π₯π₯ Major inflection point for US stocks?
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Indeed, the market might have reached a major inflection point after the SP500 declined roughly -10% while the Nasdaq dropped roughly -15% as inflation estimates by the Federal Reserve, as well as subsequent interest rate hikes, have been re-priced higher. But this correction could be over based on a βnew signalβ.
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Every day, we analyze millions of data points to generate insights. On Jan 24, LongShortBets.com generated βScore 9.9 (out of 10): SPDR S&P 500 ETF TRUST sets up for +3.3% rally in 1 monthβ when the SPY was at 435.48 (vs. currently 441.95). A high score indicates that based on previous events, this specific set up (signal or insight) has been consistently right (10 out of 10) and this signal could also be right this time.
A sign that the market might start to look through this inflation pressure and focus on other factors? This could be due to the fact that 3 major tech companies have delivered extremely strong earnings AND have indicated that supply chain pressures might be easing.
Together with labor shortages, supply chain pressures are likely the main driver of the current on-going inflation pressures. So as these tech companies indicate that inflation is less of a problem, the market might focus on the on-going strong economic growth factors.
While supply chain issues will persist, Teslaβs sales are expected to grow by +50% in 2022 compared to 2021. The company reported a record $5.5bn profit last year as sales rocketed by +71% to $53.8bn in 2021 - the company delivered more than 936,000 vehicles.
Microsoft also beat earnings estimates as well as revenue expectations and has delivered upbeat forecast. The company delivered $2.48 per share vs. $2.31 expected by Wall-Street analysts with revenues of $51.73bn vs. $50.88bn expected. Microsoft feels even so confident about the future that the company announced the acquisition of Activision Blizzard for $68.7bn.
Finally, Apple salesβ and profit numbers also topped analysts estimates as the hit from chip shortages eases. The company reported fiscal first-quarter revenue of $123.9bn vs. $118.7bn estimates. Profit was reported at $34.6bn vs. $31.0bn, equating to $2.10 per share vs. $1.89 expected.
Interestingly, despite a weak tape during the last few weeks, some stocks are making new highs. Among market experts, this relative strength is seen as very promising future performance. Among those strong companies:
ARCHER-DANIELS-MIDLAND shares are making a new all-time high β this is especially interesting as the overall market has been weak. ADM, is an American multinational food processing and commodities trading corporation. The company posted record Q4 profit on rising biofuel demand, projects strong 2022.
ARCHER-DANIELS-MIDLAND (ADM) has reached a new shorter-term high. Previously, during similar occasions, ARCHER-DANIELS-MIDLAND shares had a median return of +8.9%, over the following 2 months β based on 10 historical occasions with 9 of those showing positive returns (90% hit ratio). This buy signal for ARCHER-DANIELS-MIDLAND received a high score of 8.1 (out of 10). This insight was generated on 2022-January-26 with last price of 72.27.
Similar to ADM insight, CVS is making a new high while the overall market is weak. Normally, this is seen as a very constructive price action. CVS has raised 2021 forecast estimates. The insurance coverage for at-home Covid tests may lift US drugstore sales further. The health-care company expects full year 2021 earnings to be in a range of $5.87 to $5.92 per share, up from previous expectations of $5.50 to $5.61 per share.
CVS HEALTH CORP has reached a new shorter-term high. Previously, during similar occasions, CVS HEALTH CORP shares had a median return of +11.1%, over the following 2 months β based on 2 historical occasions with 2 of those showing positive returns (100% hit ratio). This buy signal for CVS HEALTH CORP received a high score of 9.2 (out of 10). This insight was generated on 2022-January-27 with last price of 106.79.
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