Market 2018-01-25 (Housing, WDC, and more)

It is a choppy day in Market. It turns out that S&P and Nasdaq finish with little change. However, there are lots of big moves on individual stocks. Let's first start with Headline news.

New home sales tumbled 9.3% in December. Cold Weather might play a big role here. The median price of new home hits a record $335.4k, +2.6% YoY. On Wednesday, it reported that sales of existing homes fell 3.6% as well. For 2017, existing home sales totaled 5.51M (+1.1% YoY), most since 2006. Nevertheless, homebuilders are sharply down today ITB -2.1%, XHB -1%.

Mortgage rates surged to their highest levels in 10 months. The 30-year fixed-rate mortgage averaged 4.15% for the week ending Jan. 25, spiking from 4.04%, and the 15-year rate averaged 3.62%, surging from last week's 3.49%; last year at this time, they were 4.19% and 3.40% respectively.

Trump wants to see a strong dollar. Treasury Secretary's Mnuchin today says the short-term position of the dollar was "not a concern of mine.". UUP +0.1% today after all the mess.

Robinhood adds zero-fee Bitcoin and Ether trading, starting in February. Robinhood is a commission-free broker. If you are interested, you are welcome to use my referral (http://share.robinhood.com/minweis). Both you and me have the chance to get free stocks.

Samsung debuting Galaxy S9 on 2/25. AAPL -1.8% today. More on Apple: the company has added 24 self-driving Lexus SUVs to its fleet since April 2017, according to the California DMV. It is behind Google and Uber on self-driving cars. Apple adds a drama series from La La Land director Damien Chazelle to its slate of original programming. Apple reportedly set aside $1B in its original content push.

Winners

MMM +1.9% reaches all-time high after reporting: Q4 EPS of $2.10 beats by $0.07. Revenue of $7.99B (+9.0% Y/Y) beats by $110M.

MKC +5% also reaches all-time high after reporting: Q4 EPS of $1.54 beats by $0.02. Revenue of $1.49B (+21.1% Y/Y) beats by $10M.

Biotech companies continue to roll out nice earnings as I said yesterday, IBB +0.6%.

 BIIB +2.5%, Q4 EPS of $5.26 misses by $0.19. Revenue of $3.31B (+15.3% Y/Y) beats by $230M.

CELG +1.3%, Revenues: $3,483M (+16.9%); Net Product Sales: $3,479M (+16.9%). 2018 Guidance: Total Revenue: $14.4B - $14.8B (12% growth); non-GAAP EPS: $8.70 - 8.90 (18% growth).

Defense names: 

NOC +3.7%, Q4 EPS of $2.82 beats by $0.08. Revenue of $6.63B (+3.6% Y/Y) beats by $280M. Hikes dividend from $1/quarter to $1.1/quarter.

GD +3.3%,  extends yesterday's gains after BofA Merrill Lynch reiterates its Buy rating for GD and raises PT to $260 from $245. UTX +1.8%, LMT +1.2%.

Chinese Techs: 

BABA +1.4% (all-time high, little shy from $200), JD +1.4%, NTES +1.5%, MOMO +2.6% (breakout), YY +1.1%, QD +3.7% (breakout), YRD +3.8%...

NFLX +3.2%, GWW +5.3% continues the rally after their ERs.

GS +1% after WFC praises them.

 KR +2.6% after the company announces that the Simple Truth brand has racked up $2B in annual sales. COST +1.9%.

Losers

Airlines have another bad day even after great ERs from AAL (-3.2%), LUV (-3.3%), JBLU (-6.2%) and ALK (4.1%). UAL -4.3%.

F -4%, feels the pressure from inflation (high commodities). GM -2.6%.

LRCX -5%. It is shocking to see such a loss after great earnings.

URI (-2%) has a similar story after ER beats.

PM -2.8%, as FDA rejects Philip Morris iQOS claims. MO -2.3%. iQOS stands for "I quit ordinary smoking" -- is designed to reduce the health risks of smoking. It works by warming up the tobacco in the cigarette with an electrical heating element instead of igniting it.

Baker Hughes (BHGE -4.4%) extends yesterday's post-earnings losses. Morgan Stanley reiterates Outperform rating and $44 PT, believing that the stock's weakness presents a buying opportunity, given that BHGE's free cash flow will soon inflect higher. Wells Fargo also reiterates an Outperform rating.

AH Earnings

INTC -0.5%, Q4 EPS of $1.08 beats by $0.21. Revenue of $17.1B (+4.3% Y/Y) beats by $760M. Shares +4% in AH. Chip security problem doesn't matter, right? because people still need to buy intel chips.

KLAC -1.6%, Q2 EPS of $1.97 beats by $0.24. Revenue of $976M (+11.3% Y/Y) beats by $7.19M. Shares -1% in AH.

WDC +1.2%, Q2 EPS of $3.95 beats by $0.16. Revenue of $5.34B (+9.2% Y/Y) beats by $40M. Shares was down as much as -6% in AH. The report looks great! The company takes a provisional net tax charge of $1.6B, which seems to surprise the Street, sending stock price driving. The company generated approximately $1.2B in cash from operations during the second fiscal quarter of 2018, ending with $6.4B of total liquid. Revenue grows 9% with such cash flow, I would say "Buy the dip".

SBUX -0.5%, Q1 EPS of $0.65 beats by $0.08. Revenue of $6.07B (+5.9% Y/Y) misses by $110M. Shares -4% in AH as comparable store sales rose 2.0% below 3% expected. Starbucks expects FY18 EPS of $2.48 to $2.52 vs. $2.48 consensus and $2.30-$2.38 prior guidance.

 ISRG +3.2%. Q4 EPS of $2.54 beats by $0.27. Revenue of $892M (+17.8% Y/Y) beats by $41.4M. Stock price reaches all-time high today. Very solid results may send it higher.

My Trades Today

  • Double down on LUV @ $60.
  • Added FIT @ $5.4, still a very small position.
  • Sold 1/3 OHI @ $27.8. Rising treasury yield makes me nervous.

Major Earnings Tomorrow pre-Market:  ABBV, HON, NEE

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