July 19th Market Overview

Happy Friday everyone,

“I see red people” is the quote of the day. Sell volume indicates a risk off environment and Ill be adding a very special section on risk management strategies at the bottom of this overview. 

The only positions I’m in now are ones that are small enough where I don’t think of them before bed.

Lets dig in…

Executive Summary

1. Market Volatility Expected: Option expiration day coupled with a shift into a negative volatility skew could lead to amplified market movements…not to mention our presidential race into Nov.

2. Strong Earnings Reports: Notable earnings beats from Netflix (NFLX), American Express (AXP), and Intuitive Surgical (ISRG), with NFLX showing impressive customer additions.

3. CrowdStrike Outage Impact: Significant global disruptions caused by a CrowdStrike update, affecting various industries including airlines and emergency services.

4. Geopolitical and Policy Updates: Insights on potential Biden’s presidential candidacy withdrawal, Middle East conflicts, and ECB’s monetary policy stance.

Market Overview

• Premarket Data: Indicators suggest a volatile trading session due to the expiration of options and negative gamma conditions.

• Key Indices: Tracking movements over the course of the trading day, the S&P 500, NASDAQ, and Dow Jones show varied responses to mixed earnings and geopolitical news.

Key Market Drivers

• Earnings Reports: Significant beats from NFLX, AXP, and ISRG driving individual stock movements.

• CrowdStrike Outage: Affecting multiple sectors, leading to operational disruptions worldwide.

• Economic Policy: Developments from the ECB and possible shifts in the U.S. presidential race creating an uncertain environment.

Stock Spotlight

1. Netflix (NFLX)

   • Earnings Beat: EPS of $4.88 and revenue of $9.56B, with substantial net customer additions.

   • Strong Guidance: Raised full-year outlook with progress in ads business and new product offerings.

2. American Express (AXP)

   • Earnings Beat: EPS of $3.49, though revenue miss at $16.33B.

   • Forward Guidance Raised: FY 2024 EPS guidance increased, strong card acquisition numbers.

3. Intuitive Surgical (ISRG)

   • Earnings Beat: EPS of $1.78 and revenue of $2.01B.

   • Operational Strength: Increased installations and procedure growth for Da Vinci systems.

Other Magnificent 7 Updates

• Tesla (TSLA): Trump’s comments on ending the EV mandate could affect market sentiment.

• Microsoft (MSFT): Down due to CrowdStrike-related outages.

• Amazon (AMZN): Similarly impacted by the CrowdStrike issues.

• Nvidia (NVDA): Global outage affecting GeForce now linking with Xbox accounts.

• Meta (META): Zuckerberg’s neutrality in political endorsements.

• Apple (AAPL): In discussions to license more Hollywood films.

Other Notable Company News

• SentinelOne (S): Rising as alternative to CrowdStrike amidst outage issues.

• United Airlines (UAL), American Airlines (AAL), Delta (DAL): Ground stops due to communication issues, severe operational impact.

• ARM Holdings (ARM): Upgraded by Morgan Stanley with price target of $190.

• Ford (F): Trump comments on EV mandate impacting stock.

• Hawaiian Electric (HE): Settlement for Maui wildfire lawsuits.

• Plug Power (PLUG): Announced $200M share offering.

• Southwest Airlines (LUV): Operating normally despite wider industry issues.

• Penn Entertainment (PENN): Employee layoffs announced. (100+)

Sector Watch

• Technology: Mixed performance due to sector-specific outages.

• Financials: Strong earnings from AXP but concerns over revenue misses.

• Healthcare: Positive earnings from ISRG suggests sector strength.

• Consumer Discretionary: NFLX shines with strong quarter, boosting sentiment.

Bond Market

• Treasury Yields: Watching for any shifts in yields as market digests earnings and policy updates.

Policy Watch

Policy Watch

• US Political Landscape: Speculation on Biden’s potential withdrawal.

• Geopolitical Tensions: Ongoing conflicts in the Middle East.

• ECB Insights: Discussions on inflation outlook and rate adjustments in upcoming months.
  
  Enjoy your weekend, please consider subscribing for chart discussions and more advanced topics. I have costs running this Newsletter but I enjoy it and want to keep it alive and well everyday!
  
  - JB

Insight Into how I Look at Risk Management

1. Be Selective

Be systematic with your scans and DD prior to entering an investment or trade. Don’t base trades off a hunch or feeling, use data back decisions as much as possible to scrutinize the shit out of an idea. Play devils advocate with your investing or trading partner.

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