Informal Thoughts on Earnings Season: My Conviction is Now Strengthened That a U.S. Downturn Will Come after NFLX, ASML, and TSLA earnings
Earnings Season Informal Short-Form Commentary and Actionable Strategy/Key Levels: Big Banks, NFLX, ASML, TSLA
Note: This is a brief *informal* Strategy update on this earnings season. Make sure to follow me on Twitter and Instagram for latest commentary. Thoughtful preview is provided for public readers.
Members,
Just a short informal after-market note so far on Earnings Season. Some observations I wanted to share as well as actionable ideas that I’m watching.
First of all, some context. At this point, I believe that a Return to 2022 Lows for the S&P 500 is a highly contrarian opinion. Bullish (positive) opinion and sentiment on stocks are now widespread. This is demonstrated on the Fear & Greed index where we are now hovering close to “Extreme Greed.”
However, with my intermediate-term strategy timeline, there is little evidence that these elevated S&P 500 and Nasdaq levels are based on the strength of the economy. The divergence between a strong market and a weak economy has never been larger. How long this can persist is anyone’s guess, but my hypothesis is that this doesn’t persist indefinitely.
And I continue to believe that the markets will face far more challenges ahead in the upcoming 60-90 days. I continue to believe a revisit to 3830 for the S&P 500 will happen later this year.
With economic weakness so well documented, it doesn’t matter if we reach ~4300 first.
I still believe we will see 3830 again in calendar year 2023.
This isn’t to say there aren’t stock-selection opportunities at all. See that as recently as last weekend, I talked about Trip.com TCOM (China Travel Theme) offering opportunity at 35. It traded near 38 earlier this week.
And just 30-40 days ago, I discussed New Oriental’s level at 37 being fairly attractive. The company now trades ~43. Feel free to read below.
As always, I’ll continue to highlight opportunities when I see them. My Investment Strategy is intermediate-term in nature (read more there if you are unfamiliar), and folks who can sit tight & wait for a multi-week/multi-month idea to materialize are best positioned to benefit from my research views as I believe the best moves come in a 3-6 month time horizon.
Now let’s discuss this short-form update on The Banks, NFLX, ASML, and TSLA to share with you my thinking on earnings so far, in a logical manner that is often not discussed in mainstream media outlets.