It’s an extremely lackluster session without any economic data releases, and big earnings reports are coming later in the week. 

Session Themes

Earnings Letdowns

The earnings release of the session is Kimberly-Clark (KMB), which posted a miss, but it initially saw its shares higher in part to the announcement of a new CEO.  The trading range on the stock has been a wild ride.

• Previous Close $110.23
• High $112.40
• Low $104.86

The company has no pricing power, consequently, sales declined 2% from a year ago and operating margin declined to 14.6% from 18.4%.  Personal care margins held up, but tissue plunged to 14.4% from 17.5%.  I’m sure there was hope the company would post the kind of surprise that made Proctor and Gamble (PG) a big winner last week.

Upgrades

• Amazon (AMZN) fetched a $2,400 target at Credit Suisse
• Ulta Salon (ULTA) received a higher target of $286 from Piper Jaffrey
• Lulu Lemon (LULU) got a strong buy rating

Sector Resolve

I like the action in retailers, with several making nice reversals, even as major indices sink lower.

• Ralph Lauren (RL)
• Macy’s (M)

Rumor of the Day

Then, there’s the rumor that Facebook (FB) is on the prowl for a cyber security acquisition.  Lots of names have been mentioned, but remember, Facebook caught the attack on the DNC in July with the help of FireEye (FEYE).

Other names mentioned:

• Palo Alto Networks (PANW)
• Check Point Software Technologies (CHKP)
• Splunk (SPLK)

China technology names started the session off with oomph, as major China exchanges rallied on news of lower tax rates to buttress the economy. 

Summation

It remains a brutal market beneath the surface, even as all the major indices remain higher for the year.  There are not just more losers than winners in the S&P 500, but there is significant carnage in the market. 

• Stocks Down in 2018 - 274
• Stocks Down 10% - 71
• Stocks Down 20% - 77

That said, we are prepping for a big year-end rally that will lift all boats, but the winners will see major percentage gains.  

 

Comments

Charles, as I was watching your show on Fox Business this afternoon with my wife, I mentioned how much I appreciate your market analysis and steady hand in giving guidance. My wife said that she really likes your suits and ties, and you should give a big kudo to whoever is picking them out for you. Just thought I'd pass that on to you........ George Elliott on 10/22/2018 5:51:58 PM

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