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Morning Commentary

THE LESSON OF EARNINGS SEASON: DON'T GET FRUSTRATED

By Charles Payne, CEO & Principal Analyst
10/23/2020 9:37 AM

Question of the Week

Who do you think won last week's presidential debate, and did it sway your opinion on who you will vote for?

Post your answer below.

After meandering most of the session on Thursday, the market finally attracted buyers. All the major indices finished higher, and market breadth was solidly bullish. During the session, however, something interesting happened.

The hottest stocks fell back, as the struggling stocks came on like gangbusters.

Market Breadth

NYSE

NASDAQ

Advancing

2,113

2,192

Declining

938

1,295

52 Week High

49

72

52 Week Low

26

40

Up Volume

3.23B

2.22B

Down Volume

801.24M

1.04B

 

Positioning for New Normal

It’s becoming a worn-out phrase because, in the end, the more things change, the more they stay the same. We are going to live, shop, drive, work, and play. But how we do these things and where we do these things are changing. 

Here’s the rub; Wall Street is cheering about those changes. We have already seen the so-called work from home stocks rocket into the stratosphere. Yesterday, we saw the Street cheer about the announcement from Gap Stores (GPS) that it will close stores across North America over the next few years. By 2023, 80% of its revenue will come from e-commerce and off-mall locations.

That news sent shares of Gap Stores soaring, bringing brick-and-mortar retailers along for the ride.

Another big winner was Southwest Airlines (LUV), which is bringing back the middle seat. While their rivals dither, the nation’s former premier airline is getting back to a new normal.

Priced for Perfection?

Pulte Homes (PHM) posted great financial results that saw results for revenue and earnings come in better than Wall Street consensus. But shares were under pressure throughout the session. It was a frustrating session for shareholders, especially considering more housing data that underscores the boom is only gaining strength.

Existing-Home Sales came in at +9.4% month-over-month, and 20.9% from a year ago to an annual rate of 6,540,000.

Existing-Home Sales

The rich get richer, as the biggest percentage changes have occurred in the most expensive price range.

Earnings Gyrations

We saw a lot of companies post monster results that initially sent shares erupting higher, and then as the session moved along, those gains evaporated. I know it is so frustrating, especially for investors that bought those stocks on the good news. This is also why I often take profits before earnings are released even when I know the business is doing great.

We took profits on Whirlpool (WHR) at $201.00 a share. Yesterday, the stock closed at $193.00 despite a dream quarter. The great news is when these stocks stumble, and when it seems they have done everything right, opportunities are created. But it’s confusing, and it’s a major reason why folks must understand what they own.

Presidential Debate

I am dismayed that the economy wasn’t the main topic. I think it moved the needle for President Trump, but media headlines and teleprompter scripts were biased before the debate began. I do worry about the hostile tone from Joe Biden when he talked about the stock market. Any attempt to crush the stock market will destroy Main Street.

Over half the homes in the nation own stocks, and it’s still a pretty good proxy for the direction of the overall economy.

Hotline Model Portfolio Approach

Yesterday, we took profits in CAR (Industrials).  While we typically do not take a profit in the Hotline Model Portfolio so quickly, it was up +27.2% from the suggested entry in eight days, while the S&P 500 was down -2.0%. If you are not a current Hotline subscriber, call your account representative or email Info@wstreet.com to get started today.

Today's Session

We are going to be on stimulus watch, although there is nearly zero percentage chance, and the pattern of the market is fading quickly after fast starts.


Comments
I made my mind up last night. Biden has done nothing for our country. They have been presenting him as a kind and gentle old man! He is not. I am in healthcare and can tell you Trump did everything he could. Tbis is a serious virus and it will continue. No one could have done any better. I am voting RED all the way!

Jan Blume on 10/23/2020 9:11:30 AM
Trump Wins. Confused Biden just doesn’t know. He should definitely not be running for The President of the United States. He’s frail. It’s actually Scary.

Joe on 10/23/2020 10:01:31 AM
Biden has been an ineffectual stooge for China and Russia for the past 47 years, reaping millions through graft and corruption. Trump will bring about further prosperity to all socioeconomic levels through his policies and reduced regulation. Trump loves his country, Biden uses his country for personal gain.

Matthew Lovitt on 10/23/2020 10:06:53 AM
Trump

Martin Meade on 10/23/2020 10:09:04 AM
I will vote for Donald Trump because he is a fighter for the average man, he is strong, and he speaks straight and keeps promises in the face of adversity. Biden seemed stronger but he is not a leader.

alice copeland on 10/23/2020 10:16:19 AM
There was good exchanges and I think it was a tie and won't swing many voters. Now if Biden's sons foreign business dealings scandal in the next couple of weeks uncovers that Joe is definitely lying then Trump will edge him out as Trump exposed the story that the main stream media is covering up.

Mark Mitchell on 10/23/2020 10:16:21 AM
President Trump was outstanding in stating truth and facts, but when largesse came up he missed the opportunity to state he does not accept his President Salary but returns it to the US government.

Catherine F Jensen on 10/23/2020 10:17:14 AM
The President

Michael Antzas on 10/23/2020 10:18:38 AM
Pres. Ttump won by a mile. To late to change minds...stick with a winner.

Jay D Millspaugh on 10/23/2020 10:24:34 AM
I think Biden was given the questions before hand, that's why he stayed in the basement for 2 days so he can brush up on his answers. I don't see anyone changing their mind over the debate. I know I certainly didn't. I'm a democrat by registration only. But, I haven't voted for democrats in a long time now. I don't believe in their liberal policies, their lies, their conniving ways, and the way the news always bashes Trump every chance they get. All they can do is say what he does wrong, but never gives him credit for all the good things he has done for this country.

Sal Arnone on 10/23/2020 10:32:18 AM
We attended Trumps rally in Janesville Wisconsin last week. His speech was somewhat canned and you can catch it on the news most nights. However, what we saw that impressed us so was how warm and humorous he is and how very much he loves his country and fellow Americans. I am so proud and happy that he is my President!

Gordon Tormohlen on 10/23/2020 10:41:33 AM
Trump has earned the right to be president for four more years he has promised us improvement he’s delivered on his promises and I expect he will do the same for four more years whereas Biden has proven his cut from the same cloth as Hillary Clinton and a political character at best

Gary on 10/23/2020 11:01:41 AM
President Trump...he performed much better this time. Trump was effective bringing the Hunter laptop scandal to the forefront. He had Biden on the defense, which made him go to his talking points instead of addressing the issue at hand.

Beth Cage on 10/23/2020 11:20:07 AM
Agree totally with Sal. Some of the questions were totally irrelevant and from left field, such as the one regarding “people of color who live near energy producing plants”. HUH? But Biden had a ready made answer about his life experience of 65 years ago when he was a kid. Neither the question or answer made sense but solidified my belief that the questions were spoon fed to Biden last week.

Steve Buchanan on 10/23/2020 11:21:44 AM
Trump did well ....Biden made up his truths as he needed to keep afloat.

Pat Johnson on 10/23/2020 11:38:31 AM
President Trump kicked Biden ass!

G. Brandin on 10/23/2020 11:43:55 AM
The winner was that GUY who the deep state and lame stream media hate for exposing the corruption.

John on 10/23/2020 11:46:38 AM
Trump won debate. I’ve also voted for Trump.

William Finland on 10/23/2020 12:04:56 PM
Donald Trump was on it. I think he was angry at the last debate-which he has a right to be. They treat him horrible. I also think they are giving Biden some enhanced drug for his memory or he wouldn't have been as good as he was last night.

KATH on 10/23/2020 12:18:38 PM
As a naturalized US Citizen from Hungary & life long independent voter I found Biden’s evasive and fear mongering answers as a prelude to his & Democrats motives to turn the USA into a socialist quagmire. President Trump deserves a second term!

Jim P on 10/23/2020 12:52:27 PM
Definitely Our President won, BIG !!!

Liz Clark on 10/23/2020 1:42:05 PM
The debate revealed why President Trump must be reelected. Joe Biden is not up to the demanding task and, for all to see, we got a glimpse at what he and his party really represent. Trump is a problem solver. Biden is a life long failed politician.

Jamie on 10/23/2020 3:04:18 PM
Trump!!!!!!

J Pond on 10/23/2020 3:09:07 PM
Favorable Trump Growth and Prosperity Contrasted with Anti-Growth , Biden: Dark Gloom of Lock-downs, Taxes and Regs.

steven hungerford on 10/23/2020 3:35:02 PM
I just wish president Trump would articulate that He cannot tell 50 individual states what to do about Health, Education and Welfare [see 10th Amend. to Constitution!]. Only State Governors have that Executive capacity under the the American constitution. Practically speaking, the Governors know best what their "LOCAL" population is experiencing. Lastly , while opening up the economy and stressing mixed Science and "Med. Experts" opinions, people are expected to be informed and adult and practice the sanitary and Flu preventions that help them overcome their fears of contagion. Conclusion : Prosperity and Smart Health to all.

steven hungerford on 10/23/2020 3:46:01 PM
Trump won by a landslide. Wish it had been a few weeks earlier before America began voting.

Leelee Clement Doughty on 10/23/2020 3:55:32 PM
Trump won the debate.

John Johnson on 10/23/2020 5:06:33 PM
Trump won. He actually speaks. His opponent seems artificial, like those dolls where you pull a cord and it says some standard phrase.

Patricia Flynn on 10/23/2020 7:38:20 PM
T R U M P
2 0 2 0

Jack Lukse on 10/24/2020 11:11:48 AM
Trump mopped the floor with Lying Biden

Joseph L Metzger on 10/24/2020 11:57:33 AM
Trump won. Biden reminds my wife and me of her dad just before his Alzheimer’s began

Richard Hart on 10/24/2020 12:32:03 PM
If you work and pay taxes you have only one option

TRUMP!!!!!!

Matthew Konnick on 10/24/2020 6:23:54 PM
Biden is decent. Trump ain't! Biden won!

Jeff French on 10/24/2020 8:49:59 PM
I’ve been a Trump supporter since the “Escalator”! But am really worried that even a good performance against a Biden who is so out of it, lying constantly, might be impossible.

Jamie Head on 10/26/2020 2:52:51 PM
President Trump won the debate. Biden is hiding from the truth about his dealings with China. Definitely voting for Trump. If Biden wins, he won’t be in office long. It will be President Harris because the money people behind this campaign (Soros) have already laid out that plan!

Theresa Robbins on 10/26/2020 3:04:36 PM
Trump. No change if mind. More jobs, higher wages, more equal opportunity for anyone, programs that actually get results

sky416 on 10/28/2020 8:21:45 AM
Trump won. I was always going to vote for Trump. After the last 4 years and what the Dems have put this country thru, not to mention what they have put the Trump family thru, I will never vote for a Democratic ever again.

Kim Ely on 10/30/2020 8:39:22 AM
Trump won and we VOTED FOR HIM DURING THE WEEK.

Frank Jones on 11/2/2020 9:08:11 AM
Trump won the debate because he got Biden to disclose that he was going to shut down Oil and Gas industry.

Debbie Waggener on 11/2/2020 10:01:45 AM
I may be biased but of course the President won! Joe Biden is where my 91-year old mother was 3 years ago. I also ran the assisted living with the dementia unit for the last 4 years of my career. I think Biden is the sacrificial lamb and I am totally disgusted with his family that they would allow him to be used like this. I also believe he knew the questions. There is no way he thinks that well on his feet as we have seen over the campaign. He gets angry when he is asked serious questions. We are small business owners in California and are thrilled to vote for President Trump for 4 more years. PS Dems are downright mean. It's like they are the popular kids and if you go against them, you are scorned.

Cheryl Fewell-Brown on 11/3/2020 12:20:02 PM
Hands down President Trump! He never gets fair media, and has been awesome! Joe Biden speaks in “words” that no one knows what he is talking about. Shame on his wife for not telling him to quit.

Peggy Sandoval on 11/3/2020 2:14:06 PM
 

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