Short Term Chip Trades for End of Week and Why Earnings Won’t Steer the Market

Short Term Chip Trades for End of Week and Why Earnings Won’t Steer the Market


On Wednesday, Boeing rallied and Caterpillar dived as the respective Big Board companies reported numbers. Boeing’s, a maker of firearms and weaponry, had a  revenue spike with an increase in arms sales, most likely a direct result of US Govt purchases flooding the system and sapping supply, which not only gave them heavy volume but allowed them to increase prices. Ever since the government bought out gun shops a few months back, prices in both ammunition and firearms have gone through the roof and it’s beginning to show in Boeing’s numbers.

Caterpillar is a maker of construction and mining equipment and missed earnings, revenue, and lowered expectations (guidance) for the rest of the year. Earnings fell 44% to $1.45 a share when estimates were for $1.66 a share. Revenues were nearly a billion below the consensus figure of $14.35-billion coming in at $13.42-billion.

Chip makers for cell phones and electronic devices had a major sell off today. Note, the Nasdaq(heavily tech stocks) was down about .60%. Most of the reason was a forecasted lower demand for micro chips in general in the next quarter. This was a case in point example of 3 companies– STMicroelectronics $STM, Radio Frequency Micro Devices $RFMD, and Broadcom and it driving a complete selloff across the whole industry. For the smaller companies that sold off strictly as a result of the market leaders weakness and nothing to do with their own reports, this almost always offers significant opportunity on the other side. All of these companies were down at least 5% today and have potential to correct by the end of the week.

CRUS -6%                            TQNT -6.7%                        CAVM -5.1%

SWKS -7.2%                        FSL -5.5%                             ATML -5.2%

Gold was down as the Dollar rebounded from the weakness shown earlier in the weak, which was initialized by the expectation of the continuation of Dovish Policy. On a technical basis, after unsuccessfully challenging resistance at $1,343.50/$1,344.02, prices pulled back to the first level of support at $1,330/$1,327.55.

We already know how I feel about Gold, but this quote emphasized it –

“short-term gold investors are shying away from making new investment in gold because of “hyper-bearish sentiment” for the metal on the internet and other forms of media, and the metal’s inability to rise despite all the positive factors” The precious metal has no business being as low as it is based on what’s going on around it, it’s driven by bullshit. Spells Opportunity.

As far as the market for a whole, weakness today comes with the volatility of a bull market. Things do not go in a linear direction, and we continue to see higher highs and higher lows. As long as the DJIA doesn’t break support at 14,700(see below, currently 15400) and the S&P continues to make new highs, followed by higher lows, we are seeing what we’ve expected. I actually think that earnings season has less of an impact that it ever has on the overall market sentiment.

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