Home » GDP and Earnings Crush It and That Means Higher Stock Prices

GDP and Earnings Crush It and That Means Higher Stock Prices

GDP and Earnings Crush It and That Means Higher Stock Prices

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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Michael Kramer owns IWM Calls

So what happened? All we heard about was a looming recession coming in 2019.  The slumping economy. It turns out that scenario only played out in the imagination of investors living on fantasy island. GDP growth in the first quarter came in at 3.2%, anything but a slumping economy, and even better it was a full percentage point better than last year.

Even today the naysayers were trying to write-off the strong growth. All I heard about was inventories and exports, blah, blah, blah. Stop, just stop! You were wrong, just give it up. There was no slump.

While they point to what they want, I can point to the estimates that suggest the government shutdown cost the GDP as much as 0.4%. So does that mean 1Q GDP could have been as high as 3.6%? So you point to exports, I’ll point to the shutdown. Whatever…

Earnings

Here’s another stat nay-sayer won’t like, according to S&P Dow Jones, 75% of the 228 S&P 500 companies that have reported results have beaten their earnings estimates. To top it off, earnings estimates for 2019 increased this week to $165.35 from $165.02, while 2020 estimates increased to $186.26 from $185.65. But can we talk more about this over the weekend.

S

(Data from S&P Dow Jones)

S&P 500 – SPY

Stocks continue to push the envelope and the S&P 500 is nearing its next and last major break out. By that I mean, there are no more areas of resistance to break from here. The line in the sand is 2,940; I revised this higher from 2,938. A rise above 2,940 puts the S&P 500 into unchartered waters.  The big question is what happens then?  Will we get a big melt-up? Not sure. I haven’t thought that far out.

Russell – IWM

The Russell closed right on the cusp of a significant break out at 1,591.

Russell, iwm

Amazon -AMZN

If you own Amazon, you have to be very happy about the performance of the stock today. The stock held firm at support at $1,903 and bounced hard off it. I think this sets up the stock up for a run to $2,025. I did point out a few trends that I am seeing in their business that are worth tracking closely, around revenue growth, ads, and margins. BREAKING DOWN AMAZON – Growth Slows Again

Amazon, amzn

Intel – INTC

The Intel results weighed on the broader sector today, but mostly on Nvidia and Micron. The call revealed a few caveats that are likely to be negative around the data center and NAND pricing. I reviewed in greater detail in the video where the information in the call was highlighted.  What Does Intel Means For Micron And Nvidia – Not Good

Nvidia – NVDA

Nvidia’s is clinging to support at $178, and the uptrend in the RSI is broken. I noted in the video the odds of the stock falling back to $150 just increased today.

nvidia, nvda

Micron – MU

Micron continues to struggle at resistance around $44.

Micron, mu

That’s going to be for a Friday.

-Mike

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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

 

 

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