Reading the news first thing in the morning these days disturbs my coffee. When I read things like, "The New York Fed joins a group of investors demanding Bank of America buy back mortgage securities...." What? That is not what I call a stabilizing force in the fragile Banking Industry right now (Financial Sector is the 2nd row, right side). What happened to due diligence and back channel sorting out of issues to solve problems? Unfortunately this is one of many problems that are clouding what I call the "Confidence Factor." Anyone running a business (and I include our sparky little company, Aqumin LLC) needs to plan and they need confidence to plan. I'm not here to argue the politics, but the market is showing us that confidence in planning is very low, probably near or below 2002 levels. I created a simple AlphaVision Landscape to show this.
First I created a landscape with the S&P 1500 Universe that have reported earnings this cycle (just set to Latest Announcement Date in the Landscape Filter Bar and pick your dates) All the dark green buildings are stocks that have surprised on the upside for EPS by at least 25% in the October earnings cycle (the last two weeks). White and light green buildings are from 0 to 25% surprise on the upside. I have Apollo (APOL) highlighted for a reference point. Even a passing glance says companies are reporting well above earnings estimates in this cycle. But here is the kicker: building height measures total return for the last week and I flipped this landscape over. All the names you are looking at are actually down for the last week. I figured with the sell off yesterday these names would be back to even at worst - but not so. At the least, the market is still selling companies that miss earnings. Something is dependable (red spikes). Companies are having a hard time with "guidance". They are making money but, "don't ask for more information because we don't have it." This landscape rounds out my low "Confidence Factor" thesis. The unintended trading result from this landscape is that, for this cycle at least, if you want to unload a name do it the day before earnings are announced. You will look right most of the time. It is what a company is not saying that the market is listening to.
Andrew Giovinazzi
For AV for Bloomberg users, just click EPS Surprise with 1 Week Total Return in the View Library to interact with this view live. If you are not an AlphaVision for Bloomberg Subscriber please follow the download link here: Download AV for Bloomberg
Posts
No comments:
Post a Comment