JUST LETTING YOU KNOW
We are in the midst of earnings season. Here’s what’s going on.
Intel (INTC) missed earnings and lowered guidance. The stock rallied up strongly and led the Semiconductors to its best day in a while as they held very important support at around the 350 area.
Technology stocks have been very week in comparison to other areas of the market. The Semiconductors have also been very week in comparison to other areas of the market. The fact that the bad news has been anticipated and these stocks are rallying off of that bad news is potentially good news.
Remember, bull phases are made up of situations where good news is bought up big time and bad news is ignored and thing still go up.
Bear phases are when bad news is trashed and good news is even sold off.
If companies are missing earnings and lowering guidance and the stocks were hit hard over the past 12 weeks, are being bought up with a fervor, it tells you that the stock has already reflected the bad news.
Another example: IBM with its revenues down year over year is being bought. It’s partially because a lot of these stocks are down a lot and they’re rebounding.
For sure, there’s a ton of areas that are in bad shape and remain under pressure and in bad shape. But the action of the past couple of days relieves a lot of that. But don’t think this is going to be easy. But there’s no doubt in my mind that:
- The Fed is printing money now
- The Fed knows this is an election year and that they have a job to do.
So my belief system is that, until proven wrong, the market is set to do better. That means, from here, they’re going to have to show me that they want to sell this thing down.
I say that knowing that there a lot more earnings to come out.
But right now the market does not care.
The first thing you to need to look at is the Semiconductor Index (SOX). It’s been dreadful. It went back to an area that held in November and December of 2011 as well as early-June of 2012. Even with Intel lowering numbers, it was bought up like crazy. Why? As they say, “All the news was already in the stocks.”
For now. To be revisited.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.