Market 2018-02-05 (WOW.... Bloody)

The quick bounce in the morning turned out to be a trap. The selloff is so violent that there are almost no survivors. The deep dip  around 3pm is especially evil. The market is definitely in panic mode. Dow -4.6% to 24,343. S&P -4.1% to 2,649. Nasdaq -3.8% to 6,967. And the selloff continues in AH.

The money floods into Treasuries: 30-year +1.12%. 10-yr +0.74%. 5-yr +0.51%. 10-yr note drops from above 2.85% to 2.7% (about last Tuesday/Wednesday level). This may calm some nerve.

Currently it is hard to predict how much lower indices will go. I would suggest to prepare your own shopping list and start to add positions. I am fully positioned myself. I plan to hold and wait.

Commodities: Crude -2.73% to $63.66. Gold +0.28% to $1,341.00.

Bitcoin is also facing another run of selloff as major US & UK banks ban Bitcoin credit card purchases. The lowest price today is below $6600 from coindesk.

To be honest, there is no particular bad economic news today. Instead, we have some good earnings and M&A.

Broadcom (AVGO -3.1%) plans to raise its takeover offer for Qualcomm (QCOM -6.6%) to ~$120B. The new offer would value QCOM at $82/share, according to the Reuters report, up from the previous $70/share bid. However, the market has doubts on this acquisition to go through. Moreover, Morgan Stanley (MS -5.3%) issues a note that downgraded the semiconductor sector and says chip stocks are at risk from poor iPhone sales and rising inventory levels. However, ON Semiconductor (ON -4.4%) reported Q4 beats, upside guidance (Q1 Revenue $1.34-1.39B vs consensus $1.34B) this morning.

Winners

CHD +2.4% after reporting  Q4 EPS of $0.52 beats by $0.02. Revenue of $1.03B (+15.0% Y/Y) beats by $30M.

TRIP +3.7%; EL -0.1% --- flat today is already considered great performance.

Losers (too many...)

WFC -9.2% is punished by FED.

NVDA -8.5% dips, close to $200 support level. AMD -7.1%. This is maybe caused by the selloff in cryptocurrencies.

Big pharma gave up all the gains this year, along with the market, despite the great earnings from BMY (-4%) this morning. IBB -4.4%, and another -1% in AH. CELG -6.1%

Lululemon (LULU -1.5%) announces that CEO Laurent Potdevin has resigned from the company after falling short of the standards of conduct expected by all employees. Shares -3% in AH.

Earnings in AH

MTGE Investment (MTGE): Q4 EPS of $0.52 beats by $0.03. Book value $20.75 up from $20.61 three months earlier. Today's close of $16.40 is a 21% discount to Dec. 31 book. Shares +0.3%.

Cirrus Logic (CRUS): Q3 EPS of $1.59 misses by $0.19. Revenue of $482.74M (-7.7% Y/Y) misses by $46.63M. Shares -10.7% in AH.

Skyworks Solutions (SWKS): Q1 EPS of $2.00 beats by $0.09. Revenue of $1.05B (+14.8% Y/Y) in-line. Shares +1.5% in AH.

My Trades Today


  • Sold BIVV @ $104 (acquisition price is $105).
  • Sold 20% AAPL @ $163.6.
  • Added more CELG, it reached 10% in my portfolio as over-weight now, no more shares.

Earnings Tomorrow


  • pre-market: BP, EMR, GM, GPK
  • post-market: BZH, CMG, DIS, GILD, NTGR, PAYC, SNAP, ZEN


Comments

  1. UnknownFebruary 5, 2018 at 3:44 PM

    AAPL 这种value stock应该是现在这种市场环境下受追捧的吧？

    ReplyDelete
    Replies
    1. UnknownFebruary 5, 2018 at 4:00 PM

      I guess so. AAPL has ex-div this Friday, $0.63. AAPL has the "best" performance among the 30 Dow Jones Stocks today.

      Delete
    2. UnknownFebruary 6, 2018 at 3:56 PM

      难道不应该加持？

      Delete
    3. UnknownFebruary 6, 2018 at 4:18 PM

      对，如果今天开盘加持，回报率已经很不错了。我昨天减持是因为overweight了

      Delete
  2. UnknownFebruary 5, 2018 at 4:27 PM

    Could you kindly suggest some stocks in case the market changes its course?

    ReplyDelete
    Replies
    1. UnknownFebruary 5, 2018 at 5:15 PM

      Sure, here are a few examples: growth stocks such as FB/GOOG/NVDA/EXPE; dividend stocks such as AAPL, BA, COST, PG, JNJ, MO, LMT, GD, UPS, V, GS, JPM, C, O, HD, DIS.... The companies with strong cash flow (high quality) usually perform better in difficult time. Or you can choose to buy ETFs, such as SPY, QQQ, IBB and XLF. I would NOT suggest 3x ETFs. It is almost 10% correction now. If you expect a maximum 20% correction, divide your cash into 5, buy every 2% drop. I was expecting 5-10% correction, which is why I have used all my cash in my trading account. It seems too fast too early now. Good luck!

      Delete
    2. UnknownFebruary 7, 2018 at 8:15 AM

      BA是强股，buy on dips。defense是defensive sector 对经济周期不敏感；commercial aersospace 是长周期产业对短期经济波动有些抵御。defense stocks一般是用cash flow做valuation的，这个在市场动荡和下跌时应该outperform。BA的valuation比较合理，product cycle和 trump的defense budget increase 有momentum，市场上涨它也该outperform.

      Delete
    3. UnknownFebruary 7, 2018 at 8:19 AM

      This comment has been removed by the author.

      Delete
  3. UnknownFebruary 5, 2018 at 7:39 PM

    Thanks for the recommendation. I bought some BABA last Friday, and today some NVDA and ALGN. Seems like every move I make was hammered by the market. Only bright spot was getting SKX at 37.8 a few weeks back.

    ReplyDelete
  4. UnknownFebruary 7, 2018 at 6:05 PM

    谢谢Amy. BA是好股。一直没怎么关注军工，以后找机会买点。昨天盘尾买了点NVDA，今天感觉不好又赶紧扔了。赚了500，动荡时期不敢赌ER。

    ReplyDelete
  5. CapitalHeightMay 24, 2018 at 4:03 AM

    This Blog is very helpful for Market Information Thanks for Providing this type of information
    also read more here :
    capitalheight

    ReplyDelete

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