Pressure seems likely despite positive impact of Netflix results, Tuesday's rally

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Despite the glowing results of Netflix, it seems that the market could retreat early Wednesday after Tuesday's huge advance. Profit-taking could be a factor, and investors could also consider a slight rise in Treasury yields.

The big story today is without a doubt Netflix gains, that we will arrive in a moment. The publication of the Fed's minutes this afternoon and the results of Abbott Labs and the United States of America Bancorp are part of Wednesday's calendar, but nearly 90% of reporting companies have exceeded expectations of Wall Street analysts.

Nevertheless, the bias seems to be mainly lower for the moment, partly because of the slight rise in Treasury yields and the rise of the dollar against the euro and the pound. A more pronounced than expected decline in UK inflation, announced on Wednesday, could help support the dollar, resulting in some weakness in the commodity market. Crude appears to be one of the victims and has dropped slightly in the beginning.

At present, it is not clear whether Tuesday's rally was a "dead cat bounce" or whether the market was building a base. We have just finished an incredible day. It would not be unusual to see profits, especially from the investors who bought the dive and could now withdraw a little from the table. The market could give up a bit of ground early and we'll see what happens next.

However, unlike the major losses in February, when the situation was relatively relaxed, this pattern of coming and going looks likely to last for some time, with persistent volatility. The volatility index Cboe was under 18 on Wednesday early after climbing above 25 last week, but think about watching it closely to return to above 20.

Netflix Engineers an inversion

To reverse a football call, a coach must throw a red flag on the court. Well, Netflix has probably made its flag-throwing version on Tuesday and reversed the lack of subscribers from the previous quarter. The video streaming giant has announced a growth of nearly 7 million subscribers to the 3Q, far exceeding management forecasts of 5 million, against 5.15 million in Q2.

It really looked like a reversal of the last time when Netflix Over-promised and undelivered on subscriber numbers and the stock was slammed. This time, equities rose 11% in pre-market transactions and could give Nasdaq a boost. These are good results.

Earnings of 89 cents per share for Netflix easily overestimated by a consensus of 68 cents, while revenues of $ 4 billion were up to expectations. The FAANGs seem to have a good start, with one less company and four more to come.

IBM revenue growth returns to red

The news did not look as promising as at IBM, where revenue fell after a rise in the previous quarter for the first time in years. Stocks fell 4% in the aftermath of the earnings report, after IBM reported a total business figure of $ 18.76 billion, lower than the consensus expectations of third parties, at $ 19.1 billion. Earnings per share of $ 3.42, however, exceeded estimates of two cents.

Perhaps more importantly, the company's share of strategic business revenue – which includes cloud computing and data analytics – declined in the third quarter to less than 50 percent of total revenues, at $ 9.3 billion, compared with $ 10.1 billion in the second quarter.

On the other hand, IBM's problems do not necessarily affect the entire industry and could be positive for other companies in the industry if they win IBM shares. The demand for cloud computing will not go away, but a possible transfer of IBM to competitors. The shares of Adobe, another cloud market company, grew nearly 10% after a 20% business growth forecast over the previous year.

Out of the woods? Not necessarily

So, the 2% rise recorded Tuesday in major US indices means that the benefits of last week's sale are over? Probably not, for various reasons, we will discuss below. Nevertheless, the biggest rise in a day since March seemed to indicate that investors may have begun to focus more on earnings and less on the geopolitical and rate issues that have contributed to slowing things down earlier this month. .

It is probably too early to be optimistic. Movements like those of the market generally take three to five days to come true. Volatility, although lower than at its peak, remains high. Many investors still do not know where to put their flag, as last week's quicksand remains unstable. Tuesday could be one of those good days to position itself where the market is trading, but think it's "best of all, the witch is dead" when it comes to volatility and sharp fluctuations. market would probably be a mistake.

Tuesday's recovery was led by information, health care and communications services, but all sectors advanced and markets approached their highest. It should also be noted that neither crude nor bond yields really moved as the stock market rallied. The 10-year benchmark rate appears to have remained neutral near 3.15% this week, and crude oil has fallen to $ 70 a barrel after breaking the $ 75 mark recently. The rallies in these two markets have no doubt helped to curb the actions last week.

Generally strong earnings so far, but it is still too early

Until now, at the start of the season, reporting companies are posting gains above their historical rate. That said, about 20% of the S & P 500 gains will be completed by the weekend. The road ahead is long.

Investors finally seem to reward big banks for their strong quarters. Morgan Stanley rose more than 5% on Tuesday after surpassing Wall Street estimates and posting strong investment banking results. The Goldman Sachs stock rose 3% after a similar performance in the third quarter. Financial services are still down for the year and far behind the market in general, but Tuesday may have helped to reinforce an image of the sector that looks pretty good.

Health care ranked second among industry leaders after Tuesday's information technology, with Johnson & Johnson reporting strong third quarter results of nearly 3% and UnitedHealth Group. Biotech shares all of the underperformed healthcare, with gains well above 4% on Tuesday, but the biotech sector remains well above last month's highs. Some analysts are worried about the risks of new pressures from Washington on the price of drugs in the coming months, which may weigh on biotechnology stocks, but that did not seem to bother Tuesday, at least.

Breadcrumb trail: If you want to be "technical" about it, the S & P 500 has left a trail of key levels in its wake as it quickly plunged into tech support last week. These levels could be like proverbial breadcrumbs that investors will need to watch if the market finds a way to continue climbing out of the valley. The S & P 500 has already surpassed what one might call the "level one" or the 200 day moving average, which was 2767 in the approach of Tuesday. This average has been a key level of support almost throughout the year. The next step could be 28-day moving average of 2823, followed by another point of resistance at 2872 – the reading where the market rebounded in late January before correcting.

The absolute record recorded at the end of September, just under 2941, a few weeks ago, is well above. The march is still long and there is no guarantee that the market will not test the bottom of last week, 2710. Although the past is not necessarily a prelude, remember that stocks rebounded sharply in early February, after reaches a low point, before retesting them. a new low for the year (so far) in April. We are not yet at the end of our sentences. Let's hope that the breadcrumbs are not used up.

Looking to rent? Normally, job openings that reach an all-time high could be an encouraging sign for stock market investors, but this is not necessarily the case this time around. The survey of job openings and job rotation in August (JOLTS) climbed to 7.14 million euros, according to Ministry of Labor data released Tuesday. To understand how much this figure has increased this year, consider that there had never been a month with 6 million until mid-2017. This demand for workers probably highlights the harsh climate of the companies and could perhaps interest the companies to develop their activities.

All this is undoubtedly positive for the economy and the market. The only thing to fear is that the number of unemployed by job opening continues to decline. Just four years ago, there were two unemployed people for every vacancy. In August, there were less than one, said the Department of Labor. Companies that have difficulty filling their positions may have to pay the right worker or not be able to find it. Higher wages and fewer workers can sometimes result in inflation or stifle business growth plans.

Risk hug: When stock and treasury markets fell last week, investors also pulled out billions of corporate bonds, notes the Wall Street Journal. However, the paper noted a difference: investors sold more investment grade bonds than high yield bonds, or "junk" bonds. According to the newspaper, this might mean the absence of a "systematic escape from risk". Throughout the year, the Wall Street Journal noted, investment grade bonds underperformed high risk debt. BBB-rated bonds – the lowest for high-quality debt – are half the prime index, the highest for more than 15 years. For investors, this means more risk of downgrading and possible losses, said the Wall Street Journal. Many high-risk companies have borrowed in burgeoning credit markets. With interest rates still on the rise, investors may want to re-evaluate corporate bond positions to ensure their portfolios remain well-balanced and not overly geared towards higher-risk assets, which could have -be more difficult to repay their loans if the economy slows due to rising rates.

Comment TD Ameritrade® for educational purposes only. ISPC Member.

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Despite the glowing results of Netflix, it seems that the market could retreat early Wednesday after Tuesday's huge advance. Profit-taking could be a factor, and investors could also consider a slight rise in Treasury yields.

The big story today is without a doubt Netflix gains, that we will arrive in a moment. The publication of the Fed's minutes this afternoon and the results of Abbott Labs and the United States of America Bancorp are part of Wednesday's calendar, but nearly 90% of reporting companies have exceeded expectations of Wall Street analysts.

Nevertheless, the bias seems to be mainly lower for the moment, partly because of the slight rise in Treasury yields and the rise of the dollar against the euro and the pound. A more pronounced than expected decline in UK inflation, announced on Wednesday, could help support the dollar, resulting in some weakness in the commodity market. Crude appears to be one of the victims and has dropped slightly in the beginning.

At present, it is not clear whether Tuesday's rally was a "dead cat bounce" or whether the market was building a base. We have just finished an incredible day. It would not be unusual to see profits, especially from the investors who bought the dive and could now withdraw a little from the table. The market could give up a bit of ground early and we'll see what happens next.

However, unlike the major losses in February, when the situation was relatively relaxed, this pattern of coming and going looks likely to last for some time, with persistent volatility. The volatility index Cboe was under 18 on Wednesday early after climbing above 25 last week, but think about watching it closely to return to above 20.

Netflix Engineers an inversion

To reverse a football call, a coach must throw a red flag on the court. Well, Netflix has probably made its flag-throwing version on Tuesday and reversed the lack of subscribers from the previous quarter. The video streaming giant has announced a growth of nearly 7 million subscribers to the 3Q, far exceeding management forecasts of 5 million, against 5.15 million in Q2.

It really looked like a reversal of the last time when Netflix Over-promised and undelivered on subscriber numbers and the stock was slammed. This time, equities rose 11% in pre-market transactions and could give Nasdaq a boost. These are good results.

Earnings of 89 cents per share for Netflix easily overestimated by a consensus of 68 cents, while revenues of $ 4 billion were up to expectations. The FAANGs seem to have a good start, with one less company and four more to come.

IBM revenue growth returns to red

The news did not look as promising as at IBM, where revenue fell after a rise in the previous quarter for the first time in years. Stocks fell 4% in the aftermath of the earnings report, after IBM reported a total business figure of $ 18.76 billion, lower than the consensus expectations of third parties, at $ 19.1 billion. Earnings per share of $ 3.42, however, exceeded estimates of two cents.

Perhaps more importantly, the company's share of strategic business revenue – which includes cloud computing and data analytics – declined in the third quarter to less than 50 percent of total revenues, at $ 9.3 billion, compared with $ 10.1 billion in the second quarter.

On the other hand, IBM's problems do not necessarily affect the entire industry and could be positive for other companies in the industry if they win IBM shares. The demand for cloud computing will not go away, but a possible transfer of IBM to competitors. The shares of Adobe, another cloud market company, grew nearly 10% after a 20% business growth forecast over the previous year.

Out of the woods? Not necessarily

So, the 2% rise recorded Tuesday in major US indices means that the benefits of last week's sale are over? Probably not, for various reasons, we will discuss below. Nevertheless, the biggest rise in a day since March seemed to indicate that investors may have begun to focus more on earnings and less on the geopolitical and rate issues that have contributed to slowing things down earlier this month. .

It is probably too early to be optimistic. Movements like those of the market generally take three to five days to come true. Volatility, although lower than at its peak, remains high. Many investors still do not know where to put their flag, as last week's quicksand remains unstable. Tuesday could be one of those good days to position itself where the market is trading, but think it's "best of all, the witch is dead" when it comes to volatility and sharp fluctuations. market would probably be a mistake.

Tuesday's recovery was led by information, health care and communications services, but all sectors advanced and markets approached their highest. It should also be noted that neither crude nor bond yields really moved as the stock market rallied. The 10-year benchmark rate appears to have remained neutral near 3.15% this week, and crude oil has fallen to $ 70 a barrel after breaking the $ 75 mark recently. The rallies in these two markets have no doubt helped to curb the actions last week.

Generally strong earnings so far, but it is still too early

Until now, at the start of the season, reporting companies are posting gains above their historical rate. That said, about 20% of the S & P 500 gains will be completed by the weekend. The road ahead is long.

Investors finally seem to reward big banks for their strong quarters. Morgan Stanley rose more than 5% on Tuesday after surpassing Wall Street estimates and posting strong investment banking results. The Goldman Sachs stock rose 3% after a similar performance in the third quarter. Financial services are still down for the year and far behind the market in general, but Tuesday may have helped to reinforce an image of the sector that looks pretty good.

Health care ranked second among industry leaders after Tuesday's information technology, with Johnson & Johnson reporting strong third quarter results of nearly 3% and UnitedHealth Group. Biotech shares all of the underperformed healthcare, with gains well above 4% on Tuesday, but the biotech sector remains well above last month's highs. Some analysts are worried about the risks of new pressures from Washington on the price of drugs in the coming months, which may weigh on biotechnology stocks, but that did not seem to bother Tuesday, at least.

Breadcrumb trail: If you want to be "technical" about it, the S & P 500 has left a trail of key levels in its wake as it quickly plunged into tech support last week. These levels could be like proverbial breadcrumbs that investors will be able to monitor if the market finds a way to continue climbing out of the valley. The S & P 500 has already surpassed what one might call the "level one" or the 200 – day moving average, which was 2767 in the approach of Tuesday. This average has been a key level of support almost throughout the year. The next step could be 28-day moving average of 2823, followed by another point of resistance at 2872 – the reading where the market rebounded in late January before correcting.

The absolute record recorded at the end of September, just under 2941, a few weeks ago, is well above. The march is still long and there is no guarantee that the market will not test the bottom of last week, 2710. Although the past is not necessarily a prelude, remember that stocks rebounded sharply in early February, after reaches a low point, before retesting them. a new low for the year (so far) in April. We are not yet at the end of our sentences. Let's hope that the breadcrumbs are not used up.

Looking to rent? Normally, job openings that reach an all-time high could be an encouraging sign for stock market investors, but this is not necessarily the case this time around. The survey of job openings and job rotation in August (JOLTS) climbed to 7.14 million euros, according to Ministry of Labor data released Tuesday. To understand how much this figure has increased this year, consider that there had never been a month with 6 million until mid-2017. This demand for workers probably highlights the harsh climate of the companies and could perhaps interest the companies to develop their activities.

All this is undoubtedly positive for the economy and the market. The only thing to fear is that the number of unemployed by job opening continues to decline. Just four years ago, there were two unemployed people for every vacancy. In August, there were less than one, said the Department of Labor. Companies that have difficulty filling their positions may have to pay the right worker or not be able to find it. Higher wages and fewer workers can sometimes result in inflation or stifle business growth plans.

Risk hug: When stock and treasury markets fell last week, investors also pulled out billions of corporate bonds, notes the Wall Street Journal. However, the paper noted a difference: investors sold more investment grade bonds than high yield bonds, or "junk" bonds. According to the newspaper, this might mean the absence of a "systematic escape from risk". Throughout the year, the Wall Street Journal noted, investment grade bonds underperformed high risk debt. BBB-rated bonds – the lowest for high-quality debt – represent half of the prime index, the highest number in more than 15 years. For investors, this means more risk of downgrading and possible losses, said the Wall Street Journal. Many high-risk companies have borrowed in burgeoning credit markets. With interest rates still on the rise, investors may want to re-evaluate corporate bond positions to ensure their portfolios remain well-balanced and not overly geared towards higher-risk assets, which could have -being more difficult to repay their loans if slows because of rising rates.

Comment TD Ameritrade® for educational purposes only. ISPC Member.