It’s Oh So Quiet
It’s oh so quiet. Shh … shh.
The Dow’s oh so still. Shh … shh.
It’s been seven days. Shh … shh.
It’s oh so peaceful until … volatility explodes. Zing! Boom!
Björk? Really, Mr. Great Stuff?
What can I say? The brain wants what the brain wants. I heard this song on the way to work this morning — i.e., walking from my kitchen to my office after making coffee — and it stuck. Now, you too can share in today’s earworm.
Wow. So, really Björk. Huh.
But it’s not all just a pop culture reference. There’s some market advice in there as well. Oh, Björk, that great market sage…
For the past seven days, the Dow Jones Industrial Average has been quiet … too quiet.
After it rallied more than 6.5% in the first 11 days of August, the Dow has gone nowhere. Both the S&P 500 and the Nasdaq hit fresh all-time highs, but not the Dow. What gives?
The biggest reason is that the Dow doesn’t have quite the same Big Tech lineup of its Wall Street brethren. Tech is king in 2020, and the Dow’s crown is decidedly light on FAANG gems.
The Dow represents a cross-section of the U.S. economy. By design, that means its growth is driven by more than just tech stocks — just like the U.S. economy. So, what does the Dow’s recent action tell us about the economy?
Just look and see:
That, dear reader, is the very picture of a lack of bullish conviction. The Dow wants to move higher, but investors just aren’t willing to push prices any higher. However, neither are they willing to let prices fall from their lofty heights. The result is a tight, 200-point trading range for the Dow.
But I thought this market was all about volatility!
That’s the funny thing — it is. Which means that we’re about to see a period of “Zing! Boom!” to quote Björk.
However, the ultimate “Zing! Boom!” direction remains a coin flip at this point. We should see a correction given the stalling economic recovery. But then, we probably should’ve already seen that correction before the Dow broke out above 27,000 earlier this month.
We all know Keynes’ “The market can stay irrational longer than you can remain solvent.” quote, and it’s rarely been more relevant. Yes, Keynes and Björk: two great tastes that taste great together … probably.
My point is that it’s been very, very quiet on the Dow lately, but don’t let that lull you into complacency. We’re hunting volatility.
You Great Ones out there already know where this is going … or at least you think you do.
By now, many of you are familiar with Mike Carr’s One Trade strategy. Quite a few of you have already used One Trade to flip a finger at 2020 and Wall Street’s excessive volatility.
But Mike’s not one to rest on his laurels. This former rocket surgeon is about to launch a new research system that could really make your portfolio go “Zing! Boom!”
Mike will present this new strategy soon, but Great Stuff has your backstage passes ready to go now. We’re hooking you up with a sneak peek at this next great trading system for free!
It’s called “Strike Zone,” and all you have to do to sign up for your free sneak peek is click here now!
Good: A Momenta(s) Occasion
Momenta Pharmaceuticals Inc. (Nasdaq: MNTA) investors cried tears of joy today.
MNTA just surged nearly 70% after Johnson & Johnson (NYSE: JNJ) agreed to buy Momenta for $6.5 billion … cash.
The driver behind J&J’s acquisition is Momenta’s experimental autoimmune drug nipocalimab. Nipo what? Who names these things?
“Nipocalimab will be JNJ’s first immune counter regulator and a catalyst to the next wave of innovation in treating autoantibody driven immune mediated disease,” said Cantor Fitzgerald Analyst Louise Chen.
Chen is clearly no Björk, but he might just be on to something here. Nipowhatchamacallit has the potential to treat a broad swath of rare immune system diseases. And that means billions in potential revenue.
Since nipopotamus is still in the experimental stages, it won’t add to JNJ’s bottom line anytime soon, but it’s a positive long-term driver for the company’s drug pipeline.
For MNTA investors, today’s your day. Either you were in or you weren’t. If you value your portfolio, don’t go chasing this stock after today.
Better: Nailed It
Who said retail is dead?
Earnings came in at $3.38 per share, versus $1.62 expected.
Revenue soared to $23 billion, versus $20.09 billion expected.
Same-store sales growth landed at 24.3%, versus 7.6% expected.
What the “usual suspects” don’t show you is that online sales surged — Skyrocketed? Soared? Pick your own “S-word” euphemism, you probably won’t be wrong — 700% from the same quarter last year!
It’s no wonder: According to CEO Brian Cornell, Target attracted 10 million new online customers in the first half of 2020. Thank you, pandemic?
Still, Target didn’t provide a current-quarter outlook, citing unpredictable U.S. back-to-school sales. Estimates are that 66% of U.S. students are distance learning at the start of this school year.
“Sitting here today, I don’t know if 30 days from now that number is going to be 6% or 96%,” said Cornell.
As for TGT investors, the stock rallied roughly 12% today. If you missed the mark on Target, you may want to wait for the shares to consolidate today’s gains before aiming at this high-flying retailer.
Best: More E-Commerce, More Power! (Various Grunts)
From the windows to the walls, every fixer-upper project and honey-do list must be scratched off by now.
Remember our chit-chat on home improvement yesterday? If you thought Home Depot Inc. (NYSE: HD) had hard-hitting earnings, Lowe’s Companies Inc. (NYSE: LOW) just threw Home Depot off “Hell in a Cell” to plummet 16 feet through an announcer’s table.
- Earnings: $3.75 per share, versus $2.95 expected.
- Revenue: $27.3 billion, versus $24.27 billion expected.
For reference, that’s a 30% revenue jump and an outstanding 68.7% surge in profit. Plus, every single U.S. region that Lowe’s runs in saw same-store sales grow over 30% — a pipe dream for many retailers even outside of a pandemic.
Remember, this increased profitability is at a time when Lowe’s also shelled out “…$460 million during the quarter on higher pay for hourly workers, store safety and supporting communities.”
The real secret? You guessed it: e-commerce (again). Lowe’s online sales more than doubled, soaring 135% this quarter as everyone hunted online for various thingamabobs and doohickies.
But what does LOW get in return for the blowout quarter? A measly 2% jump that washed away in today’s uncertain trading. Though, to be fair, LOW had a sizable run-up going into earnings, up over 140% from its pandemic LOWs, so profit-taking is expected.
Whether you get low with the LOW rally now is up to you and you alone … though, I will say this is exactly the type of well-run company with the right amount of online-shopping growth that we want to see in these pandemic earnings.
Who knew Lowe’s would beat Netflix Inc. (Nasdaq: NFLX) as the real stay-at-home pick?
To heck with it all — I’m building a writing shed, like Thoreau with Wi-Fi and Chex Mix!
It’s time once again to share your take on today’s hot topics. No, it’s not Reader Feedback day just yet — that’s tomorrow, by the way, so you still have time to drop us a line at GreatStuffToday@banyanhill.com!
So, how about the end of that bear market, huh? Everything’s all lollipops and teddy bears now if you haven’t heard — at least as far as the S&P 500 is concerned, and that’s all that matters, right?
OK, we’re shelving the snark for another day and another rant, but we’re not done talking about these heady all-time highs just yet. You’ve already heard our take — a correction is overdue, and gains today may not last till the morrow.
So, let’s talk about what you’re doing as the market reaches its crossroads: Are you holding out for more gains or prepping your portfolio for a pullback by taking some gains off the table?
Click below and let us know!
If you’re curious about last week’s poll, we asked you whether or not you would personally trust the new Sputnik V vaccine.
Yeah … it went about as expected, with 98% of Great Stuff readers hitting the “doubt” button. Then again, I don’t exactly think that Russia was going for “worldwide biotech blockbuster” to begin with.
Great Stuff: Buckle up, Buttercup
It was the greatest of ‘Stuff, it was the worst of ‘Stuff. Together, we’ve seen all-time highs and times that at least felt like the lowest of lows.
And through it all, you’ve left some pretty hilarious emails in our inbox!
Speaking of which, we’re digging into that Sarlaac pit of Reader Feedback goodness tomorrow, and we want you to be a part of it. Hey, if you don’t want to click on that poll right up there, why not share with us what’s on your mind in an email instead?
GreatStuffToday@banyanhill.com. We’ll catch up with you tomorrow.
Until next time, stay Great!
Editor, Great Stuff