Stock Market Seasonal Buying Opportunities
Companies / Corporate Earnings Dec 04, 2023 - 07:15 AM GMTBy: Nadeem_Walayat
Dear Reader
Are you ready to rumble! Lets see of earnings season volatility can deliver some more buying opps in target stocks over the next couple of weeks.
Where the S&P is concerned the expectation for an early October bottom at just below 4200 was freakily ac hived in terms of price and time and as my market brief illustrated going into October.
Stock Market Brief - 29th Sept 2023 - (5am UK Time)
Stock Market correction entering it's end game, S&P swing low is 4237 coming close to the sub 4200 target by Mid October, Thursday saw a technical bounce to 4300, therefore currently standing some 100 points above target. The window for the bottom is from late September to Mid October, so the S&P has upto 2 weeks left to trade to sub 4300 though most likely is just 3 trading days, so early next week could mark the end of this correction either via a lower low (sub 4200) or a higher low (above 4237)..
Too many were sat on the sidelines waiting for a plunge below 4200 towards 4100 so it's not much of a surprise that they didn't get what they wanted. Hence, one should be grateful for those opps that the market delivered in the likes of AMD, TSMC and ASML. We taketh what the market giveth, the market is the master and we are merely trying to ride on it's coat tails and not to fixate on the indices in ones individual stocks buying decision making process, the market gave numerous buying opportunities in a number of stocks, as it will likely do once again during earning seasons, it's just that we don't know exactly which will be the big surprises.
In terms of the overall market the S&P 'should' hold the early October low, if I had to guess how low it could go during earnings then to around 4270 looks a likely price point to target significant support, which fits with my existing base case for an UP October and a bull run into December to ac hive 4510+, that could even see a new bull market high. So I expect limited temporary downside, though again my focus is on the individual stocks rather than the S&P.
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Which is consistent with my expectations of how things would play out of over a year ago.
Stock Market Analysis and Trend Forecast Oct 2022 to Dec 2023
EARNINGS Week starting October 16th
Tuesday 17th Oct
LMT $441 BMO - EGF -3% / -1% PE 15.9, -21% Range.
LMT is enjoying a price boost courtesy of the latest Middle East war that reversed an earlier downtrend that was targeting $370. Despite all of the wars earnings are not growing, so based on the fundamentals the stock should trade lower, i.e. target $370, but there is war fever inflating the stock price as the market discounts escalation to some degree, though nothing to suggest a major expansion in the conflict is imminent..
(Charts courtesy of stockcharts.com)
JNJ $157 BMO - EGF 4% / 4% PE 15.1, -81% Range.
JNJ is likely to respond positively to earnings, though I don't expect much price movement as it remains stuck in a $152 to $172 range, nevertheless the stock should rally on earnings to target the top of the range at $172,
Wed 18th Oct
ASML $600 - BMO - EGF 7% / 14% PE 30.1, 33% Range.
A MONOPLOY that traded down to $564 from a high of $770. You don't often get such buying opps in such stocks! Which illustrates why the S&P is a nothing burger. As weakness begets weakness, we could get another dip into earnings that has a good chance of a break below $564 to target $530. Whilst the PE looks a little pricey at 30, ASML does have the growth to keep the bull run going.
The bottom line is that this is one of the best AI tech stocks out there which doesn't often deliver buying opps so don't blow it if as expected another one materialises! I will definitely be adding more to my 81% invested.
TSLA $255 AMC - EGF -15% / 2% PE 64, 9% Range
The EV Hype Master with a market cap greater than all other motor corps put together is primed to take a big plunge on earnings which could mark a trend that takes Tesla below $200. There just isn't the growth to justify a PE of 64. Compare ASML's metrics to that of TESLA, half the valuation for far higher growth which is because of TSLA hype. So Tesla should break it's August low to target sub $200, and could go as low as $175.
Lam Research AMC $645- EGF -29% / -11% PE 19, 73% Range
Very bad metrics are setting the scene for a potential sharp drop in the price of Lam Research into and on earnings, i.e. a break below $600 to target $550 which would be a 15% drop off the current price. Yes there is always a chance of an earnings surprise but without the benefit of hindsight I aim to capitalise on a break below $600, the stock has had a spectacular bull run off it's $295 low, all the way to high of $725 against which a drop to at least $550 is possible.
Thursday 19th Oct
TSMC $90,5 - AFMC - EGF -24% / -12% PE 15.3, 53% Range
TSMC bounced from $85 to $94 and given bad EGF's is primed to revisit the $85 low on earnings. Downside should be limited given that the stock has already fallen by 23% off it's $110 high, though a break of $85 would target $80.
Tech Stocks trading in or very near buying ranges, in portfolio order.
TSMC
Qualcom
ASML
PFE
RTX
UKW.L
ARW
On Semi
MED
CRUS
HPQ
BIDU
PRX
INMD
ULH
The Bond Trade
The Bond Markets look like they have bottomed.
Bond portfolio break down - percent invested of target.
IBTM.L 60%
IBTL.L 97%
GLTL 61%
3GIL.L 113%
Total size is 3% of portfolio. For more info see original 7th Aug Bond Trade article - https://www.patreon.com/posts/inflation-bond-87342150
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S&P
Targeting 4600 Mid Summer 2023 Top, followed by correction to 4100 into Mid October before a year end rally to 4450+
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By Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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