Thursday, October 27, 2022

📩Bad Earnings Have Become Good News – Prepare Your Portfolio Accordingly

Good morning. We're living in a topsy-turvy word. In the real world, a company's share price..
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. We're living in a topsy-turvy word. In the real world, a company's share price should rise as it continues to grow. It should decline when it stops growing or gets into trouble. Right now, many big-name companies are reporting earnings. Some are faring well. Others are having trouble with either a slowdown, or passing on inflation to consumers without losing too much business.

That's resulted in a market focused on the overall picture. And bad earnings is overall good news, as it speeds up the likelihood of a shift in monetary policy.

For now, traders should expect volatility, as markets will likely continue to post big moves in either direction until a policy change. And the recent rally may stall out if companies continue to post poor earnings and lower guidance going forward. That's still a recipe for caution. Continue to look for short-term downside trades here.

Now here's the rest of the news:

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MARKETS
DOW 31,839.11 +0.01%
S&P 3,830.60 -0.74%
NASDAQ 10,970.99 -2.04%
*As of market close
Stocks traded mixed on Wednesday, as tech stocks sold off.
Oil rose 3.3 percent, closing at $88.12 per barrel.
Gold rose 0.6 percent, last going for about $1,668 per ounce.
Cryptocurrencies rallied, with Bitcoin at $20,756 at the stock market close.

Today's TOP TIPS
Grab the World's Best Assets When They Go on Sale
In a bear market, smart investors buy. They know that great companies get sold off with overpriced ones during a market selloff. And buying great companies ensures better returns than chasing great companies higher during a bull market.

Investors who follow this strategy can build a solid portfolio of blue-chip stocks in any sector. Right now, many great tech names have been hit the hardest. Of those tech stocks, there are some compelling valuations in companies that simply dominate their market.

» FULL STORY

Insider Trading Report: The First Bancorp (FNLC)
Kimberly Swan, a director at The First Bancorp (FNLC), recently added 1,000 shares. The buy increased her holdings by nearly 15 percent, and came to a total purchase price of just under $30,000.

This is the first insider buy at the company since last December, when the director made a 5,000 share buy. Other company insiders have been buyers in the past three years, including the company President & CEO. The last insider sale occurred in the summer of 2020.

» FULL STORY

Unusual Options Activity: Momentive Global (MNTV)
Shares of software feedback company Momentive Global (MNTV) are down 70 percent in the past year. One trader sees a move higher in the coming weeks.

That's based on the December 16th $9.00 calls. With 50 days until expiration, 8,228 contracts traded compared to a prior open interest of 103, for an 80-fold rise in volume on the trade. The buyer of the calls paid $0.58 to make the bullish bet.

» FULL STORY

IN OTHER NEWS
Home Sales Drop by Double-Digits

Home sales dropped by 10.9 percent in September compared to August. Compared to a year ago, home sales dropped 17.6 percent, according to the latest report from the Department of Housing and Urban Development. In total, 603,000 homes sold last month, down from 677,000 in August. However, median prices rose to $470,600 from $436,800.
Goldman Warns a Recession Isn't Priced In

The latest analysis from Goldman Sachs (GS) is that markets haven't fully priced in the risks of a recession. In the event the economy continues to slow, that could mean a further big drop in stocks. The analysis also notes that no asset class has priced in the risks of a severe contraction.
SEC to Vote on Claw Back Provision

The Securities and Exchange Commission is set to vote on a provision that would allow companies to recoup executive pay if they identify errors in financial statements. The rule would apply to public companies, and would target executive's bonuses. The rule was first outline in the 2010 Dodd-Frank Act, but implementation has been resisted.
Seagate Announces 3,000 Job Cuts

Hard drive manufacturer Seagate (STX) says it plans to reduce about 8 percent of its workforce. That amounts to about 3,000 employees. It's also a sign that the PC space continues to slow, as hard drive sales tend so move with PC sales. And growth of cloud services could also slow, given the high need for memory space there.
Musk on Track for Friday Purchase of Twitter

Despite the legal wranglings, billionaire Elon Musk is on track to complete his purchase of Twitter (TWTR) on Friday. The social media company is bracing for layoffs anywhere from 25-75 percent of staff, and for big potential changes in the company's policies. Musk may also look to renegotiate the high fees that Apple (AAPL) charges for developers on third-party sites like Twitter.

S&P 500 MOVERS
TOP
UHS  12.609%
ENPH  10.119%
JD 9.505%
ROL 9.238%
CSGP 7.02%
BOTTOM
AIZ 9.899%
GOOG 9.554%
GOOGL 9.284%
BA 8.912%
FFIV 7.604%

Quote of the Day
It's a rainbow after a pretty big storm. We're seeing enough slowing in the economy that we don't have to worry about the Fed really raising rates beyond what's already priced. I think we're finally getting to the place where the market has priced in the right amount of Fed tightening. Once you do that, the uncertainty in the market falls and we could see higher prices.
- Paul Zemsky, chief investment officer at Multi-Asset Strategies and Solutions, on why the bond market appears to have sufficiently priced in the interest rate hikes so far and the likely hikes through the end of the year.

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