by Ian Harvey
January 13, 2019
A Quick Review of Last
Stocks posted solid weekly gains, but an ongoing U.S. government shutdown and worries about an economic slowdown in China pushed shares marginally lower on Friday.
Even though this was the calmest week experienced by the stock market in quite a while, expect more volatility in the foreseeable future.
On top of the partially closed federal government, which has been closed for 21 day as of Friday, and matching the longest U.S. government shutdown on record from late 1995-early 1996; there are concerns over a possible slowdown in China’s economic growth as China tries to strike a permanent deal with the U.S. to settle a punitive trade war.
For the week, the Dow Jones Industrial Average (DJI) finished up 2.4% at 23,995.95.
The S&P 500 Index (SPX) was up 2.5% at 2,596.26 for the week.
And the Nasdaq Composite (IXIC) also up 3.4% for the week at 6,971.48.
It seems that most of the decline is over; but bear-in-mind that there are also geopolitical and other factors that could affect stocks.
The S&P 500 is suffering resistance at the 2,600 level, and may see some more pullbacks before over-coming this barrier.
However, if earnings are better than expected, they could act as a positive force to help fend off further declines.
The health care sector seems to have positive revision trends and earnings are expected to be strong.
As we have noticed in the past many companies that beat earnings were hardly rewarded; but, the market may be ready to reward positive news, and the biggest winners could be those that beat expectations for revenue and profit.
Earnings to Watch…..
Citigroup, Shaw Communications
J.P. Morgan Chase, UnitedHealth, Wells Fargo, Delta Air Lines, United Continental, First Republic Bank
Bank of America, Goldman Sachs, BlackRock, U.S. Bancorp, Fulton Financial, Bank of NY Mellon, Charles Schwab, PNC Financial Services, Comerica, Kinder Morgan, Hancock Whitney, CSX, Alcoa
Morgan Stanley, Netflix, Bank of the Ozarks, Commerce Bancshares, KeyCorp, M&T Bank, PPG Industries, American Express
State Street, VF Corp, SunTrust, Regions Financial, Kansas City
Economic Data to Watch…..
CONTROL OF EMOTIONS AND LESS PANIC WILL HELP YOUR PROFIT MARGIN!
Reviewing the Earnings Predictions from Last Week…..
Here is a look at the “Earnings Predictions” sent to members last week.
The article “Helen of Troy Slumps After Reporting Earnings!” nicely sums up the situation last week…..and the statement below outlines the outcome….
“With just the profits from this trade, the cost for all six (6) trades for the week – total cost $1,360.00 – is covered. Any monies from the remaining 5 trades is extra profit!!!”
Just briefly, Constellation Brands, Inc. Class A (NYSE: STZ), had a potential profit of 189%. Also, KB Home (NYSE:KBH) was up 74% at one stage.
Note that Delta Air Lines, Inc. (NYSE:DAL) earnings report has been delayed until Tuesday, this week.
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
YOU NEED TO BE IN IT TO PROFIT!
Options Trades to Consider Based on Expected Earnings Reports:
Tuesday, January 15, 2019
Atlanta, GA-based carrier Delta Air Lines, Inc. (NYSE:DAL), will report earnings before the market opens. Delta Air Lines kicks off fourth quarter earnings season for major American airline carriers, with analysts expecting the company to report earnings per share of $1.29 on quarterly revenue of $10.8 billlion. The company's guidance was for earnings of $1.10 to $1.30 per share. Consensus estimates are for year-over-year earnings growth of 32.29% with revenue increasing by 5.71%.
After shares of Delta Air Lines lost altitude and plunged into multi-percentage-point loss territory Thursday, things were looking pretty grim -- and they were, but only for about 24 hours. Then Friday saw the stock make an upswing gaining 5%.
This downturn was due to the fact that Delta made an 8-K filing with the Securities and Exchange Commission (SEC) describing how its Q4 total revenue per available seat mile ( TRASM ) is likely to come in below previous estimates but "adjusted" earnings will arrive on target -- and toward the high end of previous guidance at $1.25 and $1.30 per share. Profit margins also look strong for Q4, rising into the 10% to 11% range.
Delta now expects adjusted total revenue per available seat mile (TRASM: a key measure of unit revenue) to increase approximately 3% on a year-over-year basis. This compares unfavorably to the previous guidance, which had called for an approximately 3.5% rise in this key metric.
Per Delta, slower-than-expected improvement in close-in yield (prices of tickets sold close to departure) in late December compelled the company to trim its guidance for this key metric. In fact, this was the second time that Delta had trimmed its fourth-quarter unit revenue forecast in a short span of time. In December, the carrier said that it expects unit revenues to rise 3.5% compared with the 3-5% improvement predicted in October.
Delta reduced its fourth-quarter 2018 projection for fuel costs per gallon from the $2.47-$2.52 range to $2.38-$2.43 due to the declining trend in oil prices. Non-fuel unit costs are expected to be down approximately 0.5%. Capacity is anticipated to expand approximately 4%.
Total revenues are anticipated to grow approximately 7%, excluding third-party refinery sales. Additionally, the pre-tax margin is predicted between 10% and 11%. The Consensus Estimate for earnings per share and revenue growth is pegged at $1.27 and 6.1%, respectively.
Investors focused on the negative aspects of this report, and in particular, Delta's observation that the ticket prices it was able to charge "in late December [were] more modest than anticipated" -- and extrapolated these trends into a theory that all airline stocks were in trouble.
However, investors obviously re-thought and refocused on more positive aspects of Delta's commentary, such as the fact that "the overall demand environment remains healthy with strength in both business and leisure segments throughout the quarter," while "fuel price per gallon is expected to be ... approximately 10 cents below initial guidance."
There are several positive factors for airline stock futures…..
DON'T MISS OUT - MORE TO COME!
Don’t miss out – check out further options trades recommended for the week ahead by becoming a member of Stock Options Made Easy “Earnings Predictions”.
An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented.
If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, check out the other memberships available at Stock Options Made Easy.
When To Exit A Trade Based On Earnings?.....
It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?”
traders realize, there is a 50/50 chance that the company stock price could go
either way after reporting earnings – even if the report is good, the stock
price could reverse – and if you hold a call option, means depletion of an
already good profit if it exists. A similar situation can be found if you hold
a put option, and a report is not that sound (and you expect a profit from
this) but the stock price can, at times move upwards due to traders bias or
other external conditions......READ MORE.....
The Decision Is Yours!
Before You Trade Consider This Strategy……
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
”Success is simple. Do what's right, the right way, at the right time.”
Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.