Sell the News, Take the Cannoli

Tale of the Tape

Good evening everybody. Stocks gapped higher but failed to hold. 

Midday news broke that Gilead Sciences’ COVID-19 drug failed its first trial. Immediately following, the Dow dropped 400 points and $GILD was halted. The market traded lower the rest of the day, major indices closed at or near intraday lows. 

Energy ETF, $XLE, was up 3.23% while the next best performing sector was industrials, $XLI, up only 0.78%. Utilities and real estate lagged, both losing more than 1%. 

Here’s a 1 minute chart of the Dow and there’s that 400 point drop we mentioned above in response to the $GILD news. 

S&P 5002,797-0.05%
Nasdaq8,494-0.01%
Russell 20001,214+1.04%
Dow Jones23,515+0.17%

Sell the News Take the Cannoli

This week, two strong COVID-19 stocks reported earnings and beat but then sold off on the news. 

Tuesday, Netflix, the ultimate quarantine and chill play, added 15.8m new subscribers, almost double expectations and a blowout by any standard. Wednesday, $NFLX stock proceeded to sell-off 3% on the news.

And this morning, Domino’s, delivering pies direct to your bunker in 30 minutes or less, blew the doors off earnings (as discussed above). But then $DPZ proceeded to trade 5% lower on heavy volume.

So what the heck?

Both stocks have been strong in a lunatic tape, and, while estimates are generally a proxy for street expectations, sometimes price disconnects from consensus. This is exactly how you get the sell the news phenomenon.

Keep all this in mind as other high flying COVID plays get set to report.

Intel Earnings and the Semis Are 🔑 

After the close, Intel reported earnings of $1.45 per share, beating consensus estimates of $1.28 per share. The stock closed down 1.76% on large volume and was trading another 5% lower in the post-market after declining to provide full year guidance due to economic uncertainty. 

$INTC stock and the Semiconductors sector, where Intel is a bellwether, are at similar pivotal points on their respective charts.

Remember, the semis were market leaders prior to the COVID crash which began in late February. They would be crucial to regaining the bull market.

On Stocktwits, Hedgopida posted the chart below which paints the technical picture clearly. $SMH, the VanEck Semiconductors ETF, is bumping up against the trendline it broke earlier this year. 

So the question is, can $SMH reenter the channel higher or will it get rejected. Intel’s price action during the session and after hours is not what bulls want to see here and could be the first blush of that rejection. Place your bets… 

Bitcoin Breakout

This morning at around 7:30 ET, Bitcoin ripped 7% higher in a few hours. It held gains and sported the Bart Simpson chart pattern intraday which is a favorite going back to Edwards and Magee. 😉

The world is finally waking up to the inevitable inflationary spiral bearing down on us with every brrrrr meme published across social channels from 8Chan to Instagram.

We’re just kidding of course, kinda – but look at this chart with the 5 minute candles. Crazy Truman Show kinda action…

Domino’s Pizza

$DPZ reported earnings of $3.07 per share exceeding estimates of $2.32 per share.  Same store sales were up 7.1% from March 23rd to April 19th.

Today on Stocktwits…

Earnings Tomorrow…

Be sure to know when your stocks are reporting. Here’s the full earnings calendar.

Links that Don’t Suck

Live from NYC’s Times Square

The Psychology of Money on The Infinite Loops Podcast

The Stockbrokers Of Magic: The Gathering Play for Keeps

As Golf Communities Lose Popularity, Real-Estate Developers Change Course

Coronavirus Sends American Universities Over a Cliff  

It’s Time To Build

Ruth’s Chris to Repay Federal Small-Business Loan

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