Earnings Season began on Thursday January 12 with several of the major banks reporting. Overall, their earnings came in quite strong. An exception was Goldman Sachs. Their now Consumer division managed to lose $1.2 billion. They laid off over 3000 people on Friday. GS has always been quite generous with year end bonuses for all its’ employee’s. That is, until this year. Reportedly, some bonuses were cut 90% from a year ago.
On Tuesday, Amazon upped its layoffs from the 10,000 beginning Thanksgiving week to 18,000. Call me crazy, but how does one company have 18,000 too many employees?
On Wednesday Microsoft announced 10,000 being laid off. Normally in the markets, companies shares tend to go up on cost-cutting moves of laying off people. That was initially the case with Microsoft. Shares jumped up $2. About an hour later, it finally dawned on traders and investors that something is drastically wrong if one of the very best companies in the US is laying off that many employees. It must mean that there is something else going on in the entire economy, or at the very least in the tech sector. Microsoft and the markets suddenly turned south. MSFT ended up down $4 for the day. The markets lost about 2%. Then another 1%+ the next day.
I predicted volatility in January, and it is here in spades. The S&P index is now at about 3900 and the DJIA has lost about 1000 points in 3 days.
To me, the charts appear to be approaching a support area in the S&P 3800-3825 range with over 175 stocks within 8% of turning from positive trend to negative trend. So far very few have changed trend yet and that is not unusual. We are hovever approaching that point where if stocks begin breaking trend, we could quickly be down 10% this month yet (worst case.)
Here are this weeks chart and video.
Chart
The Industrials are clearly in power right now. Tech, Healthcare, and half the Consumer discretionary mini-sectors are laggards.
Video
This next week in the markets will be crucial. We are just 6% above the June lows and 8% above the October lows. That’s just 2-3 bad days and January still has 12 days to go.
I’ll have lists of companies I’d like to buy out for you this next week. We are getting closer and closer to the end of this bear market. Not there just yet.
I can hardly wait much longer.
Let’s Go Get the Money
or at least keep what we have.
JimB