The markets had another red week with the DOW 30, S&P 500, and NASDAQ ending -1.84%, -2.03%, and -2.60%, respectively.
Markets are on a two-week red streak. There's a Fed Reserve meeting coming up on November 1 and more earnings coming up soon. Hang tight everyone!
SPY
QQQ
What happened this week?
This week, we just broke the support line on our upwards trending channel.
Rep. Mike Johnson, a Republican of Louisiana, won the election as the new speaker of the House on Wednesday.
The U.S. Gross Domestic Product (GDP), which quantifies the total production of goods and services, rose at an annualized pace of 4.9% in the third quarter, surpassing the estimated 4.7%. This substantial growth can be attributed to various factors, including robust consumer spending, increased inventories, higher exports, enhanced residential investment, and elevated government spending. Despite this encouraging report, traders are maintaining their stance that the Federal Reserve is unlikely to implement an interest rate hike during its upcoming meeting.
With the markets being down, don't panic, as pullbacks are healthy and normal. Over the long term, the markets have always gone up after some volatility or downtrend.
However, for the next couple of weeks, I would like to be more on the cautious side since we aren't seeing signs of our typical fourth quarter rally. More on this in a bit.
Steve's Trades
AMZN
AMZN Bear Call Spread
Expiration Date: December 15, 2023
Step 1: Buy 1 $170 strike call option (delta 0.01) for $9 Step 2: Sell 1 $140 strike call option (delta 0.25) for $203
Step 3: Set up a buy-stop order of 100 shares at $139
Credit/premium received: $194
AMZN, along with the broad markets, broke down from its support within the upwards channel. However, the company had a great earnings report, so we'll have to see how the stock moves next week.
I'm still overall bullish on AMZN in the long term. However, with the recent broad-base selloff of the entire stock market, I'm more on the short-term bearish side since we broke down from the support line. I'm holding my cash as cash until we see some positive market sentiment.
As for my other positions, I'm still selling covered calls 45-60 days out in expiration to collect more extrinsic value in the premiums.
Earnings
Here are the earnings dates for the companies that we currently invest in:
Reported: GOOGL Oct 24, 2023 MSFT Oct 24, 2023 MA Oct 26, 2023
V Oct 26, 2023 AMZN Oct 26, 2023
Upcoming: AAPL Nov 1, 2023 AMD Nov 1, 2023
SBUX Nov 2, 2023
DIS Nov 8, 2023
HD Nov 8, 2023
GOOGL Alphabet Inc. (GOOGL) has reported Q3 2023 earnings revenues for the quarter amounted to $76.69 billion. The stock has seen a year-to-date increase of approximately 55.4%, outperforming the S&P 500.
Revenue: $76.69 billion vs. $75.97 billion expected
YouTube advertising revenue: $7.95 billion vs. $7.81 billion expected
Google Cloud revenue: $8.41 billion vs. $8.64 billion expected
Traffic acquisition costs: $12.64 billion vs. $12.63 billion expected
During the investor call, Alphabet's CEO Sundar Pichai reported that Shorts, YouTube's rival to TikTok, has seen a surge in daily views, reaching 70 billion, compared to its initial count of over 50 billion daily views at the start of the year.
MSFT
Microsoft Corp. (MSFT) reported its quarterly earnings, surpassing analysts' expectations in both revenue and earnings per share. This positive performance led to a more than 3% increase in Microsoft's stock price after hours following the earnings call.
Revenue: $52.86 billion vs. $51.02 billion as expected
Intelligent Cloud: $24.3 billion vs $23.6 billion expected
Productivity & Business Processes: $18.6 billion vs $18.3 billion expected
More Personal Computing: $13.7 billion vs $12.9 billion expected
In addition to its AI focus, Microsoft recently completed its $69 billion acquisition of Activision Blizzard, becoming one of the world's largest video game companies. However, there may be investigations regarding antitrust issues related to this acquisition by the Federal Trade Commission. Microsoft's investments in AI and strategic acquisitions are aimed at driving new growth for the company as AI becomes increasingly integral to business operations.
MA MasterCard posted revenues of $6.53 billion for the quarter ended September 2023. This compares to year-ago revenues of $5.76 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The company reported a 28% boost in net income and 14% revenue growth year-over-year. The company also paid out dividends worth $538 million. For the fourth quarter of 2023, management expects low-double-digit growth in net revenues and high-end high-single-digit growth in operating expenses. For the full year 2023, the company anticipates low-teens growth in net revenue and high-single-digit growth in operating expenses.
V Visa Inc. (V) reported strong results for the fourth quarter of fiscal 2023, driven by increased payments, cross-border volumes, and processed transactions.
Revenue: $8.6 billion vs $7.7 billion expected
Full fiscal year revenue: $32.7 billion vs $29.4 billion expected
Key drivers for Visa's performance included a 9% growth in payments volume, a 10% increase in processed transactions, and a 16% rise in cross-border volume on a constant-dollar basis. These positive results were supported by steady cross-border travel growth and resilient consumer spending. AMZN Amazon.com (AMZN) exceeded analyst expectations for revenue and earnings for this past quarter.
Revenue: $143.1 billion vs. $141.4 billion expected
Amazon Web Services: $23.1 billion vs. $23.2 billion expected
Advertising: $12.1 billion vs. $11.6 billion expected
Amazon said fourth-quarter sales, which include the key holiday period, will be between $160 billion and $167 billion.
I am still bullish on all these companies. Once I see technical evidence that these stocks can make higher highs and higher lows, I will slowly add some more shares to my portfolio. I'll keep everyone updated.
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