Equity markets gapped lower at the market open. Most media outlets attributed this as a reaction to the travel bans imposed by President Trump. That sounded pithy (or as Woody Allen wrote “it had great pith”) but it was indeed not the case.
The fact is that after a huge run since the Election, the markets got a little ahead of itself. Some profit taking, especially on the penultimate trading day of what was a strong month for stocks, was the better explanation for Monday’s action. After eclipsing 20,000, the Dow Jones Industrials (DJIA) went a bit higher and then ran into some profit taking and technical resistance. I would also note that yesterday the major equity indexes opened on lows and closed on intraday highs.
We need to look ahead, because the rest of the week will be a no-nonsense affair. Today, the big Kahuna, Apple (AAPL) reports results. Also reporting will be the lesser but not inconsequential Kahunas: Exxon Mobil (XOM) today, Facebook (FB) tomorrow; Amazon (AMZN) and Visa (V) on Thursday. To put these reports in perspective, AAPL is the #1 market capitalization company in the United States; XOM is #3; AMZN is #6; and FB is #7. Friday is not a day for rest as the Bureau of Labor Statistics (BLS) will report the economic Kahuna January jobs report. So, as you can see, there are several market moving company reports and events this week.
There is nothing that you can do to prepare for these results from a transactional perspective. From a fundamental analysis perspective, you can prepare for these results by noting Wall Street Consensus estimates and reading the earnings reports once they are released. For the die-hard stockies (like me) you can listen to the company conference call or read it’s related transcript. For the record:
- AAPL is expected to earn $3.22 on revenues of $77.38 billion – you should also research what margin and unit sales expectations are
- XOM is expected to earn 70 cents on $62.28 billion of revenues – look for net realizations (what the company earns between the sales price of crude oil and the cost to produce the oil)
- AMZN is expected to earn $1.35 on revenues of $44.67 billion. Of course, the holiday quarter is the big season for AMZN. However, focus on the non-retail sales as AMZN is migrating more and more into internet and cloud services.
- FB is expected to earn $1.31 on revenues of $8.5 billion. It is all about mobile for FB
- As for the BLS jobs report: non-farm payrolls are expected to rise by 170,000; the unemployment rate, official U-3 rate, is expected to by 4.7%. However, the more important rate is the U-6 which is considered the true unemployment rate as it includes discouraged workers, underemployed workers and other marginal people in the workforce. There is no consensus for U-6 but keep your eye on that.
So buckle up as the action gets started after today’s close and don’t be a Fielding Mellish.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, XOM, AMZN, FB, DIA, & DDM — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
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