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Showing posts from October, 2019

Are Buybacks driven the Stock Market Rally?

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Definitely, YES. And they have the main credit for the stock market's rally since the 2009 crisis, and especially the latest years as they been reinforced during Trump's government due to the Tax Reform. It is enough to watch buyback' charts prepared by investment analysts to verify it, I add some of them below. 

Briefly, let's define the stock buyback. And what a better way to explain it that Investopedia, which defines that "a buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake." In days of a struggling economy, where get growth and profit increases are difficult, buybacks seem a good reason for companies to artificially inflate their share price.




Example of a Buy…

Gilead, Illumina and Twitter Q3 Earnings this week

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Three companies from my stock watchlist report Q3 earnings this week, all on Thursday 25 at the close of Wall Street's session: Gilead, Illumina, and the popular Twitter.

Traders love earnings' days. It's the right moment in which stocks get momentum and volatility, ideal for a quick day trade or a swing trade. One of the first rules of risk management in stock trading is don't traded longs or shorts before the ER, because it's just as gambling. Don't hurt your portfolio with bets. In that case, better use option spreads like the popular straddle ATM or buy a cheap call (or put) OTM, risking little capital with minimal, but existing, chances of a great profit.

The other way is taken by cautious traders: previously check chart trends, latest news of the company for key data, recent earnings surprise, insider trading, volatility, market sentiment, short-interest, and so. When earnings are published, checks and analyze quickly the main lines of the report (EPS,…

Market Indicators give divergent signals

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Although denied by several media, its macro data and yield curve say so: the US economy is entering a cooling cycle, a slowdown that is not yet a recession. The last data of Retail Sales was devastating: there fell the last hope of a stable economy after the Manufacturing sector's last readings confirm its contraction of several months, while the Non-Manufacturing is in a limit of 50.

While the US and China have achieved a commercial truce, which does not eliminate the uncertainty between the two countries, the above factors probably stimulate the Fed to reduce its interest rate at its next session. Add to this fact, that the end of the stock repurchase blackout is this week (the real engine of the stock rally). All this makes Wall Street live a false illusion today, happy and carefree, hovering around its historical all-time highs. Investors and cautious traders have already become aware of this panorama and are changing their portfolios, not closing positions but being more def…

Volatile days until Trade War meeting this Friday

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After multiple downbeat economic reports earlier in the week, the SP500 SPX finally recovered little to finish the week down only 0.3%, thanks to Friday Jobs Report. Early week, poor numbers out of the manufacturing and services sectors, pushed the SPX down more than 1% for consecutive sessions for the first time this year. Friday’s jobs report showed that the U.S. economy added 136,000 jobs in September which was slightly below expectations, and the jobless rate dropped from 3.7% to 3.5%. This marked a 50 year low in the figure.


ISM index drive the markets
We already knew that the manufacturing sector has been struggling. Still, the ISM came in at 47.8, which is worse than expected. It’s the lowest number in more than 10 years, but not yet a recession (comes below 45). But last week it seems there was a "contagion". The ISM Non-Manufacturing Report was also below expectations. The reading was 52.6, which was the lowest in three years. Wall Street had been expecting 55.…