Preparing for Earnings Season
Who knows whether the Fed will put a chill on the market tomorrow. It depends on whether they care more about the impending housing bubble bust or the manufacturing strength. Strong manufacturing is a good sign that consumer demand continues. I had thought that we would actually see some inventory buildup leading to some manufacturing slowdown, but the economy is too strong for that.
In the face of such strength, the Fed may not worry any more about busting the housing bubble. Which would mean more rate hikes beyond tomorrow.
Remove all stops because these stocks are solid, any price drops from the rate hikes will not be stock specific, so why sell? We are not looking to get out because the market sags - only to get out when the stock itself has problems.
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BMHC is a major housing construction company providing both materials and construction services to home builders. They are VERY exposed to new home building. In their recent earnings release, Toll Brothers revealed that cancellations were starting to happen. Since the initial shock, TOL has begun moving back up and so has BMHC.
I must be missing something. The February New Housing Sales Report showed the biggest drop in 9 years. More importantly, it was a deeper drop than expected. The market for new homes is slowing faster than expected, but the companies selling in this market are showing strength?
Oh, and prices are moving down as well.
Unless there is a different way to measure future business expectations, I multiply dropping prices times slowing sales and I end up with lower earnings.
I hope it's just pre-earnings excitement because I bought BMHC puts.
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What do we think of our stocks?
ET - I continue to see strength
GHL - I see strength but not as much as LAZ. If GHL does not blow through their numbers, I may consider getting into LAZ instead. Because I believe in the M&A market, but maybe I chose the wrong player. I don't think so, but the market is betting on LAZ to win and GHL to place.
GRP - I think that it is emerging from it's dull moment. I am concerned that, with gas prices so high, GRP is not benefitting. But volumes are increasing on them, so I think a strong quarter will bump them up
JLG, JOYG, MDR - still solid (MDR hit a new 52 week high today)
MRVL - Established a bottom at $55 and is under their 100 day moving average. I think that this is a case of a company under promising and over delivering. They have bottomed out and should be rising.
NTRI - Technical signals are looking positive.
STX - Showing weakness and probably will for a bit before surging back up
TRID - Looks strong and hit a new 52 week high
So, in summary, GRP and GHL are looking softer than I would like and STX is not yet bottoming out.
In the face of such strength, the Fed may not worry any more about busting the housing bubble. Which would mean more rate hikes beyond tomorrow.
Remove all stops because these stocks are solid, any price drops from the rate hikes will not be stock specific, so why sell? We are not looking to get out because the market sags - only to get out when the stock itself has problems.
-------------------------------------------------
BMHC is a major housing construction company providing both materials and construction services to home builders. They are VERY exposed to new home building. In their recent earnings release, Toll Brothers revealed that cancellations were starting to happen. Since the initial shock, TOL has begun moving back up and so has BMHC.
I must be missing something. The February New Housing Sales Report showed the biggest drop in 9 years. More importantly, it was a deeper drop than expected. The market for new homes is slowing faster than expected, but the companies selling in this market are showing strength?
Oh, and prices are moving down as well.
Unless there is a different way to measure future business expectations, I multiply dropping prices times slowing sales and I end up with lower earnings.
I hope it's just pre-earnings excitement because I bought BMHC puts.
-----------------------------------------------
What do we think of our stocks?
ET - I continue to see strength
GHL - I see strength but not as much as LAZ. If GHL does not blow through their numbers, I may consider getting into LAZ instead. Because I believe in the M&A market, but maybe I chose the wrong player. I don't think so, but the market is betting on LAZ to win and GHL to place.
GRP - I think that it is emerging from it's dull moment. I am concerned that, with gas prices so high, GRP is not benefitting. But volumes are increasing on them, so I think a strong quarter will bump them up
JLG, JOYG, MDR - still solid (MDR hit a new 52 week high today)
MRVL - Established a bottom at $55 and is under their 100 day moving average. I think that this is a case of a company under promising and over delivering. They have bottomed out and should be rising.
NTRI - Technical signals are looking positive.
STX - Showing weakness and probably will for a bit before surging back up
TRID - Looks strong and hit a new 52 week high
So, in summary, GRP and GHL are looking softer than I would like and STX is not yet bottoming out.
posted by Andrew at
8:59 PM
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