And, just like that, we're testing Nasdaq 14,700 again.
It's actually a good thing to test the bounce line from above – it can help give us confidence it will hold and, if it doesn't – back to bearsh very quickly for our portfolios! As we expected, the quick market rally had built a real house of cards in the indexes and it only took a miss from one major company (FB) to knock the whole thing down.
Don't forget we're expecting a weak NFP Report tomorrow morning so we'll see how brave today's dip-buyers are going to be. FB dropped $175Bn in value overnight as the company said it expects growth to slow after the pandemic (duh). Note they haven't said it would decline – which is more likely to happen. Meta cited inflation as a weight on advertiser spending and estimated that ad-tracking changes introduced by Apple Inc. last year would cost Meta some $10 billion this year. They also lost about a Million daily users globally and stagnated in the U.S. and Canada, two of the company’s most profitable markets.
During the call, Zuckerberg and other executives repeatedly emphasized that Meta faces stiff competition from TikTok for users’ time, particularly the younger demographic. Facebook’s business under pressure on a number of fronts at a moment when Zuckerberg is betting the company’s future on VR headsets, AR glasses and virtual worlds, known as the Metaverse, in which users can live and work. On the whole though, the company reported a $10.3 billion profit for the fourth quarter, only slightly below analyst expectations of $10.9 billion but, as I keep saying, these valuations are unsustainable in the face of reality:
Lost in the headlines of Meta's miss is Amazon (AMZN) being hit by labor shortages and supply-chain issues and they will be reporting this evening. God help us all if they disappoint! It is already expected that earnings will be down to $3.63 per share vs $14.09 last year – anything worse than that can give us another huge sell-off. AMZN accounts for 41% of all on-line sales but, of course, people getting out of the house again is not going to help their business, nor is inflation that eats into their retail profits (since they generally don't control the products they…
You must login to see all of Phil's posts. To read the rest of this article now, along with Phil's live intra-day comments, live trading ideas, Phil's market calls, additional member comments, and other members-only features - Subscribe to Phil's Stock World by clicking here.
To signup for a free trial membership, click here.
Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!
