Swaggy's Top Stonks - Market Update & MSFT Earnings

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We've seen the headlines... "markets in shambles", "worst week since March 2020"... when does this end and when do we get a rebound? Nobody knows, but let's take a look at the recent earnings.

Today's Letter

• Market Update

• Earnings SZN

• Trending Cryptos

• Trending Meme Stocks

Market Update

What's happened so far this week?

Monday

The US market staged a staggering intra-day recovery, with major indices actually ending the day in the green – a feat that seemed inconceivable mid way through the session.

The Nasdaq was down 5% at one stage, but rallied strongly, closing up 0.5%. The 5.7% intra-day rally in the NDX was the 7th biggest such move since 2010.

Only 8 times since 1928 has the S&P 500 moved down more than 4% and then rebounded to close up on the day.

There was a clear behaviour shift between the morning and the afternoon sessions:

• In the morning, it was largest day of retail selling in 3 years. Panic selling from retail where JPM data shows a net $1.36B worth of stock sold off by Noon EST, with most of it coming in the first hour. This measured 3 standard deviations higher selling than the full day average of previous 12 months.

In the afternoon post 12pm EST:

• BTC went positive and retail buying resumed

• Futures were bought,

• Consistent short covering in baskets,

• The firm price action failed to bring any systematic supply with it.

Energy and consumer discretionary were the best performing sectors with healthcare and utilities the worst.

US Unprofitable Tech ended the day up 2.2%, having rallied over 11% during the day.

US Growth L/S pair ended the day up 1.5%

Quality down close to 1% while Value was flat.

US cyclicals outperformed Defensives by 1.6%.

Overall volumes were a notional all-time high, tracking 77% above the 30 dma at $1.16tn.

VIX traded as high as 38.94 although closed back below 30 (29.90).

The good news…A tame close-to-close return keeps systematic supply at bay, and the rebound in growth stocks helped stem the P/L drawdowns for both HFs and retail traders alike. 

The bad news…  yesterday’s afternoon rally was likely driven by short covering, and it is hard to draw a read from this into the future – i.e., not much has changed, and the market is still grappling with the concern of a growth shock while the Fed is likely on autopilot

Tuesday

US equities weak again after a volatile Monday session that saw the S&P moving into correction territory before staging a dramatic afternoon rebound.

Growth notably trailing today after outperforming yesterday. FANMAG all weaker. Momentum software, payments, EVs, solar, meme stocks also particularly weak.

Fed's hawkish policy shift still the big headwind for risk sentiment, particularly with some shift in focus to quantitative tightening. Pickup in concerns about a growth slowdown also in focus and increasingly playing into the policy mistake narrative. 

No reprieve from corporate calendar as early Q4 earnings beats have tended to underwhelm while guidance has also leaned negative and analysts starting to cut 2022 estimates.

Some strategists have also highlighted the lack of meaningful capitulation in positioning and flow metrics, while valuations still stretched despite recent compression

Sector Outperformers/ Underperformers

Semis, HDDs, expensive tech, IBs, asset managers, industrial metals, machinery, multis (GE-US ), managed care, hospitals, apparel/accessories, HPCs, homebuilders and autos among worst performers.

Credit cards, airlines, dept. stores, apparel retailers, energy outperforming. 

Dealers remain slightly short SPX option gamma

Treasuries weaker across the curve

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Earnings SZN

IBM

• Revenue $16.7B vs $16.0 est. Beat

• EPS $3.35 vs $3.14 est. Beat

• IBM is trading up roughly 6% since reporting this week.

Logitech (LOGI)

• Revenue $1.63B vs $1.48B est. Beat

• EPS $1.55 vs $1.31 est. Beat

• Shares of LOGI are trading up roughly 6% today.

Microsoft (MSFT)

• Revenue 51.7B vs $50.1B est. Beat

• EPS $2.48 vs $2.29 est. Beat

• Shares are trading down 5% in after-hours action. Solid earnings, but not good enough in today's current bearish market.

Trending Cryptos

The rug has been stabilized as crypto currencies have rebounded. Here's a look at some of the more popular names over the last 24 hours.

Trending Meme Stocks

On the meme-stock segment all eyes were on MSFT today with their earnings report. The rest of the list is mainly being dominated by names with upcoming earnings. I personally am looking forward to getting back to a bullish market where some memers take off again.

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