The rally faded into the close yesterday, yet it was still a remarkable session for most of the market. Market breadth was solidly bullish, although not as strong as the prior session.
We are still a long way off the new 52-week highs witnessed the week before last. On the flip side, there were no 52-week lows on the New York Stock Exchange and only six on the NASDAQ Composite.
Market Breadth | NYSE | NASDAQ |
Advancing | 2,443 | 2,904 |
Declining | 761 | 997 |
52 Week High | 132 | 217 |
52 Week Low | 0 | 6 |
Up Volume | 3.11B | 4.29B |
Down Volume | 2.47B | 2.99B |
All S&P 500 sectors finished higher, but Financials (XLF) were the biggest winner for the session, as those big Wall Street Banks finally stepped up:
- #1 Morgan Stanley (MS)
- #2 Goldman Sachs (GS)
- #7 Bank of America (BAC)
- #14 JPMorgan (JPM)
S&P 500 Index | +1.39% |
Communication Services XLC | +1.53% |
Consumer Discretionary XLY | +2.12% |
Consumer Staples XLP | +0.67% |
Energy XLE | +1.09% |
Financials XLF | +2.42% |
Health Care XLV | +0.29% |
Industrials XLI | +2.12% |
Materials XLB | +1.32% |
Real Estate XLRE | +0.43% |
Technology XLK | +1.35% |
Utilities XLU | +0.82% |
Bye, Bezos
After the close, Amazon (AMZN) posted monster results:
- Revenue: $125.6 billion consensus $119.7 billion
- Earnings per share: $14.09 consensus $7.23
- Guidance: $106.0 billion consensus $95.50 billion
Initial shares popped, but then came word Jeff Bezos would soon be stepping down. He will hand over the job to Andy Jassy, who started at the company in 1997. Jassy is a self-taught technologist who built Amazon Web Services (AWS) into a juggernaut.
Despite his resume, the Street might make him wait for the kind of respect earned by the relentless founder and soon-to-be ex-CEO Jeff Bezos.
Amazon comments from earnings conference call from Briefing.com:
- Results for Q4 include approx. $4 billion in COVID-related operating costs, bringing total COVID-related costs for the year to more than $11.5 billion.
- Added 175,000 new full- and part-time employees in Q4 alone while continuing to build out its fulfillment and logistics networks; increased capacity was used to fulfill strong customer demand.
- Saw strong order volumes and holiday demand, driving sales growth throughout Q4, beyond peak sales days. Results reflected the continuation of stay-at-home demand trends.
- Prime members continued to shop with greater frequency and across more categories than before the pandemic began and continued to expand their engagement with digital benefits.
- Amazon expects increased Prime engagement to have a lasting impact on customer purchases even as COVID-19 conditions evolve.
- Impact of shifted timing of Prime Day contributed to sequential growth in the international segment in a more pronounced way than in the US; increased lockdown actions in the UK and Europe also drove sales.
- AWS is now a $51 billion annualized run rate business; backlog number stood at about $50 billion at year-end.
- Transportation expansion work is "not done yet." Infrastructure will remain a healthy part of Amazon's investments, including in enabling capacity for customers' cloud transitions.
- Notes that some cities are probably back to handling one-day levels of delivery service; forecasts continued improvement in managing backlog and volume, leading to greater and greater one-day percentages for Prime shipments.
- Reiterates that Jeff Bezos is "not leaving; he is getting a new job" and will continue to play an important role.
Hello, Google
Alphabet (GOOG) was lost in the after-hours hoopla, but the company delivered big time:
- Revenue: $56.80 billion consensus $53.54 billion
- Operating Income: $15.65 billion consensus $11.97 billion
- Earnings: $22.30 consensus $15.58
Shares of the stock took off in after-hours trading.
Game Stopped
GameStop (GME) shares finished down 60% after a day of trading halts and valiant efforts to regain traction. The restrictions are still too high, as the tide has turned on the stock for the moment.
In the middle of the session, the diamond hands crowd on WallStreetBets (WSB) got a pep-talk from Mark Cuban, who said he would hold if he were ‘long’. But he also said WSB would have to step up again as the shares continue to move lower.
A big key is redeploying from Robinhood to a platform without liquidity problems.
I think Mark is onto something here. I’m reluctant to share a strategy, since I am not in the idea, and I liked it before it moved into the stratosphere. But I sincerely do not believe the saga is over, especially if traders step up again. Make no mistake. The stakes are high, bias is to the downside, and I have no idea where support is under $80.00.
The Thinking on Reddit
Thinknum’s new Reddit Mentions dataset tracks the number of times NYSE and NASDAQ tickers are mentioned in the top 100 posts on r/WallStreetBets and r/Stocks in real-time.
Portfolio Review
We added to Industrials and took profits in Consumer Discretionary yesterday in our Hotline Model Portfolio. Today, we are adding to Technology.
Today’s Session
The January ADP report showed the private sector added 174,000 from December’s decline of 78,000, topping analyst expectation for a 50,000 rise.
- Small Business 1-49 employee+51,000
- Medium Business 50-499 employees +84,000
- Large Business 500+ employees +39,000
Goods Producing +19,000 | Service Providing +156,000 |
Mining 0 | Trade/trans/utilities +16,000 |
Construction +18,000 | Information -2,000 |
Manufacturing +1,000 | Financial Activities +1,000 |
Professional & Business +40,000 | |
Education & Health +54,000 | |
Leisure & Hospitality +35,000 | |
Other +10,000 |