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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • Hammer Time...Will It Spread? - By Charles Payne

    Watch my show: Making Money With Charles Payne Fox Business 6PM

    It continues to be hammer time in the stock market where the earnings season has taken a nasty turn; a woe to those companies with any miscues. Then again, is any stock safe? The Dow closed off with 195 points, but the index held above 17,600, a critical area of technical support. For the year, the Dow is still fractionally higher and keeps its wheels spinning with periodic spurts higher and periodic tumbles lower.

    Without a doubt, this trading range is frustrating for investors that have become very comfortable with rare pullbacks of any substance.

    It's unlikely the market will trade in such a narrow range much longer. Considering how far the market has come sideways, it is a moral victory. However, all that changes with the Dow below 17,600; the next key support point is 17,100.

    Dow Jones Industrial Average

    The NASDAQ held around its 50-day moving average of 4,947 and remains in a strong upward pattern of higher lows and higher highs. But the biotechs were crushed…again!

    NASDAQ

    We've seen stocks from Twitter to Yelp crushed, but it's not just high -flying names. Normally, slow movers, such as Whirlpool, have paid a heavy price for a miss or a subpar guidance. The bottom line is that it feels like the market has entered that period where no news is good news. Consequently, fear is creeping higher as measured by the Volatility Index (VIX).

    Moreover, I don't think the market is waving the white flag of surrender, but there's no doubt selling is excessive. Once the crowd decides to bolt, a vapor of destruction is all that remains. If they did that with the entire market, it could be ugly… actually, it would be a relief.

    Today's Session

    The major equity markets are creeping higher this mornings, showing signs of wanting to erase yesterday's session. Earnings have been mixed this morning with earnings beats and mixed guidance. Below are some of the notable companies that reported this morning.

    Company

    EPS

    Consensus

    Revenue ($M)

    FY EPS Guidance

    FY EPS Consensus

    CVX

    1.37

    B 0.56

    34,558

    -

    3.85

    CLX

    1.08

    M 0.02

    1,401

    4.45-4.55

    4.51

    CVS

    1.14

    B 0.06

    36,332

    5.08-5.19

    5.16

    GWR

    0.83

    B 0.01

    397

    -

    4.72

    LPNT

    1.00

    B 0.01

    1,264

    -

    3.97

    NWL

    0.36

    B 0.02

    1,264

    2.10-2.18

    2.15

    We have tons of economic data being released after the market open, including the Institute of Supply Management's (ISM) manufacturing purchasing managers' index (PMI) and the Michigan Consumer Sentiment report.

    It's time to start putting our money to use and get ready to ride the market higher.

    May 01 10:12 AM | Link | Comment!
  • Businesses Cannot Thrive Under These Conditions - By Charles Payne

    There was no question the economy is soft, but the advance release of the first quarter of the U.S. Gross Domestic Product (NYSE:GDP) hit like a punch to the gut. The headline number of 0.2% is simply demoralizing and it has been in freefall since the third quarter of last year.

    However, the number would have been much higher if it was not for the private inventory build of $100 billion to go with $80 billion in the third quarter and $82 billion in the second quarter.

    Will consumers buy all this stuff? Personal savings surged to 5.5% from 4.6% in the fourth quarter and 4.9% a year earlier. The most recent consumer confidence number from the Conference Board was an unmitigated disaster. What's driving the swift mood changes that see months of steady, but cautious improvements wiped out in a second?

    The news set the tone for the Federal Reserve, which issued a statement that actually mitigated the carnage that saw the Dow off 156 points. Coming into the session, the consensus was 96% for a hike in September. I think 2015 can officially be taken off the table.

    Even though the market stopped moving lower as the Fed rate hike is now pushed out, investors have to be concerned if there is any way to pump an economy that's deliberately held back from higher taxes and the administration's war on business.

    Greenback Stumbling

    The strong dollar has crushed corporate earnings. Thus far, it hasn't sparked extra spending or any enthusiasm from Main Street. After forming a recent double top, the U.S. Dollar Index (USDX) is now tumbling hard and broke through its 50- day moving average. The rapid decline of the dollar without the aid of central bank assistance is worrisome. Let's face it, the economy is just barely moving along. The assumptions of a miraculous second half-rebound are being tempered.

    For me, it's simply frustrating because we have the most amazing businesses in the world, best practices, and an opportunity to take global shares since rival nations can only compete on money-printing gimmicks.

    Moreover, there is a serious attempt to alter our DNA, and while it's not working; it has created hesitation and pauses that's resulted in the most morbid recovery.

    Today's Session

    Equity futures aren't off much, but internal carnage continues as names that miss aren't getting free passes and those that offer sub-par guidance are simply being crushed. The great news is these knee-jerk reactions are creating amazing buying opportunities.

    There are a few winners in the earnings circus, including Exxon Mobile which blew away consensus and maybe the notion that the American oil miracle was dead.

    Company

    Date

    EPS

    Consensus

    Revenue ($M)

    FY EPS Guidance

    FY EPS Consensus

    CAH

    30-Apr

    1.19

    B 0.03

    25,375

    -

    4.36

    CL

    30-Apr

    0.66

    in-line

    4,070

    -

    2.95

    DRQ

    30-Apr

    1.38

    B 0.23

    226

    4.60-4.80

    4.78

    XOM

    30-Apr

    1.17

    B 0.34

    67,618

    -

    3.78

    THRM

    30-Apr

    0.55

    B 0.02

    207

    -

    2.24

    HEES

    30-Apr

    0.17

    M 0.05

    227

    -

    1.60

    HAR

    30-Apr

    1.22

    M 0.05

    1,464

    5.65

    5.84

    MOS

    30-Apr

    0.70

    M 0.05

    2,139

    -

    4.31

    ODFL

    30-Apr

    0.73

    B 0.02

    696

    -

    3.64

    POT

    30-Apr

    0.44

    M 0.05

    1,665

    1.75-2.05

    2.02

    TASR

    30-Apr

    0.13

    B 0.07

    45

    -

    0.41

    TEVA

    30-Apr

    1.36

    B 0.10

    4,982

    5.05-5.35

    5.14

    VIAB

    30-Apr

    1.16

    B 0.09

    3,078

    -

    5.90

    Of course, the spike in crude might have already belied the call for $30 West Texas Intermediate.

    Economic data is mixed as well with initial jobless claims down to 262,000 from 296,000 a number that suggest these should be boom times.

    In March, spending increased, although less than expected, and at the expense of savings which edged lower to 5.3% from 5.7% because incomes were unchanged.

    There are lots of storylines this morning. These are the moments for taught out decisions which are different than knee-jerk decisions. It can be a buy, sell or hold for existing positions or keeping the powder dry to keep cash on sidelines.

    Apr 30 10:35 AM | Link | Comment!
  • When The First Fade By Charles Payne

    Don't look now, but the New York Mets are in first place and while Chris Rock's friends never heard of a Met, so far this baseball season reminds us that things can, and do, change.

    And the last shall be first gives many earthly hopes that things will get better and so it is in the stock market that from time to time there are shifts - the winners fade, pause or even become losers while the latter leads the parade.

    They call this phenomenon in the stock market a "rotation".

    As the market has been spinning its wheels in the past week, energy and utilities have improved reflecting (in my mind) greed and fear. Coming into today's session, there was a noticeable drop off in the performance of consumer cyclical and defensive stocks in hindsight then perfect harbinger for the initial read on first quarter GDP.

    Sector Name

    5-Day

    YTD

    Basic Materials

    1.75

    4.85

    Communication Services

    2.12

    7.84

    Consumer Cyclical

    1.56

    9.48

    Consumer Defensive

    1.71

    7.56

    Energy

    4.02

    3.65

    Financial Services

    2.44

    84.34

    Healthcare

    1.95

    12.19

    Industrials

    2.19

    8.38

    Real Estate

    4.19

    11.81

    Technology

    2.60

    10.10

    Utilities

    0.80

    -2.83

    But as stocks like Apple stall and others like Twitter get hammered, I think it will be slow-moving names that are largely ignored that will attract buyers. On that note, however, we aren't looking to force the issue.

    Gross Domestic Product (NYSE:GDP)

    This morning's GDP report is downright demoralizing. Sure, there were signs all along, but the print of 0.2% hits like a ton of bricks. The economic rate of growth has decelerated since peaking in the third quarter of last year. Note: last year, the initial GDP release was +0.2%, but the final read was -2.1%, not a great omen for the true state of our economy.

    Earnings mostly disappointed, save for Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) and GoPro, Inc. (NASDAQ:GPRO) which is fighting off Wall Street's relentless hate machine that has ignored all signs the company is a budding juggernaut, instead to focus on the eventual victory of a cheaper Chinese knockoff.

    Company

    Date

    EPS

    Consensus

    Revenue ($M)

    FY EPS Guidance

    FY EPS Consensus

    ETN

    29-Apr

    1.01

    B 0.03

    5,223

    4.65-4.95

    4.82

    FCAU

    29-Apr

    0.05

    M 0.03

    26,396

    €0.64-€0.77

    0.93

    GD

    29-Apr

    2.14

    B 0.20

    7,784

    -

    8.35

    GT

    29-Apr

    0.54

    B 0.10

    4,024

    -

    2.90

    HES

    29-Apr

    -0.98

    B 0.09

    1,550

    -

    -3.03

    IP

    29-Apr

    0.84

    B 0.04

    5,517

    -

    3.85

    MA

    29-Apr

    0.89

    B 0.09

    2,230

    -

    3.47

    NSC

    29-Apr

    1.00

    in-line

    2,567

    -

    6.14

    SPR

    29-Apr

    1.00

    B 0.08

    1,742

    3.60-3.80

    3.72

    HOT

    29-Apr

    0.65

    B 0.09

    1,415

    2.94-3.04

    2.97

    TWX

    29-Apr

    1.19

    B 0.10

    7,127

    4.60-4.70

    4.65

    WM

    29-Apr

    0.49

    in-line

    3,040

    2.48-2.55

    2.51

    Time to keep your powder dry. Everyone should have more cash than normal after the exit alerts over the past few sessions.

    Apr 29 10:12 AM | Link | Comment!
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