey have been the primary causes taking gold fractionally lower, with the most active April 2021 Comex contract down $2.90 and fixed at $1738.80. However, silver is experiencing a much sharper decline, currently down 1.77%, taking the most active May 2021 Comex contract to $25.85 an ounce, after factoring in today’s decline of $0.47.

silver march 22

Government spending has already allocated four trillion last year, in addition to the most recent aid package costing $1.9 trillion. Now the Biden administration is considering adding an additional $3 trillion worth of debt as it looks at two additional recovery packages. The $3 trillion would be spent to improve infrastructure, climate change, and reducing economic inequities, according to the New York Times. CNBC reported that “The White House is going to propose splitting the mammoth initiative into two bills, though Republican support for either plank could be hard to secure as Biden aims to increase taxes on corporations and the wealthiest Americans.”

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

Amazon Starts Offering Healthcare Service to Other Employers

By Jeffrey Dastin

Piloted in September 2019 for staff near its Seattle headquarters, “Amazon Care” lets employees video-chat with doctors for diagnoses and referrals. It also facilitates housecalls and drug delivery in greater Seattle, a non-virtual benefit that Amazon said would be available in greater Washington, D.C and Baltimore in the coming months.

The news shows how the No. 2 U.S. private employer is diving further into healthcare, the latest industry it has aimed to disrupt after retail, enterprise technology and Hollywood.

Amazon is now delivering prescription medications through an online pharmacy it launched last year and earlier worked with Berkshire Hathaway Inc and JPMorgan Chase & Co on lowering care costs in a now-disbanded venture called Haven.

Its playbook for offering healthcare in-house and then to other employers resembles how Amazon built data centers to satisfy its own web needs, before opening up the same infrastructure to startups in what became its cloud-computing business.

Kristen Helton, director of Amazon Care, said the service has grown during the COVID-19 pandemic and work-from-home period, but the opportunity goes far beyond that.

“Virtual medicine is absolutely part of the future of how healthcare is delivered,” she said in an interview.

Enterprises can contract with Amazon Care, offer that as a workplace benefit and subsidize healthcare costs for employees, Amazon said. It did not disclose financial terms, and Helton did not specify how big a business Amazon anticipates this will be.

Helton said Amazon Care was an add-on for some patients, a way to quickly get help after hours. But for others without a regular doctor, it is shaping up to be more.

“We’ve now evolved to offer more services,” she said. “We can do more primary care.”

(Reporting by Jeffrey Dastin in San Francisco; Editing by Christopher Cushing)

Amazon Workers in Italy Call First Company-Wide Strike for March 22

The world’s largest online retailer employs 8,500 people in Italy and this will be the first strike by its Italian workforce as a whole.

National unions Filt Cgil, Fit Cisl and Uiltrasporti e Assoespressi said talks over contracts for Amazon staff in Italy “came to an abrupt halt because of the company’s unwillingness to positively address the issues raised”.

The unions had asked the company to revise several aspects of staff’s contracts, including workloads, shifts, contract conditions, lunch vouchers, results-linked bonuses and payments for travel. It also asked for drivers’ working hours to be cut.

“Amazon shows, with an unacceptable behaviour, that it is chronically unavailable to confront workers’ representatives, in defiance of national contract rules and going against a system of fairness,” the unions’ statement said.

Amazon said that the union’s claims were “false” and that the company had already met the unions twice in January, a company spokeswoman said in an emailed statement.

It added that given logistics staff included several delivery service providers, it believed it should talk directly with them as well as with the unions representing them.

The strike will affect all Amazon workers in the supply chain, hub and delivery operations in Italy.

The U.S. company has invested 5.8 billion euros ($6.94 billion) in Italy since starting operations there 10 years ago. In January it announced it would open two logistics centres investing a further 230 million euros.

Last year around one-third of staff working at an Amazon delivery station in central Italy went on strike over requests for enhanced safety measures for workers amid the coronavirus health emergency.

($1 = 0.8361 euros)

(Reporting by Elvira Pollina in Milan and Francesca Piscioneri Rome, editing by Giulia Segreti and Susan Fenton)

US Stock Markets Daily Recap: That’s Why You Buy the Dips

Days like Tuesday (Mar. 9) are why you buy the dips. It was nothing short of a reverse rotation from what we’ve seen as of late. Bond yields moved lower; tech stocks popped.

That’s why I called BUY on the Nasdaq.

Inflation fears and the acceleration of bond yields are still a concern. But it looks as if things are stabilizing, at least for one day. The lesson here, though, is to be bold, a little contrarian, and block out the noise.

Unless you’ve been living under a rock, you know that recent sessions have been characterized by accelerating bond yields driving a rotation out of high growth tech stocks into value and cyclical stocks that would benefit the most from an economic recovery. The Nasdaq touched correction territory twice in the last week and gave up its gains for the year.

But imagine if you bought the dip as I recommended.

The Nasdaq on Tuesday (Mar. 9) popped 3.7% for its best day since November. Cathie Wood’s Ark Innovation ETF (ARKK) surged more than 10% for its best day ever after tanking by over 30%. Semiconductors also rallied 6%.

Other tech/growth names had themselves a day too: Tesla (TSLA) +20%, Nvidia (NVDA) +8%, Adobe (ADBE) +4.3%, Amazon +3.8%, Apple (AAPL) +4.1%, and Facebook (FB) +4.1%.

In keeping with the theme of buying the dip, do you also know what happened a year ago yesterday to the date? The Dow tanked 7.8%!

There’s no way to time the market correctly. If you bought the Dow mirroring SPDR DJIA ETF (DIA) last March 9, you’d have still seen two weeks of pain until the bottom. However, you’d have also seen a gain of almost 36% if you bought that dip and held on until now.

Look, I get there are concerns and fears right now. The speed at which bond yields have risen is concerning, and the fact that another $1.9 trillion is about to be pumped into a reopening economy makes inflation a foregone conclusion. But let’s have a little perspective here.

Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%.

So is the downturn overblown and already finished?

Time will tell. I think that we could still see some volatile movements over the next few weeks as bond yields stabilize and the market figures itself out. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market has to figure itself out.

A correction of some sort is still very possible. I mean, the Nasdaq’s already hit correction territory twice in the last week and is still about 3-4% away from returning to one. But don’t fret. Corrections are healthy and normal market behavior. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

Most importantly, a correction right now would be an excellent buying opportunity. Just look at the Nasdaq Tuesday (Mar. 9).

It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.

You can never time the market.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- That’s Why I Called BUY

Figure 1- Nasdaq Composite Index $COMP

For the second time in a week, the Nasdaq hit correction territory and rocketed out of it. It saw its best day since November and proved once again that with the Nasdaq, you always follow the RSI. There could be more uncertainty over the next few weeks as both the bond market and equity market figure themselves out. However, the Nasdaq declines were very buyable, as I predicted.

If you bought the dip before Tuesday’s (Mar. 9) session, good on you. Be a little bit bold and fearless right now. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her.

Tuesday, March 9, ARKK saw its best day in history.

I’m not saying that we’re out of the woods with tech. All I’m saying is don’t try to time the market, don’t get scared and have perspective.

The Nasdaq is once again roughly flat for the year, its RSI is closer to oversold than overbought, and we’re still below the 50-day moving average, near a 2-month low, and right around support at 13000.

It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

Mike Wilson , chief investment officer at Morgan Stanley, had this to say about recent tech slides- “I don’t think this is the end of the bull market or the end of tech stocks per se, but it was an adjustment that was very necessary.”

I like the levels we’re at, and despite the possibility of more “adjustments” in the short-run, it’s a good time to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.

For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Amazon Running in Place After Blowout Quarter

Amazon.com Inc. (AMZN) is trading lower on Wednesday despite beating Q4 2020 top and bottom line estimates by wide margins. The e-commerce juggernaut earned $14.09 per-share during the quarter, better than $7.15 per-share estimates, while revenue rose a staggering 43.6% year-over-year to $125.6 billion, beating consensus by nearly $6 billion. Jeff Bezos announced his departure as CEO during the release, replaced by current head of Amazon Web Services Andy Jassy.

Q4 Blowout Results

Operating income rose 77% year-over-year to $6.87 billion vs. $1.0 to $4.6 billion guidance. Amazon Web Services (cloud computing) posted another strong quarter, growing 28% year-over-year to $12.74 billion. CEO Bezos capped off the blowout quarterly report by issuing upside Q1 guidance, now expecting revenue of $100 to $106 billion vs. $95.5 billion prior expectations while looking for operating income of $3.0 to $6.5 billion.

Susquehanna raised the firm’s price target to a Street-high $5,200 after the news, commenting, “Business trends remain strong and should continue to do so in 2021. Paid units growth was extremely strong again at 47% year-over-year, demonstrating the accelerating shift to e-commerce. The 1Q guide was also nicely above expectations for revenue and profitability, showing no signs of slowing down after a huge holiday season.”

Wall Street and Technical Outlook

Wall Street consensus now stands at a ‘Strong Buy’ rating, based upon 41 ‘Buy’, 7 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $3,048 to a Street-high $5,200 while the stock opened Wednesday’s U.S. session more than $600 below the median $4,100 target. This stark under-performance, compared to price targets, suggests that investors still view Amazon as ‘fully-valued’.

The stock broke out above 2018 resistance at 2,550 in April 2020 and rallied to an all-time high at 3,552 in September. Price action then eased into a symmetrical triangle pattern that remains in force, more than five-months later. The blowout fourth quarter report has barely moved the price needle, suggesting that Amazon remains extremely overbought after 2020’s 76% return, even though its already spent months working off technical extremes.

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.

GameStocks – Fun While It Lasted…

I don’t want to lecture anyone or say that I told you so. During one of my newsletters last week, I even said that I tip my hat to anyone who profited from this—all the respect in the world.

Me personally, though, I would never trade like this. Monday (Feb. 1) and Tuesday’s market (Feb. 2) was nothing more than a reality check. GameStop’s stock has lost nearly half of its value, and other Reddit darlings like AMC, Blackberry (BB), Koss (KOSS), and Silver (SLV) tanked.

Stocks don’t go up forever.

Stonks especially don’t.

Who knows, maybe the party’s not over. But I think the plummet in the Reddit stocks was bound to happen. Bubbles always eventually pop.

The market seems happy that the earth is back on its axis in stockland. The indices have recovered nearly all of last week’s losses already.

I didn’t call the GameStop short-squeeze, but I had called last week’s downturn for a while. The recovery so far this week wasn’t entirely surprising either.

Be that as it may, I remain concerned about complacency in the markets and overstretched valuations, plus the potential return of inflation. But the breather last week was needed and brought the indices to less overbought levels.

Generally, investors and analysts are bullish these days. According to a recent Bank of America survey of 194 money managers, bullishness on stocks is at a three-year high, and the average share of cash in portfolios, which is usually a sign of protection from market turmoil, is at the lowest level since May 2013.

We have still not declined 10% from the record highs- the minimum needed for a correction. Although the market needed last week’s downturn, we’re once again mostly right where we were several days ago.

I know what you’re thinking. Amazon (AMZN) and Alphabet (GOOGL) are the latest companies to crush their earnings estimates, how could we possibly have a correction?

For one, there are still things to be concerned about from a public health and economic perspective.

We are also long overdue for one. We haven’t seen one since last March. Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

A correction could also be an excellent buying opportunity for what should be a great second half of the year.

We’re no longer as close to those same BUY levels as we were after market close on Friday. But we’re not quite at SELL again, and I still think we’re a few pullbacks away from making more BUY calls with conviction. In other words, welcome to no man’s land.

In my last newsletter, I cautioned against making manic moves and trading with emotions. We saw our worst week since October last week and declined in two of the previous three. Much of that was due to the GameStops and AMCs freaking out Wall Streeters. But I reminded you then, and I’ll remind you again. Shares of Eastman Kodak surged by 1,481% in three days last July, and the broader market seems to have done just fine since then.

Do not let the noise deter you from your goals. My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

We’re all in this together!

Is It Safe to Buy Tech Again?

Figure 1- Nasdaq Composite Index $COMP

Earnings season for tech stocks hit record numbers last week, and is set to continue this week with Amazon and Alphabet clobbering estimates. Usually, when investors get what they expect, it’s more of a reason to sell rather than buy.

But the Nasdaq so far this week has already recovered almost all of last week’s losses, and then some.

I’m not ready to call this a BUY though, or recommend buying into momentum. There are still concerns. Tech valuations, especially the tech IPO market, terrify me. SPACs don’t help either. The Nasdaq last week declined to a more “normal” level, and in the span of two days, hit an RSI approaching 63 again.

Last week’s decline was needed, but there are still echoes of the dot-com bubble 20-years ago. I remain bullish on earnings and tech sectors such as cloud computing, e-commerce, and fintech for 2021, but please monitor the RSI.

The RSI is how I have called the Nasdaq since December. While an overbought or oversold RSI does not automatically mean a trend reversal, it has with the Nasdaq.

The Nasdaq pulled back on December 9 after exceeding an RSI of 70 and briefly pulled back again after passing 70 again around Christmas time. We also exceeded a 70 RSI just before the new year, and what happened on the first trading day of 2021? A decline of 1.47%.

When I changed my Nasdaq call from a HOLD to a SELL on January 11 after the RSI exceeded 70, the Nasdaq declined again by 1.45%.

Before the Nasdaq exceeded an RSI over 73 prior to January 25th, I switched my call back to SELL, and the QQQ promptly declined 4.13% for the week.

The Nasdaq is trading in a precise pattern.

I still like tech and am bullish for 2021. But for now, I’m going to stay conservative and say HOLD.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Stocks Move Higher On Strong Reports From Amazon And Alphabet

Tech Giants Report Strong Quarterly Results

S&P 500 futures are gaining ground in premarket trading as traders cheer solid results from Amazon and Alphabet.

Both companies have easily exceeded analyst estimates on both earnings and revenue as tech giants benefited from trends that were accelerated by the pandemic.

Amazon’s Jeff Bezos decided to step down as CEO. He will be replaced by Andy Jassy who is the head of the company’s cloud division. Interestingly, this news had no impact on the company’s shares.

Both stocks are currently gaining ground in premarket trading. Amazon shares are up by 1.5% while Alphabet shares are gaining more than 7%. The solid performance of tech giants will surely boost Nasdaq and provide support to S&P 500 at the beginning of the trading session.

ADP Employment Change Report Provides Additional Support To Stocks

The U.S. has just released ADP Employment Change report for January which indicated that private businesses hired 174,000 workers. Analysts expected that private businesses would add 49,000 jobs so the report was much better than expected.

The report indicated that the situation in the job market has stabilized which is bullish for stocks. However, some traders would prefer to wait for confirmation of the positive trend from Initial Jobless Claims report which will be published on Thursday and Non Farm Payrolls report which is scheduled to be released on Friday.

Today, traders will also have a chance to take a look at the final reading of the Services PMI report for January. Analysts expect that Services PMI increased from 54.8 to 57.5.

Oil Moves Higher As Crude Inventories Decline

WTI oil managed to settle above the $55 level and continued its upside move after API Crude Oil Stock Change report indicated that crude inventories declined by 4.26 million barrels. Crude inventories continue to decline which is a sign of recovering demand.

Yesterday, many oil-related stocks were under pressure as investor mood was spoiled by BP earnings report, but the continuation of oil price rally will likely provide sufficient support to this segment during today’s trading session.

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

Amazon Trades Flat After Blowout Quarterly Earnings as Investors Digest Bezos Departure

Shares in Amazon.com, Inc. (AMZN) were little changed during Tuesday’s extended-hours trading session, despite the Seattle-based e-commerce giant reporting better-than-expected quarterly results. During the earnings call, the company’s founder and CEO Jeff Bezos surprised investors by announcing that he will step down later this year.

The tech titan posted record sales of $125.56 billion in the 2020 holiday quarter, significantly above the $119.7 billion Wall Street had expected. Importantly, it marked the first time the company has generated over $100 billion in revenue in a three-month period. Meanwhile, earnings came in at $14.09 per share, almost double analysts’ forecast of $7.23 a share. The figure also grew 118% from a year earlier.

Management credited the outstanding quarter to record-breaking holiday season e-commerce demand that saw the company deliver over one billion products. It also said a pandemic-delayed Prime Day helped fuel quarterly sales. Looking ahead, the company projects Q1 revenue of between $100 billion and $106 billion, with operating income of between $3 billion and $5.5 billion.

Through Tuesday close, Amazon stock has a $1.7 trillion market cap and trades 68% higher over the past twelve months. Since the start of the year, the shares have gained nearly 4%.

Bezos Departs

In a move few investors saw coming, Bezos announced that Web Services CEO Andy Jassy would replace him in the top job this fall, adding that he will become executive chairman. Bezos, the world’s second-richest person, said he plans to focus on “new products and early initiatives” in his new role, as well as devoting more time to his philanthropic funds and other business interests.

Wall Street View

Last month, JPMorgan analyst Doug Anmuth bumped the firm’s price target on Amazon stock to $4,155 from $4,100 while maintaining an ‘Overweight’ recommendation. Anmuth sees the company’s “strong” e-commerce and public cloud trends continuing in the quarters ahead.

Sentiment remains just as upbeat elsewhere. The stock receives 41 ‘Buy’ ratings, 4 ‘Overweight’ ratings, and 3 ‘Hold’ ratings. Currently, no brokerage firm recommends selling the shares. As of Feb. 3, 2021, Amazon stock trades 12% below the median 12-month Wall Street consensus price target of $3,800.

Technical Outlook and Trading Tactics

Amazon shares staged a pre-earning breakout above a multi-month symmetrical triangle on heavy volume Tuesday as traders bet on a bullish quarterly report. Providing the price holds above the triangle pattern’s top trendline, look for further upside continuation in today’s session.

Those who take a trade should consider using the measured move technique to set a profit target. To do this, measure the initial high to low of the pattern in dollars, and add that amount to the breakout point. For example, add $747 (pattern’s distance) to $3,320 (breakout point) for a profit target of $4,067.

For a look at today’s earnings schedule, check out our earnings calendar.

Amazon, Alphabet Top Earning Estimates; Jeff Bezos Steps Down as Amazon CEO

U.S. stock index futures rose after the cash market close on Tuesday on the back of strong earnings from Amazon and Alphabet.

Amazon reported earnings nearly double Wall Street estimates; however, the stock move was tempered by news that Jeff Bezos would step down as CEO.

Shares of Alphabet gained 6% in afterhours trading after the technology giant reported 23% revenue growth and topped estimates for earnings.

Amazon’s Cloud Division Reports 28% Revenue Growth

Amazon’s cloud-computing business reported 28% revenue growth in the fourth quarter, falling short of analysts’ expectations.

Amazon Web Services remains the market leader for cloud computing and storage that companies, governments and schools use to run websites and applications. While Microsoft and Google grew faster in the fourth quarter, they’re still well behind Amazon in serving businesses that are rapidly offloading their data.

Revenue at AWS climbed to $12.7 billion from $9.95 billion a year earlier, below the $12.83 billion consensus estimate among analysts polled by FactSet. AWS revenue represented 10% of Amazon’s total sales.

AWS continued to drive much of Amazon’s profit. Operating income increased 37% from a year earlier to $3.56 billion, but trailing the $3.75 billion FactSet consensus estimate. That means 52% of the company’s operating income can be attributed to AWS, compared with about two-thirds in the same period a year ago.

In other news, Amazon said Andy Jassy, who runs the cloud division, will succeed Jeff Bezos as CEO of Amazon in the third quarter of this year.

Alphabet Revenue up 23% as Core Advertising Business Shows Strong Growth

Shares of Alphabet, the parent of company of Google, rose nearly 8% in extended trading on Tuesday after the company reported fourth-quarter earnings that surpassed analysts’ expectations and showed a strong return to growth in its core advertising business.

Alphabet’s revenue grew 23% on an annualized basis in the quarter, according to a statement. That’s stronger growth than last year’s Q4, which came in at 17%, and shows Google’s advertising business is recovering well after a big showdown in Q2 of last year.

Alphabet also broke out operating income from its cloud business for the first time:  the company lost $5.61 billion during the full year, and $1.24 billion during Q4, showing that the business is still in investment mode. By way of contrast, Amazon’s cloud business earned an operating profit of $13.53 billion last year and $3.56 billion last quarter.

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