Tech Stocks

Rip Or Plummet On Monday? Are You Ready?

We’ve been waiting long enough for this Trump-Xi meeting at G-20 which starts tomorrow, Friday and ends Saturday.

We’re going to get news out over the weekend that the meeting on trade either:
1) Came to an agreement to cut tariffs and play nice, or
2) Have the makings of an agreement in the future with no change today, or
3) Continue to disagree with no progress.

Our bias leans us to the second option.

But if we get option 1 the stock market can rip higher by a huge number, maybe 5% on Monday.

If we get option 3 the market can just as easily plunge 5% on Monday.

There is a huge range of outcomes that we need to prepare for. This is a greatly anticipated event that shouldn’t be taken for granted. Large investment funds will likely chase the trend driving stock market follow through either way.

The trade war has slowed economic momentum causing a very weak Q3 earnings season. We told subscribers to hedge out for the earnings season which helped avoid risk.

A positive conclusion of the trade war could mean a forthcoming rally, but no changes could cause a stock market plummet. We plan to respect and follow the market whichever way the event decides.

We’re wishing you success.

Where Are We With Tech Stocks?

We wanted to give a quick update how we’re seeing things in tech stocks and what we see coming.

We told subscribers to completely hedge throughout October and most of November except to be long for the midterm election rally day. Then we got back to hedged-out. We did not want market exposure. We still don’t.

This earnings season confirmed our concern we had ahead of time that earnings growth rates could slow.

We hear the world trying to pick bottoms but I think it’s more important to respect the slowdown in revenues. These are typically not one quarter events.

We’re telling subscribers to remain hedged and reduce position sizes to avoid risk. We do find opportunities for earnings but the risk/reward for earnings events is also not perfect right now.

It’s a good time to stay cautious into year end.

Wishing you a happy Thanksgiving and successful trading.

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Disclaimer:

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All model portfolio trades are hypothetical to show direction, conviction and timing. Performance excludes all relevant transaction costs. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues. Elazar may trade in index futures.

SPY Risk On Tech Earnings Season

If the S&P 500 ETF (NYSEARCA:SPY) index breaks 274, or worse, closes below 274 we’re most likely making further near term lows.

This is a risky time where many are looking for a low but the market has not proven to reverse trend.

We’ve been telling subscribers for a month or two that we’ve been cautious on the market.  We either need a washout or a change in trend higher but so far have had neither so we think more risk ahead.

Because of that we’ve been taking more of a wait-and-see for tech earnings season rather than getting aggressive ahead of earnings reports.

With China tariff issues, dollar and rate issues we’d prefer to react to great reports than carry much risk in this time.

$SPY #stockmarket

Looking For Tech Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Semiconductor and Tech Macro Review

We had pointed out risks in semiconductor land about a month ago. Since then there’s been a battle in these stocks with rallies getting sold.

Fundamentally Bullish

Fundamentally we’re bullish in tech and semis. Our work still shows that there is strong demand at the datacenter and the enterprise.

Cloud hyperscalers are still aggressively spending especially with strong Cloud growth. Enterprise customers are really accelerating acceptance of off-prem cloud offerings as we saw with Azure and AWS growth last quarter.

Semiconductor sell-in to these cloud offerings, we’d guess has not slowed despite fears.

Memory Fears Not A Sign Of Tech Weakness

The slowdown in DRAM and NAND prices has spooked investors that there could be a tech slowdown or a semiconductor cycle peak.

We think that memory price declines are more based on supply catching up with demand for DRAM.  Apple unit weakness earlier in the year took the wind out of NAND. Apple also pre-bought commodities early and didn’t see the unit demand which also hurt memory pricing.

As for communications semis, we think channel inventory is back to normal which can help exposed companies that have been killed so far this year after weak Apple units earlier in the year.

No Cycle Peak

For a cycle peak you need a few things.

1) End demand would need to slow which we said above we don’t think is happening. A trade war would be a risk of that but, again, so far we don’t think there’s been a slowdown.

2) You’d need high channel inventories, which we think are fairly normal in most verticals. We do think there may be some elevated inventories in consumer gaming but that’s an outlier.

3) You’d need double and triple ordering which we don’t hear.

We don’t think we’re at a cycle peak in any industry yet. Again, if there was an all-out trade war, yes, slower demand could trigger a peak. Not there yet.

Conclusion

Net net sentiment is very negative looking for anything glass half empty but we’re looking for opportunities on weakness into Q3 earnings.

Looking For Tech Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

START FREE TRIAL

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

$AAPL, $INTC, $SMH, $INTC, $AMD

Citi Tech Conference: Something New We’re Watching

It’s strange how the trade war has not really hit stocks. Why is that? Because the trade war hasn’t yet hit earnings. If it does the stocks can get hit on poor reports or weak guides.

So when we saw this from DRAMeXchange our antennae went up,

“…smartphone brands and a few server manufacturers have marked down their [Q3] shipment projections.”

That would not be good if true. The market’s soaring but if the above quote proves correct there’s risk to earnings and then stock prices.

We have not heard about this out of Q2 which was strong. If this proves correct it’s a risk. Trade war fears reflected in weak orders and slower earnings would be the ultimate risk to stocks.

We’ll be listening to the companies at the Citi Global Tech Conference tomorrow and Thursday for any signs.

Join Us For Our Live Coverage Of The Citi Conference

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Looking For Tech Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

START FREE TRIAL

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Cisco $CSCO
Intel $INTC
Micron $MU
Microsoft $MSFT
NVIDIA $NVDA

Apple $AAPL

Correction: Tickers added Sept 4, 2018 9:11 AM EDT

What We’re Watching At The Citi Tech Conference

The Citi Global Technology Conference this Wednesday and Thursday is timely. We’re two months into the third quarter. Third quarters are important in tech because you have the build for the holiday season.

Investors will be looking for any hints from management how trends are progressing.

Here’s some of the things we’re looking for…

General Body Language

Frankly we want to make sure companies are still pumped about business. They should be. Tech’s been strong and demand has been strong. We want strong language that tech and demand have not slowed. That’s what the stocks need to move up. If we don’t hear that there could be risk.

DRAM Price Weakness Not Because Of Demand

We’ve heard some analysts and companies concerned that DRAM prices peaking and coming down in the spot market could be an early sign of weak demand. We don’t think so. We think supply has caught up with demand to some degree but, we’d guess demand has not slowed.

Capex Strong

Datacenter demand has been very strong at most semi players. Capex spending has been accelerating at the hyperscalers. We think that should obviously translate to continued strong trends at the datacenter. As long as capex remains very strong we have medium term visibility that this tech boom is very much in place.

Capex moving up also allays concerns of weaker DRAM pricing.

Trade Tensions

Any disruptions thanks to trade tensions?

Apple Food Chain

Apple’s launching new products September 12. Some Apple suppliers appear to have bottomed and we want to hear that Apple is bullish about the Fall launch and that inventory is lean enough for suppliers to benefit.

Stock Action

You’ll have the biggest funds meeting with the largest tech companies. Stock action matters on Wednesday and Thursday. What those huge funds hear can quickly get reflected in the stocks moving up or down. Ear to the train tracks.

Here’s the list of companies we’re watching more carefully.

Twitter Inc $TWTR
Applied Materials $AMAT
Arista Networks $ANET
Autodesk $ADSK
Checkpoint $CHKP
Cisco $CSCO
Intel $INTC
Juniper Networks $JNPR
KLA-Tencor $KLAC
Lam Research $LRCX
Maxim Integrated $MXIM
Micron $MU
Microsoft $MSFT
MKS Instruments $MKSI
NetApp $NTAP
NVIDIA $NVDA
Qualcomm $QCOM
Roku $ROKU
Skyworks Solutions $SWKS
STMicroelectronics $STM
Texas Instruments $TXN
Western Digital $WDC
Xilinx $XLNX

Conclusion

Septembers matter for the stock market and timely tech conferences like Citi this week are key. We want to hear strong trends and want to see good stock action. If we don’t get either we probably need to do a little more digging and maybe watch out.

We also have a full slate of upcoming company calls.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Updated September 2, 2018 11:17 AM EDT

Tech Stocks: What’s Hitting Semis?

smh semi stocks
Source

Semiconductor stocks have been weak of late after a recent Morgan Stanley downgrade and some negative data-points.

While the stock market is close to all-time highs the semiconductor chart (NYSEARCA:SMH) is struggling.

We pointed out semiconductor technicals being weak in early July and they have continued to under-perform.

Weak Action Last Week

While the rest of the stock market was going up on expected US-China trade negotiations, semiconductor stocks continued to get hit. Semiconductor stocks would be among the biggest beneficiaries to a trade truce. Seeing them fall is a negative action sign and needs to be noted.

Samsung Push-Outs, NAND and DRAM

Samsung pushing out equipment orders in NAND and DRAM have caused semi-equipment companies to plan for down sequential revenues in Q3.  Investors remember past cycles where that has spelled disaster.

We don’t think this is disaster this time. But with NAND pricing coming down we’ve been cautious on semi-equipment companies for some time to subscribers.

Samsung, though likely pushed out DRAM orders not because of falling prices but because of the difficulty in transitioning to the next technology node. That can ultimately bode well for DRAM suppliers as industry supply growth could fall below expectations supporting pricing.

DRAM spot pricing has also reported to come down. That can weigh on stocks until news reports otherwise. Companies like Micron (NASDAQ:MU) have been outpacing the spot market pricing but they don’t report earnings for another month to offset claims of spot price erosion.

As for NAND, Apple iPhone units being below expectations this year may have helped weigh on NAND prices. If Apple (NASDAQ:AAPL) can nail this next iPhone launch that can add some support to NAND prices.

Typical Seasonal Tech Stock Weakness

Seasonally this period of time has been difficult for tech stocks pretty much through September. Reports coming now report on the summer lull. The results of the Q3 ramp ahead of holiday don’t get reported until October which typically can benefit tech stocks.

Conclusion

The big hit is in semiconductors but there are many individual stories and non-semis that can look through the semi-equipment concerns. We’d also expect select semiconductor stocks to catch some strength later this year. But Morgan Stanley’s call came in a news air-pocket for ultimate impact. We don’t get any potential counter news flow until the broker conference circuit kicks off in September or the next round of earnings reports.

Looking For Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

START FREE TRIAL

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Updated August 20, 2018, 6:09 PM EDT

Earnings Led Stock Market Breakout This Week?

S&P 500 SPY ETF
Source

The stock market (NYSEARCA:SPY) is approaching a key level at 280. A close above it would be a breakout signaling the market can move higher.

So far the stock market has looked through trade concerns and Fed rate hikes and we’re about to enter earnings season.

Now that we’re moving into earnings season the fundamentals should matter more than the macro.

Earnings matter for stocks. Starting this week earnings reports and guidance are the stock market’s next cue.

Bullish For Tech Stocks For Q2

We’re bullish about tech stocks for Q2 and, maybe more importantly Q3 guidance.  If correct that may have been the reason for the stock market’s strength despite negative “macro” news.

So far our work says that Q3 business has not been affected yet by trade concerns. If that shows through in strong guidance we should continue to higher highs for the stock market.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Tech Stocks Earnings Season: Gartner Confirms Enterprise Can Drive Q2

Tech stocks start to report earnings next week. We’ve been saying tech’s new driver is the “enterprise” which should support the coming earnings season (here here here). Gartner just confirmed that upgrade cycle is on.

Remember the days decades ago when we needed a new Microsoft Windows (NASDAQ:MSFT) version to drive the entire tech food chain? As we know companies like Micron (NASDAQ:MU) and Applied Materials (NASDAQ:AMAT) have said this latest tech cycle is bigger than the past because we’re not solely dependent on a new Windows upgrade to drive tech. AI, data, cloud have all been drivers. But one segment was left out, enterprise.

Traditional companies known as “enterprise” had not been spending aggressively on tech for about a decade.

Overall there is a much larger wallet size at enterprise than the cloud/hyperscalers like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG)(NASDAQ:GOOGL) and Facebook (NASDAQ:FB). And those cloud players are the ones that have been driving that tech spend so far. So adding this new leg of spending can be huge.

Gartner Confirms Our Thinking

Gartner just confirmed what we had been saying. They just reported PC sales grew by a not-so-big 1.2% in Q2. But that was the first time PC growth had been positive since 2012. What was the driver?

Here’s what they said,

“PC shipment growth in the second quarter of 2018 was driven by demand in the business market, which was offset by declining shipments in the consumer segment.”

Builds Conviction

The more confirmational data you have the more you can have conviction on your top ideas going into earnings season, especially those tech stocks that benefit from the enterprise and PC food chain.

Trade War

The offset risk to earnings season as we’ve been saying is the Q3 guide. Do trade war concerns spook business leaders into slowing purchases. So far our work says no. We still expect strong Q3 guides but we are still doing the work.

Conclusion

We still expect a strong earnings season. AI, data, cloud and now enterprise should help the tech stock food chain.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Tech Stocks: What To Watch In Earnings Season And Trade Wars

Tech Stocks are about to start reporting earnings next week. Fundamental trends should have been strong for Q2 but the question remains will trade fears slow spending in Q3? Which way will guidance go for companies on their earnings calls? We think guidance keeps moving higher but that’s very much in question and we’re looking for clues.

President Trump followed through on upping the ante on tariffs with a new $200B of targeted goods. China has said it would respond which probably occurs when the US tariffs go into effect in the Fall.

Will Q3 Guidance Be Affected By Trade War Concerns?

In the meantime we’re focused on reported earnings which start for, our focus, tech stocks next week. There will be a ton of conjecture if current trade friction slowed demand until we actually hear it in the earnings calls.

We’re collecting clues ahead of those calls.

We’ve said we don’t think that demand trends would have slowed much. If they did they are coming off super-strong Q2 levels. Even if the Q2 pace slows Q3 might still beat Street estimates. That will come out in guidance and that’s really what should matter for the stock action on earnings.

Reporting next week in our universe that will shed some light on trade-war affected demand trends are IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT).

Netflix (NASDAQ:NFLX) reports Monday after the close but has less exposure to trade friction.

Can The New Secular Dynamic, Enterprise, Offset Trade Concerns?

We’ve been picking up that enterprise customers are starting to spend big for the first time in years. Up until maybe a couple of quarters ago, the majority of the spending growth was led by cloud/hyperscalers like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) and Facebook (NASDAQ:FB).

More recently though enterprise customers, traditional companies, are starting to upgrade their tech. There had been a multi-year trend to roll-out usage in the public cloud. More recently though, specifically this year, traditional companies are starting to more aggressively build out their own internal technology infrastructure. It’s an upgrade cycle.

We think that upgrade cycle can benefit many tech stocks this year.

So that’s the Q2 story.

For now we think that trend should be strong enough to have spillover demand into Q3 offsetting any CEO concerns on trade. That’s our guess for now, which could change as we collect data. That Q3 take by companies on their earnings calls will be key in how the stock prices react. That’s what to watch next.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.