Momentum Monday – Google At New All-Time Highs

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Google is trading at new all-time highs after hours after crushing earnings estimates and now it’s only 15% away from the one-trillion-dollar mark. A follow-through tomorrow would be a major vote of confidence which will likely spread to the rest of tech stocks.

In the meantime, long-term interest rates are finally rising, which is a big boost for financials. It doesn’t make sense to bet against a market led by both, finance and tech.

Disclaimer: everything on this show is for informational and educational purposes only. The ideas presented are not recommendations to buy or sell stocks. The material presented here might not take into account your specific investment objectives. I may or I may not own some of the securities mentioned. Consult your investment advisor before acting on any of the information provided here.

Momentum Monday – Nasdaq at All-Time Highs, Netflix Under Pressure

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The Nasdaq 100 reached new all-time highs a few days before earnings season began. Amazon, Facebook, Google, and Microsoft rallied in anticipation of another set of strong earnings. Market expectations are certainly running high, so it’ll be interesting to see if the numbers justify them.

Netflix reported earnings after the close on Monday and so far, the reaction is not stellar. Netflix is down more than 10%. Reactions to earnings matter because they reflect the current market sentiment. Bad news is usually ignored in strong bull markets.

Disclaimer: everything on this show is for informational and educational purposes only. The ideas presented are not recommendations to buy or sell stocks. The material presented here might not take into account your specific investment objectives. I may or I may not own some of the securities mentioned. Consult your investment advisor before acting on any of the information provided here.

Momentum Monday – Another Sector Rotation

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Bull markets are defined by constant sector rotation. Large-cap tech stocks like NFLX, AMZN, and FB started their usual pre-earnings rise last week. So far this week, we are seeing a rotation into the so-called “old-economy” sectors like financials, transportation, energy, and industrials.

We take a dive into the stocks that define the Internet in the U.S. and most of the world – TWTR, FB, NFLX, SQ, SHOP, PYPL, V, GDOT, and share some new ideas.

Disclaimer: everything on this show is for informational and educational purposes only. The ideas presented are not recommendations to buy or sell stocks. The material presented here might not take into account your specific investment objectives. I may or I may not own some of the securities mentioned. Consult your investment advisor before acting on any of the information provided here.

What’s Wrong with SBUX?

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Starbucks has tripled its earnings since 2011 and yet its stock is trading near 3-year lows. It has underperformed 88% of all stocks and ETFs in the past year. What’s wrong with it?

Last week, Starbucks announced that it will close 150 of its underperforming stores in heavily penetrated areas. The next day, SBUX gapped down and it has been in a falling mode ever since.

150 is a drop in a bucket. Starbucks has more than 27,000 stores worldwide and it regularly closes about 50 a year. Then why the fierce market reaction?

There are two major ways a profitable company’s stock can appreciate:
a) Earnings growth
b) Multiple expansion – when the market is willing to pay a higher multiple for a company’s earnings. And by multiple, obviously, I mean P/E or a Price to Earnings ratio.

P/E reflects the market’s expectations about the near-term future of a company. SBUX is currently trading with a P/E of 21, which is its lowest multiple in the past 5 years.

The market is forward-looking and apparently, it has lost faith in the ability of Starbuck’s management to continue to grow at the same pace.

This is not an actionable post. I imagine a pullback near $40 will attract the attention of many value-oriented dip buyers because Starbucks is still a cash-printing machine and one of the most recognized brands around the world. They will probably figure out a way to jump on the current taste trend and offer better variety and organic options. They certainly have the money to acquire chains that are excelling in those attributes.

Buying on weakness is not my cup of coffee. I rather buy stocks that break out to new 52-week highs from solid bases. Risk management is a lot easier when I trade in the direction of the trend.

Momentum Monday – Summer Trading

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The market environment has certainly changed in the past couple of weeks. We went from a market, where almost all breakout led to a quick 10-30% move to a market with many failed breakouts.

Many Chinese Internet stocks are already down 10-20% from their recent highs and trading near levels of potential support. It will be interesting to see if dip buyers start to step in.

The small-cap biotech etf, XBI tried to break out a couple weeks ago, but the weakness in the general market pulled it back. Nevertheless, we are starting to see some decent long setups in the biotech space.

Some of the tickers we cover: SPY, TSLA, SBUX, XBI, SEDG, SFIX, PETQ, TRUP, etc.

Disclaimer: everything on this show is for informational and educational purposes only. The ideas presented are not recommendations to buy or sell stocks. The material presented here might not take into account your specific investment objectives. I may or I may not own some of the securities mentioned. Consult your investment advisor before acting on any of the information provided here.