Benzinga - by The Arora Report, Benzinga Contributor.
To gain an edge, this is what you need to know today.
Stock Buying Tempered Please click here for a chart of FedEx Corp (NYSE: FDX).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of FDX is being used to illustrate the point.
- FedEx is known as the bellwether of the economy.
- The chart shows a big fall in FDX stock after it reported earnings.
- The chart shows that prior to the earnings release, there was heavy volume with a slight drop in the stock. From a technical analysis point of view, this was a great indication that the stock might fall after earnings. This is a case where simply paying attention to volume would have worked.
- Most important for the macro picture is that revenues at FedEx fell.
- FedEx’s overall revenue fell 2.8%.
- Revenue in freight fell 3.8%.
- Revenue in express fell 5.6%.
- FedEx CEO Raj Subramaniam blamed a weak economic backdrop as well as “significant demand disruption” as reasons for declining revenues.
- We had previously shared with you that when the stock market is this overbought, something unforeseen always comes along to at least temper enthusiasm and often causes selling.
- In a normal overbought market, poor FedEx revenues would have caused a major drop in the overall stock market in the early trade. However, that is not the case today; there is only a slight drop in the early trade. The reason is that the stock market continues to be in the grip of market mechanics pushing the stock market to the upside.
- We wrote in yesterday’s Afternoon Capsule,
Note the difference in the VUD indicator today compared to yesterday. Yesterday the VUD indicator was solid green. The difference in the VUD indicator indicates that market mechanics are beginning to become less strong.
- Give it to the momo gurus – they are excellent at their job of running up the stock market in the disguise of analysis. Momo gurus have a narrative to persuade the masses to buy stocks and ignore the implications of FedEx earnings. Their new narrative is that FedEx earnings are not as bad as they could have been and that is a reason to buy stocks. All you have to do is look at the FedEx chart and see how the stock had run up going into earnings – you can quickly assess for yourself that the new narrative is bogus. If analysts were expecting bad earnings from FedEx, the stock would not have run up going into earnings like it did.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
United Kingdom There is encouraging news on inflation from the U.K. CPI came at -0.2% vs. 0.2% consensus month-over-month. CPI came at 3.9% vs. 4.6% consensus year-over-year.
Germany There is also encouraging news on inflation from Germany. PPI came at -0.5% vs. -0.2% consensus month-over-month.
Magnificent Seven Money Flows In the early trade, money flows are positive in Alphabet Inc Class C (NASDAQ: GOOG).
In the early trade, money flows are neutral in Microsoft Corp (NASDAQ: MSFT) and Tesla Inc (NASDAQ: TSLA).
In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ: AMZN), NVIDIA Corp (NASDAQ: NVDA), Apple Inc (NASDAQ: AAPL), and Meta Platforms Inc (NASDAQ: META).
In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is buying stocks in the early trade. Smart money is