To The Moon

On 24 July (Wednesday), we saw the market exhibiting heavy selling pressure, these cause the major indices to give significant losses. DJIA was down by -1.3%, Russell 2000 was -2.1% into the red, S&P 500 record higher loss at -2.3%, with NASDAQ being the worst performer with -3.6% loss.

Mega cap stocks, semiconductor shares, and growth stocks are the biggest contributor on the negative index performance. There are many stocks that participated in the broad retreat.

Disappointment From Alphabet and Tesla High Earnings Expectations

The disappointment coming from the high expectation of quarterly results and guidance from Alphabet (GOOG) and Tesla (TSLA) have them making the biggest decline.

Alphabet lost -5.0% at the end of trading session and Tesla fare far worse with -12.3% into the red.

The Vanguard Mega Cap Growth ETF (MGK) declined 3.8%, the PHLX Semiconductor Index (SOX) logged a 5.4% decline, and the Russell 3000 Growth Index fell 3.7%.

Another financial stock, Visa (V) also formed one of the worst performer, losing -4.0% due to them noting a slowdown in spending by lower-income consumers.

Utilities, Health Care Winner While Information Technology Largest Loser

The S&P 500 sector only have 4 out of 11 sectors in the green.

The only sectors that closed in positive territory are Utilities, Health Care, Energy and Consumer Staples with gains ranging from +0.04% to +1.16%. The rest of the sectors closed in negative territory registered losses greater than 1.0%.

The largest losers came from heavily-weighted sectors with Information Technology down by -4.14%, followed by Consumer Discretionary losing -3.89% and Communication Services finish the Top 3 losers with -3.76%.

Note Yield Lower

The treasuries was lower with 10-year note yield down by 17 basis points to 4.277% and 2-year note yield down by 19 basis points to 4.424%.

Note yield was lower due to a disappointing New Home Sales report for June, a poorly received 5-yr note sale, and mostly lower preliminary July PMI data from the eurozone and U.S.

New Home Sales Activity Soft in June

Wednesday’s economic data suggest that new home sales activity remained soft in June, pressured by a lack of lower-priced homes and affordability issues stemming from high mortgage rates and higher selling price

The Weekly MBA Mortgage Applications Index was lower at -2.2% than the previous figure at -3.9%. June Advance International Trade In Goods was also lower at -$96.8 bln with the previous revised to -$99.4 billion from -$100.6 billion.

June Advance Retail Inventories was higher at 0.7% while the previous was revised to 0.6% from 0.7%. June Advance Wholesale Inventories was lower at 0.2% as compared to previous at 0.6%

July S&P Global US Manufacturing PMI - Preliminary came in lower at 49.5 with previous at 51.6. July S&P Global Services PMI - Preliminary was slightly higher at 56.0 with previous at 55.3.

June New Home Sales was lower at 617K compared to consensus given at 640K while the previous was Prior revised to 621K from 619K.

Weekly Initial Jobless Claims On Thursday

Economic data to watch on Thursday (25 July) would be the Weekly Initial Jobless Claims where consensus was at 240,000 with the previous figure at 243,000.

Stocks To Watch

$IBM(IBM)$ shares rose over 4% in extended trading after the company reported second-quarter results and guidance that exceeded expectations. IBM earned $1.99 per share with revenue up 1.9% year-over-year to $15.77 billion.

IBM also increased its free cash flow forecast for the year, reporting $2.61 billion for the period, a 24% increase year-over-year. The strong performance was driven by growth in software, consulting, infrastructure, and financing segments.

If we looked at the daily technical on MACD and KDJ, IBM is forming a downside movement, but with the results exceeded expectations and a significant gain in extended trading, but can that reverse the trend presented?

I would think it would be better to monitor the price action on Thursday (25 July) before planning for an entry to capture the upside that could be driven by a positive earnings and guidance.

$ServiceNow(NOW)$ surpassed revenue and earnings per share estimates in its Q2 2024 financial results. The company reported Q2 revenue of $2.627 billion, a 22% increase year-over-year, and earnings per share of $3.13. Despite ending the trading day down 4.5%,

ServiceNow rebounded 5.5% during early post-market action. The company also announced the departure of its president and COO, CJ Desai, following an internal investigation.

ServiceNow technical is showing downside based on MACD and KDJ on daily chart, but the earnings result has gave a nice 5.5% rebound, but do note that departure of one key executive could also cause the stock to reverse to the downside.

For me, I would be looking closely on whether ServiceNow could reverse the MACD to form a MACD bullish crossover, then this stock is worth a trade.

$Bank of America(BAC)$ announced an 8.3% increase in its quarterly dividend to $0.26 per share. The board also authorized a new $25 billion common stock repurchase program, effective 01 August 2024, replacing the current program which will expire on that date.

Based on MACD and KDJ, BAC is still experiencing a downside trend on its stock price, so even with an increase in dividend, we might not see too much movement in its stock price.

$Tesla Motors(TSLA)$ shares tumbled over 11% as investors expressed concern over slowing vehicle sales. Elon Musk conducted a poll on social network X, where 68.1% of respondents favored Tesla investing $5 billion in Musk's AI company xAI. The poll was conducted to gauge interest, with any decision requiring board and shareholder approval.

Summary

The selling pressure could continue tonight though we are seeing some stocks recovering in the 24-hour trading, but generally investors are still feeling concerned over the earnings results we have seen so far.

Next week a few more mega cap big names earnings should give some idea on how the rotation movement would be like.

Appreciate if you could share your thoughts in the comment section whether you think we could see some slowness on the selling pressure today (25 July).

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.