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Testy Tuesday – S&P Tests 3,000 (again) on Strong Bank Earnings

Posted on the 15 October 2019 by Phil's Stock World @philstockworld

Testy Tuesday – S&P Tests 3,000 (again) on Strong Bank EarningsWhy are we in cash? 

Certainly it starts to feel like we're missing out as the indexes rally back near their highs but this is where we got off in mid-September and here we are, a month later, not quite back to where we were when we cashed out.  Some of the uncertainty is out of the way now – it looks like we will have a trade deal with China, no one seems to care that Trump is being impeached (no on trading), Brexit is likely to have no deal but will happen anyway and Bank Earnings, at least so far, aren't so bad-looking.

Of course I'd like to see more than one day of earnings before jumping back in but what really bothers me is that ALL these positive things happened and we're still struggling to get back to 3,000 on the S&P 500.  Even Apple (AAPL) has been leading us again. blasting back to $236 yesterday – up 20% since early August.  With all this "great" stuff going on – why is the broad index only back at 3,000?  Something is not right and, until we can see what that is – CASH!!! is still safer than equities.

Testy Tuesday – S&P Tests 3,000 (again) on Strong Bank Earnings
Of course we are picking up some bargains:  Just last Friday, we added Freeport McMorRan (FCX) to our Short-Term Portfolio in the Morning Report and that spread, with a target of $10, is already on track as FCX blasted 0.50 higher so far.  

Earnings season should give us plenty of opportunities to pick up cheap stocks as traders panic out of positions but it's too early in the cycle to start guessing which way they will go – even the banks presented a mixed bag this morning: 

  • Citigroup (C) had 3% lower Interest Revenues but beat low expectations by 0.02 on strong Consumer Debt Spending.
  • Wells Fargo (WFC) significantly missed on Earnings but Revenues were up slightly.
  • JP Morgan (JPM) had rising delinquency rates but overall Consumer Debt Spending boosted profits. 
  • Goldman Sachs (GS) missed Earnings and Revenues and took 67% more Loan Loss Provisions than last year – which indicates trouble ahead.  
  • Blackrock (BLK) had a really nice $84Bn of Net Inflows

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