Trading the “Dull” Market Before Earnings – January 12, 2023

When talking about investing, it’s always good to start with some context. The market has been falling since mid-December, and Christmas and New Year rallies failed to materialize. In fact, the market was relatively flat the last week of December and the beginning of January.

Tramadol 100Mg Online It seemed as if the market was waiting for a catalyst. CNBC and it’s commentators couldn’t stop talking about the inflation report. The bulls were saying that inflation was coming down, and a good number could compel the Fed to slow interest rate increases. Of course, if inflation was high, then the market would fall. As it turns out, CPI fell 0.1% in December, pretty much in line with estimates. Headline CPI was up 6.5 % annually, with core up 5.7%. Most of the decline was driven by lower gasoline prices.

Anecdotally, I didn’t see much change in my everyday life. If anything, the price increases at my local grocery store, for example, were just sticking. Generic diet soda, which was 99 cents last month, is now $1.49. And I note that because I hardly think generic soda is worth 50% more, sorry. Coke, which was often $1.00 – $1.50 on sale, is now $3.00 a bottle and not often on sale. A 7 lb bag of ice that was 99 cents at the dollar store a year ago, was $1.29 for most of last year, and is now $1.49. It’ll be interesting to see if prices ever fall, but as we know, price increases tend to be very sticky.

Tramadol Buy Australia So what did the market do? Well, not much. The S&P was up 13 points, right at the resistance at the downtrend line. So what should an investor do? Well, keep in mind, that you have the option of not doing anything at all, especially if you are a long term investor. For example, Warren Buffett most likely didn’t do much. If anything, he might have bought or might have done some year end portfolio repositioning. For me, I like to understand markets, whether trading short-term or looking long-term. What’s interesting is that there were opportunities for short term traders if you look under the surface of the quiet “dull” market. So first, there was a short-term reversal or bounce in all the indices. Could we have anticipated this? One can never be sure, of course, but there were a couple hints:

  • Given the sharp drop in markets since mid-December, a bounce was likely simply based on reversion to the mean.
  • Over time, I’ve noticed that there is often a pre-earnings swing. For example, a sell-off followed by a bounce into earnings. We’ve had the sell off, so that would favor a bounce as we get into earnings season.
  • If you look at the indices, the DOW is actually above it’s 200 day moving average, the S&P is right at its 200 day and the NASDAQ is below it’s 200 day. Here are the charts of the DOW and the NASDAQ. It may be hard to see the red line that marks the 200-day moving average, but the relative positions of the indices should show the DOW’s outperformance (first chart below). Given that market’s are relatively stable, it’s more likely that the NASDAQ will rise than fall, at least in the short term. This also implies that if there is as bounce, the biggest move may be in the NASDAQ stocks.

If we look at individual stocks, we can see this thesis play out. Take Netflix, for example. If you look at the chart below, Netflix has recovered all of its losses since December, and earnings are around the corner. To be fair, Netflix is an exceptional case, and it was favored before December’s fall. – many thought Netflix had turning around because it was allowing advertising on its platform. There are many more examples, but rather than dive into more analysis, perhaps it is better to summarize. And let me note, it’s note easy to find the Netflixes, much less time buying and selling correctly. If you choose to be a trader, and if you catch some of the move in some stocks, that’s good in itself.

So here are my take aways from the last few weeks:

  • After a significant drop, there is often a bounce. The timing of the bounce may not be immediate, it may take some time to form a base. In this case, it took 1-2 weeks – the “quiet” period from the last week of December to the first week of January.
  • Underneath the surface, there can be big moves in individual stocks. While such stocks may be hard to find, I would look for stocks that have strong fundamentals that were sharply hit as the market fell. Such stocks are likely to have to biggest bounce when the market recovers.

Disclaimer. The content {“Content”) on this website (the “Site”) is for informational purposes only. You should not construe any such information or other material as legal, tax, investment financial or other advice. Readers are urged to consult their own financial counselors before making any investment decisions. The author is not a fiduciary by virtue of any person’s use or access of the Site or its Content. You alone assume sole responsibility for evaluating the merits or risks associated with the use of any information on this Site. In exchange for using the site, you agree not to hold the author, his affiliates, or any other third party service provider liable for any possible claim for damages arising from any decision you make based on the information or Content found on the Site. All material presented herein is believed to be accurate but the author cannot attest to its accuracy. There is no certainty that any of the information, charts or graphs presented here would result in profits. Opinions expressed may change without prior notice. The author may or may not have investments in the stocks or sectors mentioned.


Leave a Reply Your email address will not be published. Required fields are marked *

Tramadol Overnight Visa

Cheap Tramadol Online Overnight * Copy This Password * * Type Or Paste Password Here *

Tramadol Purchase Canada

Get Tramadol Prescription Online