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Sunday, October 18, 2020
Heavy earnings this week set to fuel stock rally
Penny Stocks Ace, Jeff Williams, Reveals…
His Time-Tested Strategy That Turned
$3,000 Into $30,000 In 6 Months $5,000 Into $16,000 In 3 Months $500 Into $10,758 In 58 Days
We heard from banks last week but didn't have much to celebrate.
Yet, markets surged despite this weakness.
So, what do you think will happen when companies beat expectations?
This week, I'm focusing on the earnings that could add fire to this rally, and here's why.
The resilient consumer
Individual companies like Chipotle Mexican Grille (CMG) or Netflix (NFLX) aren't enough to move the market by themselves.
But taken together, they start to paint a trend that confirms the data.
Strong retail sales gains last week put spending back on track even as economic stimulus ran out.
Monthly Retail Sales
Our economy lives and dies by consumer spending.
Even as stimulus runs out, and Washington dithers about adding more, Americans continue to spend.
It just isn't the way we used to.
As more folks work from home for longer periods, they begin to furnish their offices.
That's led to an uptick in purchases.
Take a look at the breakdown of the sales in terms of percent change.
I highlighted a few areas.
First, spotting goods and hobbies continues to remain extremely robust. That's led to stocks like Dick's Sporting Goods (DKS) heading towards new all-time highs.
Building materials and like supplies also did exceptionally well as consumers remodel and renovate their homes.
But notice how gasoline stations declined substantially.
That's part of the reason I remained bearish on the oil and gas sector, even going so far as to buy puts last week on the S&P Oil and Gas Exploration ETF, the XOP, last week.
I know it's not loads of fun to parse through this data.
But a simple look at this percentage change chart provides a wealth of trade ideas.
Now, there's a few specific earnings I want to touch that could foretell changes to their industry.
Movies tell more than just their story
This week we hear from two distinctly different companies: Netflix and AMC theatres.
One led the way into our new age of streaming.
The other holds onto life by a thread.
Movies theatres suffered horribly in the pandemic. And I really question whether they'll exist next year.
AMC theaters' ability to survive isn't just about movies. It's about discretionary consumer experiences.
I'm talking about everything from Dave and Busters to concert venues.
All these companies are in survival mode.
The question is how long can they last and what are they doing to reinvent themselves?
Airlines also report this week. And there's already talk of massive furloughs.
Taken together, these reports will tell us whether any of them will survive, exist in their current forms, or collapse altogether.
On the other end, you have Netflix cultivating troves of fans with its creative content.
Their success hasn't gone unnoticed as activists push Disney to focus on their streaming services instead of theme parks.
That's putting more pressure on Netflix.
But if their report beats expectations this week, I expect their stock to smash through their all-time highs.
That could fuel a rally in tech stocks which saw a hefty pullback last week.
And it's one of the places that I like for next week.
How I plan to trade it
I've got a lot of bets working that markets rally through the election.
That's why I picked up calls last week in the QQQ that scored a nearly $35,000 gain!
11:00 AM EST – Kansas City Fed Manufacturing October
Major earnings: American Airlines Grp inc (AAL), Amer Electric Pwr (AEP), Alaska Air Grp Inc (ALK), Axalta Coating Systems Ltd (AXTA), Carpenter Tech (CRS), Citrix Systems Inc (CTXS), Quest Diagnostics (DGX), Danaher Corp (DHR), Dow Inc (DOW), Entegris Inc (ENTG), Equitable Resources (EQT), East West Bancorp (EWBC), Freeport-McMoRan Inc (FCX), Fifth Third Bancorp (FITB), Genuine Parts (GPC), Chart Industries Inc (GTLS), Huntington Bancshs (HBAN), Kimberly-Clark Corp (KMB), Coca-Cola Co (KO), Southwest Airlines Co (LUV), M&T Bank (MTB), Northrop Grumman (NOC), Nucor Corp (NUE), PulteGrp, Inc (PHM), Patterson-UTI Energy (PTEN), Sirius XM Hldgs Inc (SIRI), Snap-On Inc (SNA), Sonoco Products (SON), AT&T Inc (T), Tractor Supply (TSCO), Union Pacific Corp (UNP), Valero Energy (VLO), Valley National Bancorp (VLY), Webster Financial Corp (WBS), West Pharmaceutical Svcs (WST), Associated Banc-Corp (ASB), BJ's Restaurants Inc (BJRI), Cap One Finl (COF), eHealth Inc (EHTH), Glacier Bancorp (GBCI), Intel Corp (INTC), Limelight Networks Inc (LLNW), Manhattan Associates (MANH), Mattel, Inc (MAT), Bank OZK (OZK), People's United Finl Inc (PBCT), Verisign Inc (VRSN), Western Alliance Bancorp (WAL).
Friday, October 23rd
9:45 AM EST – Markit Composite, Manufacturing, & Services Flash PMI
1:00 PM EST – Baker Hughes Rig Count
Major earnings: American Express Co (AXP), Bloomin' Brands Inc (BLMN), Cleveland-Cliffs Inc (CLF), First Hawaiin Inc (FHB), First Horizon National Corp (FHN), Gentex Corp (GNTX), Illinois Tool Works (ITW).
Jeff Bishop
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