Opportunities to buy BA, TSM, TTE or others soon?
Since 02 Jan 2024, US market has been all over the place and in a bad way really.
In my last Fri, 05 Jan 2024 post, I have mentioned that the Santa rally has crashed landed. Click here ! to read.
With Mega cap companies’ quarterly earnings reports soon to take centerstage, they are likely to set the stage for US market performance for the coming weeks.
Factors for US market's weak performance:
In the above diagram, I have graphically provided them. (see above)
1. Macroeconomic Concerns:
Hawkish Fed & Interest rate fears: The Fed's hawkish tone towards monetary policy, hints at keeping interest rate elevated until inflation dips further, fueled anxieties about slowing economic growth and tighter financial conditions. (see below)
Inflation returns: Concerns about inflation rearing its ugly heads continued to dog the US market. The latest labour reports (JOLTs, ADP employment, Non Farm payroll) all accelerated in December 2023 compared to November’s data signals a US economy resistant to cooldown by the Fed. (see below)
2. Geopolitical Tensions:
Escalating Conflicts: Ongoing geopolitical tensions, in Europe, Middle East and the Red sea, heightened uncertainty and dampened investors sentiment. (see below latest)
3. Earnings Season Volatility:
Mixed Earnings Reports: Early corporate earnings releases were mixed, with some companies missing analyst expectations, further unsettling the market.
Profit Margin Pressures: Rising input costs and potential slower consumer spending weighed on certain companies' profitability, raising concerns about future earnings growth.
4. Sector Rotation:
Shift away from Growth Stocks: Investors shifted away from high-growth tech and consumer discretionary stocks that benefited the most during the pandemic bull run, towards more defensive sectors like utilities and consumer staples.
In light of the current situation, what are the 3 worst performing sectors this past week?
Will there be buying opportunities in the midst of correction?
Food for thoughts!
Top 3 weakest sectors (Jan 2-8, 2024):
Consumer Discretionary: Down -1.51% as anxieties about consumer spending and economic slowdown hit retail and leisure stocks.
Industrial: Down ~0.99% amid concerns over $Boeing(BA)$’s 737 Max 9 aircrafts being grounded (temporarily) by the Federal Aviation Administration (FAA) over Alaska Airlines’ incident where a panel blew off mid-air during flight.
Energy: Down -0.83% YTD with January being a quieter month for oil demand; not forgetting the recent breakaway faction Angola (from OPEC) that will continue with its current pump; keeping market with “excess” supply.
My viewpoints : (mine & mine only)
I think it is time to draw up one’s 2024 wish list of stocks if you have not already done so.
For example $Taiwan Semiconductor Manufacturing(TSM)$ will be announcing its December sales on Wed, 10 Jan 2024.
By stacking up TSM’s October to December 2023 sales, it will give a rough estimates on how the company performed in 2023’s last quarter versus its YoY performance.
Additionally, round up all progresses (news) on TSM’s overseas founderies constructions eg. US, Arizona, Japan, Germany.
Despite being subsidized by respective countries’ government, TSM still have to co-fund these ventures. Any expenses will eat into its revenue and profits; more so if there are going to be delays.
Armed with your personal big data, this would give you an advantage when looking TSM’s price movements for the next few days until its Q4 2023 earnings results announcement on Thu, 18 Jan 2024.
For me, I will start my homework on energy stock $Total SA(TTE)$. Will see whether the homework will lead me to a buy or jump ship outcome.
Have you been diligent and completed your homework already?
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Do you think US market will continue to be volatile in the coming weeks?
Do you think there are buy-in opportunities to be had in these few weeks or later on?
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