The Mother of All Earnings Days

Welcome to today’s Rude Awakening

Another down day in the marketplace, folks.

The S&P is down about 50 points, pushing past lows of the previous session yesterday, as we were trying to rebound.

Now, we’ve pushed right back below that level.

What’s Driving This Market?

As so often is the case, it’s the Monsters of Tech driving the marketplace.

We’re in the heart of earnings season right now.

Yesterday, we had the mother of all earnings announcement days… and it was a DOOZY.

We had AAPL, MSFT, AMZN, GOOG, FB, NFLX coming out with news, all of these companies reporting earnings.

It’s important to remember one thing about Wall Street…

Wall Street: A Forward-Looking Mechanism

You’ve heard the saying “buy the rumor, sell the news.”

Wall Street and the markets care more about what the future holds than what the present is.

That has certainly been the case in the past few days with these massive companies.

Take Apple Inc., reporting better sales than expected, but not willing to give guidance going forward, because they don’t feel like they have the ability to predict where they’ll be three months from now due to the precarious nature of the pandemic.

Microsoft and Amazon also reported better results than expected, but they too tempered expectations going forward.

Google, the one standout today, is up almost $55 on the day.

Netflix is also making headlines with their announcement yesterday to raise subscription prices…

That’s obviously going to account for a positive to their bottom line. The stock popped on the news by 5%, and today immediately dipped back down.

Facebook reported good earnings results, but not good enough. They’re down $18 on the day.

It brings us back to a question we constantly need to ask as traders…

What WILL the Driver Be in Marketplace Upside?

Expectations are extraordinarily high during this earnings season.

Something amazing will have to happen during this earnings season for stocks to be driven higher.

The trend is decidedly downward.

We are WELL below the 50day MA.

Our next target on the downside in the S&P is that $3,200 level. We’re only about 50 points away from that level as I write.

And if we drop PAST that level?

Like I said the other day…

LOOK OUT BELOW!

By technical definition, we are in a retracement right now.

A retracement means we’re down 10% or more from our highs.

20% or more would be considered a crash…

So, we are looking to get more downside in this market, folks.

Position yourself accordingly!

You need downside protection on any of your investments, now more than most times.

Have a safe trading day folks.

We’ll talk Monday.

Regards,

Scott Stewart

Scott Stewart
Editor, Rude Awakening

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During the 50s and 60s, my poor dad and my rich dad were savers. Saving money was safer than the stock market because, after the 1944 Bretton Woods Agreement, the U.S. dollar was backed by gold. The U.S. dollar became the reserve currency of the world, or “good as gold.” In 1971, Nixon put the final nail in the coffin of the gold standard. The dollar and all government money became debt. Gamblers took over the government casino. Debtors became winners and savers became losers. My poor dad continued to save. He did not change. My rich dad, on the other hand, did change. Because he had to.

Scott Stewart

Scott Stewart has been trading for decades. He has acted as an analyst and educator on the stock market for just as long. As your Rich Dad's Weekly Cash Flow analyst, Scott works tirelessly to ensure you know everything you need to do when entering into new positions, and adjusting trades as you go along....

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