Beat the Market

Market faces some selling pressure today as year of 2017 ends. Overall, it has been a good year. S&P 500 +19.5%, Dow Jones +25.2%, Nasdaq +28.3%. I have been able to beat S&P 500, but shy from Dow Jones or Nasdaq. The reason of under-performing is that I have been holding 20 ~ 50% cash throughout the year. I was too cautious during the 2nd and 3rd quarter. I have updated my portfolio and explain the changes in this blog. (Link HERE ) Yesterday Apple ( AAPL -1.1% ) published an apology letter. Apple is offering $29 (discounted from $79) replacement batteries for those with an iPhone 6 or later. The discount, starts in late January and ends in December 2018. Nevertheless, the lawsuits are still need to be answered or settled. Lots of customers are still mad. Samsung and LG join HTC and Motorola in saying the companies don’t slow the performance of phones with older batteries. Well, Apple is trying to save their reputation by apologizing, it raises another question. If custome...

Market has a good year in 2017. S&P 500 +19.5%, Dow Jones +25.2%, Nasdaq +28.3%. I have made lots of changes in my portfolio: mainly reduced the weight of Retailers and increased Finance and Tech . Long-term Still Holding: AXP, BIVV, COP, CPTA, COST, DIS, GILD, GPS, HD, IBM, M, SBUX Exited: KR (sold before the recent run, too bad) MAT (glad I exited with some profit, it is in bad shape now) NKE (concerns over the weakness in North America, wait for the correction to buy back) O (replaced by other REITs) UAL (was afraid of the bad weather) Added: BIDU: their AI effects, including self-driving cars, will be paid fat with the government supports. C & FRC (First Republican Bank): banks will do well in 2018. CELG: despite the recent headwinds, it is still growing fast and generating a lot of cash. CVS: I think the recent weakness is a buy. FB: it is still growing fast and dominating social network. I prefer FB over TWTR or SNAP. GE: I boug...

Market shows some cheer at the last few minutes in another quiet day. Crude +0.47% to $59.92. Gold +0.43% to $1,297.00. The battle between Amazon and Google is heating up. Amazon ( AMZN +0.3% ) disables the YouTube app on Fire TV ahead of the January 1 deadline. Google ( GOOG -0.1% ) pulled YouTube from Amazon products including the Echo Show citing a lack of reciprocity since Amazon refused to stock its Nest and Chromecast products. NFLX (+3.5%) is happy to see their fight. Apple (+0.3%) is facing more lawsuits. A French consumer association filed preliminary legal complaints against Apple and Epson for “planned obsolescence.” French laws allow for fines of up to 5% of a company’s salary if found deliberately shortening product life to demand replacements. On the other hand, iPhone X demand is still a puzzle to analysts. Winners Basic materials go higher: JJC +0.9% (copper, 3-year high). JJU (aluminum +1.7%) : CENX +8.7%, AA +4.4%. Steel: X +2.1%, AKS +1.6%, STLX +1.5%....

It is another quiet day. Market finishes almost flat. Crude -0.65% to $59.58. Gold +0.37% to $1,292.20 AAPL is now facing at least 9 lawsuits in US and 1 in Israel. One of those class actions asks for $999B. Winners UBNT +4.6% . It has a nice run recently, +31% in three months. Some recent sold-off Tech names bounced back: SQ +2%, WDC +1.2%, FB +0.9%, QRVO +2.1%, AMAT +1.2%. Hotels & Casinos: MAR +2.2%, WYN +1.3%, LVS +1%. Natural gas finally bounced following the recent storms across midwest and northeast. UNG +3.3%. Losers Malls stocks gave up some recent gains. M -4.5%, KSS -2.8%, JWN -1.1%, TGT -1%. However, it is reported that gift cards are hot gifts in this holiday season. This may spark strong sales in the following months. I believe retailers will have a nice year in 2018, considering the recent trend and new tax bill. TSLA -1.8% . Yesterday Elon Musk promised to build F-150 type pickup in 5 year --- sounds good --- but what is going on with Model 3? H...

Coming back from Xmas break, the trade volume is still light. Energy shines and Tech lags. Dollar is soft. Crude +2.21% to $59.76 --- close to $60 resistance. Gold +0.68% to $1,287.50 , close to $1,300 resistance. Winners US retail holiday sales jump 4.9% , biggest increase since 2011: KSS +6%, M +4.6%, JCP +5.4%, BBBY +3.2%, FL +2.7%, JWN +2%, WMT +1%. USO +2.4% following the explosion at a pipeline in Libya. Energy Sector: CHK +3.8%, RRC +3.3%, HES +3.1%, NBL +2.6%, COP +1.3%, CVX +0.8%. I still think the upside of crude price is limited in near term, as North Sea production will resume from January. Losers AAPL -2.5% . Taiwan's Economic Daily reported Apple is trimming its fiscal first-quarter iPhone X guidance to 30 million units from 50 million units. That's according to "unidentified supply chain officials." Further, analyst Zhang Bin of Sinolink Securities Co. cut his iPhone X estimates to 35 million units from 45 million units for Apple's ...

Market is quiet with low volume, as many have already started their holiday vacation. Tax Reform has officially become the law this morning. Congress extends the government shutdown deadline for another 4 weeks. Apple was ordered to pay $25K each day it fails to produce evidence related to an FTC case against Qualcomm. The fine started December 16. Apple is now also facing multiple class lawsuits for slowing down old iPhones. The company admitted yesterday. I believe they may need to deal with a massive settlement globally. They purposefully slow down customers' iPhones without telling them or giving them a choice. Winners BBBY (+4.3%) bounces back strongly. This quick comeback from yesterday's -12% decline is unpredictable. Usually such selloff lasts 2-3 days. BBBY guides FY18 EPS ~$3, indicating P/E ~ 7. This is quite low. However, the sentiment is quite negative according to the reaction after ER. KR (+2.5%) has a great run after its ER, +40% in 3-month. QD (+4....

Market barely keeps positive as indexes slide sharply at the final few minutes. Energy sector outperforms for the 2nd day. WTI crude closed +0.4% at $58.36 /bbl for a nearly 3-week high, while Brent at $64.91/bbl , and the energy group ( XLE +2.1% ) easily led all S&P 500 sectors. Financial Sector is also strong. Final reading on US Q3 GDP is +3.2% , vs 3.3% expected. Winners Banks: WFC +2.5%, C +1.6%, JPM +1.6%, BAC +1.1%, GS +2.3%,  Energy: HES +5.4%, APA +5%, RRC +4.4%, MRO +4.4%, HP +4%, CVX +3.3%, COP +3.1%, XOM +1.2%. Comcast ( CMCSA +3.6% ) plans to invest $50B in infrastructure over the next 5 years. CHTR +5.2%, T +0.9% UAL +2.1%. +12.7% for 1-month. In AH, Nike ( NKE +1.9% ) reported Q2 EPS of $0.46 beats by $0.06. Revenue of $8.55B (+4.5% Y/Y) beats by $150M. North American revenue was down 5%  to $3.49B. (exactly what I feared when I sold all my position a few days ago) Greater China revenue increased 16% to $1.22B. Shares +0.7%  in AH. Los...

First of all, Tax Reform Bill has been passed in Congress , which is ready for Trump to sign into law. The market opened high, then quickly retreated into the red zone, although Tech managed to recover the early loss (Nasdaq was -0.4% at some point). It seemed like a "sell on the news" in the early morning, which was killed by Santa. 10-year Treasury yield goes up to 2.5% . It was only 2% in Sept. If it keeps climbing, inflation will surface soon. Apple (-0.1%) officially admited that old iphones (from iphone 6 to 7plus) run slower as they rolled out new models. The problem was first reported on Reddit. Apple blames the slowdown to the battery. They updated the iOS so that old iphone would automatically lower clock if battery wore down. Two ways to fix it: get a new phone, or replace the battery. It is evil! Winners Blackberry ( BB +12% ) reported Q3 EPS of $0.03 beats by $0.03. Revenue of $235M (-21.9% Y/Y) beats by $19.58M. MU +4% after reporting strong earnin...

Market remains high and volatile as the New Year approaches, as I predicted at the beginning of Dec. The final version of the GOP's tax reform bill passed in the House  on Tuesday, sending it on to the Senate, where it's also expected to pass later today. Although it passed along party lines and is considered token legislation for the Republican Party, 12 Republican voted "NO", 9 from New York & New Jersey, 3 from California. U.S. Treasury prices slipped, the benchmark 10-year yield higher at 2.46%. Bloomberg reports that YouTube (GOOG -0.6%) signed long-term agreements with Sony (NYSE:SNE) and Universal Music (OTCPK:VIVHY), which moves the company’s paid music service one step closer to reality. Winners Jack In The Box ( JACK +3.1% ) jumped after agreeing to sell its Qdoba Restaurant business to Apollo Global Management for $305M. Energy Sector: MRO +3.8%, NBL +3.6%, HP +2.8%. CCL (+2.3%) reported solid ER depite the impacts of hurricanes. Dis...

The market melt-up continues. Tech Sector performs extremely well today. Most important events this week: Tax Reform vote will be held tomorrow or Wednesday. McCain will not join GOP (R:D = 51:48 now).  Congress also need to reach the Budget agreement to avoid Government Shutdown. Winners (too many to mention) TWTR +11.1% , upgraded by JPM to overweight with $27 PT . Analyst Doug Anmuth’s predictions for 2018 include improvements in video and live streaming, a 10% DAU growth, an 8% ad revenue growth, and reaching GAAP profitability. I am not sure how many DAU are bots, no matter from Russia or North Korea or Iran or whatsoever. I am not convinced by the "10% DAU growth" prediction, which would be the key to support such valuation. Next ER will tell us more. JPMorgan also raises Amazon ( AMZN +1% ) to $1,375 . Facebook ( FB +0.4% ) to $225 and Priceline ( PCLN +1.2% ) to $2,050 .  Jefferies PT hikes on mall stocks: American Eagle Outfitters ( AEO +4.8% ) to $...

After reaching mutual agreement with Toshiba, WDC updated its guidance on 12/13: Q2 guidance has revenue of $5.3B (consensus: $5.28B, was: $5.2~5.3B) and EPS at $3.80 (consensus: $3.67, was: $3.60~3.80). FY18 guidance has EPS over $13 (consensus: $13.18) and revenue at the high end of 4% to 8% growth or about $20.6B (consensus: $20.34B). As comparison, EPS in FY17 is $8.80. Current price is $81.62. Forward P/E = 6.2. Dividend yield 2.5%. On Wall Street, WDC is considered in the category of Tech-Semiconductor-Hardware-Storage. The closest pal is Seagate. Let's have a comparison between WDC and STX. STX FY17 EPS is $4.12. Current price is $42.02. Dividend yield 6%. The head-to-head EPS in recent quarters is shown in the chart below. On 5/12/2016, WDC announced that it has completed the acquisition of SanDisk Corporation ($19B). The addition of SanDisk makes WDC a comprehensive storage solutions provider with global reach, and an extensive product and technology platform th...

Market rallies again as nobody can stop Tax Reform now. All Sectors except Energy show strength although the volumn is light --- relatively small amount of cash can pump the whole market amid few sellers. Such gain is fragile, which is the reason that the market gives up some ground before close. Winners (too many to mention) Overstock.com ( OSTK +11.1% ) reaches all-time high as more gamblers jump into blockchain (BTC jumps again). OSTK jumped +290% YTD. UA (+9.1%), UAA (+9.7%) upgraded by Stifel to buy, with $17 PT. However, I am not convinced yet after CEO made some missteps in 2017. COST (+3.3%) reported strong ER. Membership started to grow again after they changed the credit card partner from AXP to Visa (Citibank). All good now --- hold tight. Losers UNG (-2.6%) , as the oil rig count declined by 4 to 747 after rising for three straight weeks, while gas rigs climbed by 3 to 183. NG price is sky-rocking in China, but dirty cheap in US. ORCL (-3.8%) : EPS of $0.70 be...

Market went south today. Healthcare and Basic Materials Sectors suffered the most. Tech also gave up early gains and finished flat. There are no reasons to be panic. I believe it is good time to swing trade. FCC overturned net neutrality rules. It is bad for customers (us) and small players. Big guys (e.g., NFLX ) will benefit. Lots of lawsuits will follow. Crude +1.01% to $57.17 . Gold +0.54% to $1,255.30 . Dollar is weaker. USD/CNY = 6.61. Winners FOX +5.8%, FOXA +6.5% , amid DIS (+2.8%) take-over deal. It is rumors that Comcast (+1.4%) offered higher, but FOX preferred Disney stocks. DIS will have a bright future as they scale up and plan to launch own streaming service. They have certain edges over Netflix or Amazon from the rich kids friendly contents and sports contents. DAL (+3%) shines on investor day. They plan to buy 100 jets from Airbus, big loss for BA. SQ bounce back 2.3% . TWTR jumped 4.2% as one trader is betting big on it, according to CNBC. GOOG +0.8...

Yesterday, Doug Jones (Dem) won the special Senate election in Alabama. GOP still holds 51-49 over Dem. What happens next? Doug Jones need to be certified in the week after Xmas. GOP has to push Tax Bill before that. We will see. Fed hikes rate by 25 basic points to 1.25%-1.5%, the 3rd this year. Another 3 hikes are expected next year. Fed revised 2018 GDP growth to 2.5% from 2.1% with considering the expected tax changes and fiscal stimulus into their calculations. Yellen also addresses Bitcoin : it's got a very small role in the payments system, and is highly speculative. The Fed doesn't really have a regulatory role at this point. Some discussions are taking place at central banks about the adoption of digital currency, but it's not something the Fed is seriously considering. Nevertheless, Dow Jones makes another record. For stocks, the ones jumped the most yesterday retreat, the ones got slammed yesterday go north. Winners MAT +6.8% , bulls hit back, HA...

Market is mixed today. Financial Sector is strong, which lifts Dow Jones, as Yellen holds her last 2-day FED meeting ---- interest rate hike is expected to be announced tomorrow. On the other hand, Utilities and Tech under-perform. Nasdaq finishes red. Crude -1.31% to $57.23, UNG -3.6% (new low). Political news: it is special election day in Alabama. If Dem wins, it will cast shadow on Tax Reform. Winners Financial : GS +3%, MS +2.1%, WFC +2.5%, JPM +1.2%, BAC +1.3%, C +0.4%. LC (+8.2%) continues its recovery. Financial Sector is expected to perform strongly in 2018. Telecommunications : CMCSA +2.8%, T 3.3%, VZ 2.6%, S 4.2%. TSLA jumped another 3.7% as GM continues to slide. In the past 5 trade sessions: TSLA +12.3%, GM -2.9% , F flat. I have no comments. Redfin ( RDFN +9.8% ), reason is unclear to me. Losers QD -6.4% . Glad I sold yesterday. GNC -8.4% . Poor balance sheet to blame? MAT -4.9%. Free-fall cannot stop. Tech: NVDA -2%, AMD -2.6%, MU -2.7%, FB -1...

Santa Rally continues, lead by Tech. Crude +1.08% to $57.98. Gold -0.31% to $1,244.50. It is observed that money flows from Gold to Bitcoin as BTC future started to be traded from Sunday. Winners OSTK +22% bitcoin fever. AAPL +2% , iphone X can be shipped in 3-4 days if you order now. I am not sure if this is a good indicator. AAPL lifted QQQ +0.8%. Also   NVDA +1.7%, TWTR +4.5% (people like the double-sized version). DIS +2.5%, close to reach deal with FOX. GILD +2.2%, CELG +1.8%.  LC +10.8%. Bounces back from the selloff on investors day. My Trades Today Exit QD , sold the rest @ $14.5 . Bitcoin Bitcoin is decentralized, peer-to-peer, "cryptocurrency". The core is blockchain technology. Advantage: low inflation, fast and low fee transaction with no purchase tax, user anonymity. Bitcoin payments are processed through a private network of computers linked through a shared program. Each transaction is simultaneously recorded in a "blockchain...

The Market goes north broadly across all Sectors today, lead by healthcare. Biotech finally shines today, IBB +2.1% . Crude +1.22% to $57.38 . Gold -0.24% to $1,250.10 . Regarding crude price, thanks to our stupid president, anti-US conflicts are allover Middle East. However, in US, the total rig count increased by 2 to 931 , rising for the 5th consecutive week. The oil rig count rose by 2 to 751, while the gas rig count held steady at 180. The increasing shale oil production has offset the OPEC cut. I am not expecting crude price to go much higher. It is expected that shale oil will peak around 2024 , still long way to go. COP has limited the average cost below $50/barrel for all new projects. This week, BAC, HON, UAL all announced to add billions for share buyback. More cash-rich companies are expected to join. This is actually not good for the overall economy, hinting they don't have better usage to invest the extra cash which they will save from the Tax Reform. Last...

The story line in today's market is similar to yesterday's, as Tech and Industrial lead. Crude +1.2%, Gold -1.3%. Surprisingly, Broadcom ( AVGO ) gave up all its early gain and finished flat. GE announced to layoff 12,000 in power unit. Stock priced initially jumped more than 2% before giving up the gain. The massive layoff is expected and analysts are not convinced. LULU jumped 6.3% today, reaching 52wk high. LC tumbled 15% today after disappointing investor day. Let's forget today's boring market, and have a look this interesting article by Philip Van Doorn on Market Watch . (Click HERE   for the article) The writer published a list of large cap stocks in Dec 2016, which had the highest 1-year return expectation by various analysts in Wall Street. There are 18 companies on that list with return expectation higher than 30% . Following are the data： 12/5/2016 --- 11/30/2017 , the S&P 500 Index rose 20%.  Of analysts’ 18 favorite large-cap stoc...

There was a selloff in Asia, Nikkei -2%, Hangseng -2.1% ignited by Commodity and Mining companies. US market is relatively calm today. Nasdaq outperform S&P 500 and Dow Jones today as Tech names bounce back a little more. Energy Sector suffer the most from the biggest crude price drop ( USO -3% ) in the recent two months. On the other hand, Bonds yield keeps falling. Winners Tech: FB +1.9%, PYPL +2.7%, BABA +2.2%, LRCX +2.1%, GOOG +1.4%, AMZN +1%, MU +0.9%, NVDA +0.8%, NFLX +0.6%. X +4.3%, FSLR +3.3%.  These two are both high beta picks. In AH, LULU ER beats, reporting comparable sales increased 8% in Q3, share +7% AH . Broadcom ( AVGO ): Q4 EPS of $4.59 beats by $0.07. Revenue of $4.84B (+16.6% Y/Y) beats by $10M. Hikes dividend, share up slightly. Losers LIT -2% amid global commodity and miners selloff. I am still bullish on Lithium ( here is an introduction article) as more electric cars will be introduced soon. GM -1.5% , I would like to start to build m...

Although Tech bounces back a little today, it is alarming today as the weakness persists. Bulls struggle to support QQQ 50-day moving average, and the direction is unclear now. Money continues to flow to safer choice --- Bonds (yields drop). However, Gold is down ( GLD -0.7% ). Regarding Sectors, the movements are pretty much the opposite to yesterday with less volatility, expect that non-cyclical consumer goods still outperforms and weakness in unitilities hangs. Winners FOX +0.5% . CNBC reported that it is near asset sale to Disney (-2.7%). Tech: FSLR +6.9%, MU +3.3%, SQ +2%, WDC +1.9%, AMZN +0.7%, FB +0.8% VLO +2.6%, PSX +0.8% Losers UNG -2% , -9.1% in a week, still in a downward channel. Chinese: MOMO -3.9%, QD -4.8%, WB -1.6%, NTES -3.3% TOL -7.4% , missed ER a little. This could be a buying chance. BGS -7.3% , I don't know the reason MAT -5.3% , I have explained the recent down-trend a few days ago My Trades Today Double down on UNG , as weather cool...

Market Sector Rotation is massive today as reaction to Tax Reform. Consumer Goods, Telecommunications and Industrial Sectors are outperforming. Tech, Healthcare and Utilities are lagging. During the weekend, I have written an article about my thoughts on tax reform impacts. I have pointed out that Restaurants and Retailers will benefit a lot, which is exactly what happens today. On the other hand, cash is flowing out from red-hot tech names. Why does the Big Rally Fade Today? The Tax Reform was already expected to pass --- "Buy the rumor, sell the news " also works. The Tech Sector correction is real as profit taking is under way. Political chaos continues while Trump is attacking everybody like a desperate mad dog. Possible government shutdown (by 12/8)? Not likely though. The big question is --- has the Tax Reform fully priced-in? No, I don't think so. If a company is paying 35% tax right now, for every $100M profit, investors get $65M. Once the tax r...

Senate passed the messy tax reform bill last night. The new tax code will start in 2019 (not 2018). The next step will be negotiation between Senate and the House to put together the final bill for Trump to sign. Put aside how the tax reform will affect personal finance, one thing is for sure --- corporate tax rate will drop from 35% to 20% . Multinational companies will also bring cash back to US. Corperate Tax Rate Drop Well, many big companies have already managed to pay low tax rate, for instance, IBM pays only ~10%. You can find tax rate information in companies' ER. Therefore, not everyone benefits from the 20% tax rate. Following are a few companies who are paying tax rate > 35% (most in retailers and restaurants). Restaurant: CMG, DENN... Retailers: CVS, LVS, GPS, JWN, M... Auto retailers: AN, KMX... Healthcare: Anthem, HUM, DGX, DVA... Transportation: JBHT, LUV... Energy: COP, PSX... Industrial: GWW... Financial: SCHW, PAYX... Utility: WEC... ...

Wall Street is trying to find the direction between Tax Reform and political chaos in White House. S&P500 dropped as much as 1.5% this morning on Flynn's news. Flynn pleads guilty to lying to the FBI. He is now fully cooperating with Muller. Next one on the list will probably be Kushner . At the meantime, gold and bonds pop before fading. However, the market gradually recovers most of the early loss. Yesterday Jim Cramer pointed out that this is a melting up market right now. North Korea doesn't matter; Trump doesn't matter; nothing matters; maybe through the end of this year. Winners USO (+1.7%), UNG (+0.7%) OPEC agreed to extend the production cut till the end the 2018. Energy  Sector shines today (lots of winners today). However, I don't expect USO to go much higher due to the rig count increase (by 6 this week). AMWD (+28.7%) pops despite ER miss. Q2 EPS of $1.23 misses by $0.03. Revenue of $274.77M (+4.0% Y/Y) misses by $8.68M. The pop is due to AMW...