WMT Misses - AAPL Warns - PIR Files

In front of the long weekend, markets put in an indecisive sideways grind all day on Friday.  All three major averages printed Doji type candles with the SPY gaining 0.16%, the DIA losing 0.09%, and the QQQ gaining 0.29%.  This made for another new all-time high close in the SPY and QQQ.  The VXX was down again, closing at 13.52 and the T2122 rose a bit but remains in the mid-range at 71.59. 

Among the news stories that may have helped markets in the afternoon was a CNBC report that the White House is considering tax incentives to encourage more investing in the stock market.  This may have helped offset slightly worse than expected Industrial Production numbers from before the open.  The only Friday news on the coronavirus was that China had “sharply tightened” the already strict quarantine in Wuhan.  However, after the close, CNBC reported that 20% of the S&P 500 members had already warned that the virus would have an impact on operations, financial performance or both.

Over the weekend, PIR declared bankruptcy, but also released a statement that they had reached an agreement with lenders to provide it with $256 million to keep it afloat while it tries to find a buyer.  This comes six weeks after it reported both a loss and sales that were down over 11% from the prior year.  This may or may not provide a read-through to competitors like BBBY.  It is also worth noting that WMT missed it’s earnings on both the top and bottom line when it reported this morning.

On the coronavirus front, in some positive news, Macao reopened its casinos on Tuesday following a two-week shutdown.  In addition, the W.H.O. reported that the trends outside of China seem promising (whatever that means exactly).  However, the numbers continue to grow as more than 72,400 confirmed cases have been reported and the death toll has risen to nearly 1900 globally.

In terms of impacts, the event cancellations (such as annual conventions in Geneva, Switzerland) and new quarantines and travel restrictions (780 million people in China are subject to lock-down or some form of travel restriction related to virus prevention) continue.  AAPL also warned that it will not meet its January-released guidance for the second quarter.  They blamed iPhone supply chain constraints (China Foxconn operations) and reduced Chinese demand as the reasons.

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Overnight, Asian markets were mixed, with Japan, Korea, Australia, and Hong Kong deeply in the red.  Meanwhile, Shenzhen was strongly green.  However, as of this point in their day, Europe is in the red across the board.  As of 7:45 am, U.S. futures are pointing toward a gap lower of half a percent across the major indices.

Tuesday’s major economic news is limited to NY Empire State Fed Mfg. Index (8:30 am).  However, there are some earnings, with AAP, ALLE, ECL, EXPD, MDT, VMC, WMT, and WAB all reporting before the open.

As we come back from a long weekend, it’s time to see if the bulls are ready to run again or we might see some pullback.  The trend continues to be strongly bullish and all the major indices are very near all-time highs (including even the IWM).  It certainly has not paid to fight the trend recently.  However, we are still a bit extended from averages and earnings news is not great. 

Just maintain your consistency. Keep locking in profits, being cautious and remaining nimble or hedged.  Remember, make the trade come to you, plan the trade and trade the plan.  Don’t get complacent and let a profitable position (or several) go South on you.  Our job is to keep producing singles and doubles, not a string of strikeouts and an occasional home run.

Ed

Swing Trade Ideas for your consideration and watchlist: NWL, SPGI, PYPL, FLO, FLDM, VSH, QRVO, BKE, DIOD, VIVE, IRWD. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

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