{"id":105063,"date":"2017-04-21T09:41:36","date_gmt":"2017-04-21T13:41:36","guid":{"rendered":"http:\/\/countingpips.com\/?p=105063"},"modified":"2017-04-21T07:42:11","modified_gmt":"2017-04-21T11:42:11","slug":"friday-charts-your-post-tax-day-gift-and-the-ugliest-earnings-streak-in-tech","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/friday-charts-your-post-tax-day-gift-and-the-ugliest-earnings-streak-in-tech\/","title":{"rendered":"Friday Charts: Your Post-Tax Day Gift \u2014 and the Ugliest Earnings Streak in Tech"},"content":{"rendered":"
April 21, 2017<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Friday<\/p>\n

It\u2019s Friday in the Wall Street Daily <\/em>Nation. If you\u2019re a newbie, that means I\u2019m skipping the long-winded analysis. Instead, I\u2019ll let some carefully selected graphics speak for me.<\/p>\n

We\u2019re on the cusp of an earnings onslaught. Peak reporting season hits on April 27, when 72 S&P 500 companies report results. So I figured there\u2019s no better place to focus our attention.<\/p>\n

After all, nothing possesses more power to consistently move stock prices dramatically higher (or lower) than an earnings report.<\/p>\n

We\u2019re going to start with the ugliest, most depressing earnings trend in existence. Yes, it\u2019s a caveat emptor situation.<\/p>\n

Then it\u2019s time to pivot to an opportunity hiding in a shiny, contrarian wrapper. Let\u2019s get to it!<\/p>

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In Desperate Need of Reinvention<\/h2>\n

Oh, how far this<\/em> tech giant has fallen!<\/p>\n

Founded in 1911, International Business Machines (IBM) has long been synonymous with tech dominance. Nowadays? Not so much!<\/p>\n

Case in point: The company just posted its 20th consecutive quarter of declining revenue.<\/p>\n

\"S&P<\/p>\n

That\u2019s no streak to celebrate. And that\u2019s why investors are high-tailing it for the exits.<\/p>\n

Shares fell 5% in the immediate aftermath of the report.<\/p>\n

Until this trend reverses, steer clear!<\/p>\n

Thankfully, all stocks aren\u2019t as dangerous as IBM this earnings season. Let me explain\u2026<\/p>\n

It Pays to Be a Contrarian<\/h2>\n

In February, I shared three charts to prove once again it pays to be contrarian<\/strong><\/a>.<\/p>\n

Heading into earnings seasons, I\u2019m convinced that we\u2019re staring at the next situation set to become a case study in gold to prove this axiom.<\/p>\n

You see, analysts and <\/em>institutional investors are universally negative.<\/p>\n

As The Wall Street Journal\u2019s<\/em> Chris Dieterich notes, \u201cStock market bulls have all but disappeared over the past six weeks as optimism wanes for swift enactment of economy-boosting tax cuts and infrastructure spending.\u201d<\/p>\n

In terms of specific data, look no further than analyst sentiment spreads.<\/p>\n

Per Bespoke Investment Group, the number of negative analyst EPS revisions continues to exceed positive revisions. The spread is widest in the energy and telecom services sectors (hint, hint).<\/p>\n

\"IBM's<\/p>\n

As for institutional investors, they think U.S. stocks are too expensive. In turn, the share of fund managers \u201cunderweight\u201d U.S. stocks hit a net 20%, according to Bank of America Merrill Lynch\u2019s latest Global Fund Manager Survey.<\/p>\n

That\u2019s a massive 21-point swing from the reading last month and the most underweight stocks the \u201csmart money\u201d has been since the financial crisis.<\/p>\n

\"Fund<\/p>\n

Here\u2019s the rub \u2014 this bearishness is coming at precisely the wrong time \u2014 right after<\/em> taxes.<\/p>\n

The Tax Man Cometh and Goeth<\/h2>\n

While the S&P 500 traditionally sucks wind heading into tax day, it typically rallies afterward, according to the latest number crunching at Bespoke.<\/p>\n

\u201cEquity returns have been overwhelmingly positive in the days and weeks after the tax deadline,\u201d says Bespoke. And they\u2019re not exaggerating.<\/p>\n

The index posts positive returns 80% of the time the week after the tax deadline and 75%\u00a0of the time in the two-week period afterward.<\/p>\n

Talk about a post-tax day gift!<\/p>\n

\"S&P<\/p>\n

So where should we be on the lookout for opportunities? In sectors where the negativity runs rampant, naturally.<\/p>\n

Energy and telecom services top that list, as the spread between analyst expectations is the widest.<\/p>\n

In case you\u2019re still too nervous to bet against the crowd \u2014 I said it was profitable, not easy \u2014 take comfort in this early stat. It single-handedly justifies taking a contrarian (i.e., bullish) bent.<\/p>\n

So far, about 60 companies in the S&P 500 have reported results.<\/p>\n

Although early, the earnings beat rate stands at 75.4% and overall profits are on track to grow 10.8%. If these early stats hold, it would mark one of the highest beat rates and <\/em>biggest profit growth rates in five years!<\/p>\n

That\u2019s it for this week. Be sure to let us know what you think about this column or any of our recent research by leaving a\u00a0<\/b>comment below.<\/p>\n

Ahead of the tape,<\/p>\n

Louis Basenese
\nChief Investment Strategist, Wall Street Daily<\/i><\/p>\n

The post Friday Charts: Your Post-Tax Day Gift \u2014 and the Ugliest Earnings Streak in Tech<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com It\u2019s Friday in the Wall Street Daily Nation. If you\u2019re a newbie, that means I\u2019m skipping the long-winded analysis. Instead, I\u2019ll let some carefully selected graphics speak for me. We\u2019re on the cusp of an earnings onslaught. Peak reporting season hits on April 27, when 72 S&P 500 companies report results. So I […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105063","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105063","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=105063"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105063\/revisions"}],"predecessor-version":[{"id":105070,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105063\/revisions\/105070"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=105063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=105063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=105063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}