The Shakedown 10/31/21

LAST WEEK, S&P 500 (+1.35%)

Monday:  +0.54%

Tuesday: +0.09%

Wednesday: -0.44%

Thursday: +0.90%

Friday: +0.20%

Stocks saw another strong performance this week which capped off a three week run of gains. We closed at a brand new all time high Friday as earnings reports across all sectors have largely been favorable so far this earnings season. We saw Apple and Amazon release some lackluster earnings but this didn't weigh on the indices as the news was largely shrugged off. Both companies reports showed that strong consumer demand was not enough to offset other underlying issues such as the supply chain crunch we're seeing across pretty much all sectors. 

For example, Apple has had difficulty with producing enough iPhones, iPads, Apple Watches, Macs, and other products due to shipping delays and materials shortages. This marked the first time that Apple has missed Wall Street expectations for its revenue since May 2017. 

Meanwhile, Amazon’s results were also worse than expected. Labor shortages and shipping disruptions have weighed on the company. Amazon also shared disappointing guidance for the crucial holiday shopping period. 

Although Amazon and Apple announced underwhelming results, markets have been propelled higher by solid third-quarter earnings. Roughly half of the S&P 500 has reported so far and more than 80% of the companies have beat earnings estimates. Wall Street will also be looking for clues as to when the bank may hike interest rates. For the month of October as a whole, the Dow saw a 5.8% rise, while the S&P 500 advanced 6.9% and the Nasdaq rallied 7.2%.

All eyes will be on the Federal Reserve this week. Following its policy meeting, which wraps up Wednesday, the central bank is expected to announce that it will taper its asset purchases. Since the onset of the pandemic, the Fed has been purchasing $120 billion in Treasury bonds and mortgage-backed securities to help the economy stay afloat amidst lockdowns and other challenges. With the economy regaining strength, it is expected that the Fed will begin to scale back this buying. In the market's history it has typically not reacted well to these type of events in the near term, so we will see if a Taper announcement causes pressure to stocks.

We've got another crazy week of earnings with hundreds of companies reporting once again. Some notable names I'm looking forward to this week are Roku, Moderna, Square, Draftkings, Coinbase, Airbnb, Uber, Peloton, Etsy, Cloudflare and many more!

Earnings This Week

Click the above picture for a full list of the companies reporting this week



SGH Long

Smart Global, SGH, is coming of a great quarter. They saw every segment of their business rapidly grow, with overall revenue growing almost 60% in the past year. After the report was released, the stock ripped 22% in the two days that followed. It's since been consolidating that first earnings move, and appears ready for the next leg higher soon.

If we take a look at the monthly chart, we can see the stock's setting up with a massive cup & handle on a long term chart... which means this setup could have some serious legs. This is a thinner name which makes it more difficult to trade, especially if it triggers early in the day. I'll be watching that 54 area for an influx of volume. 

Trigger: $54

Stop: $50.89

Target: $60-66+

Leave a comment