Hotline Sample Report
This report is a sample for information purposes only. These recommendations are closed.
2/6/2024 10:09:34 AM Eastern Time FEEDING FRENZY Click here to download PDF version Only large-cap growth rallied yesterday, and now, it's becoming absurd. Moreover, market breadth was significantly worse than the -0.32% decline in the S&P 500 suggests. What’s more, the most telling deterioration is happening on the New York Stock Exchange (NYSE). Tough Sledding Only two sectors finished the session in the plus column. I’m very disturbed by the action in Real Estate (XLRE). And I’m even more concerned with the selling of regional bank stocks. I don’t think there is contagion to big banks. In fact, the Fed could use a crisis there to pump more money into the economy.
SLOOS The Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) on bank lending continues to see banks tighten somewhat and considerably on commercial real estate loans in all categories, including construction, nonresidential, and multifamily.
The real risk comes with the wave of refinances scheduled around the corner. Momentum Darlings Only the momentum darlings are getting love, and it's borderline cult-like. Moving to Technical and Behavioral From our three-pillar system, fundamentals are playing a very limited role, as groupthink and panic buying, coupled with moves through key chart levels, have created a limited feeding frenzy. This will bring key support points into play on the downside. Portfolio Approach We are adding a new position in Communication Services (NFLX) this morning in the Hotline Model Portfolio. Today’s Session The market is opening higher, but the buying continues to become even more narrow. Momentum names have gone off the rails and are skewing the overall market more than ever. According to sentiment trader:
Since 1928, that's only happened once before: August 8, 1929. Meanwhile, the spike in the ten-year treasury raises a yellow flag. In addition, inflation expectations are also moving higher. This morning, Deutsche Bank moved into the ‘no recession’ camp, leaving a handful of firms, when it was once unanimous. The problem with all these firms becoming so optimistic is they are also looking for a tidal wave of rate cuts (although DB lowered their count). I don’t think they can have both.
Long Idea: NetFlix Inc. (NFLX) @ $564.12
BACKGROUND: Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. It has operations in approximately 190 countries. The company was incorporated in 1997 and is headquartered in Los Gatos, California. SKINNY: Netflix streaming reflects growth across all regions with Poland Netflix with the largest market share. Revenues continue to rise, and margins continue to expand. Our target is $700.
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