$Wal-Mart(WMT)$ $John Deere(DE)$ $Utilities Select Sector SPDR Fund(XLU)$ $Vanguard Utilities ETF(VPU)$
📉 Market Focus Shift: Consumer Confidence Sinks, Certain Stocks Feel the Burn! 📉
Kia ora Tiger traders!
With consumer confidence at record lows, we’re seeing significant ripple effects across sectors that rely on discretionary spending. While Tesla is performing well, the focus here is on stocks that are directly impacted by shrinking consumer sentiment as households tighten their belts and prioritise essential spending. 📉
Stocks to Watch: Impacted by Consumer Confidence
🔥 Retail:
Discretionary spending is down as consumers focus on the essentials. Big names like Walmart (WMT), Target (TGT), and Amazon (AMZN) are feeling the pressure, as non-essential purchases drop. Retailers that fail to adapt quickly could see profit margins squeezed.
🔥 Financials:
Rising borrowing costs are dampening consumer and business lending. Expect Bank of America (BAC) and JPMorgan Chase (JPM) to feel the impact as loan demand weakens and defaults risk increases. Tighter liquidity means banks may struggle to maintain recent performance levels .
🔥 Real Estate:
Higher interest rates have thrown cold water on the housing market. Zillow (ZG) and Redfin (RDFN) are facing headwinds as consumers delay home buying and refinancing plans .
🔥 Automotive:
Consumers are backing off from new car purchases as financing becomes more expensive. Ford (F) and General Motors (GM) are seeing the effects as rising interest rates hit demand for new cars .
Why Tesla is Less Impacted (For Now)
Tesla continues to perform well due to strong demand for EVs and its premium positioning, but it’s not entirely immune. If consumer spending continues to shrink, we may see reduced interest in luxury vehicles down the road.
With an overnight price of $240.89, we’re already seeing a sweet +1.11% jump. The chart is basically waving a giant “GO!” sign at us. 🚦💥 Tesla is in a solid bullish channel, with support around $240, and we’ve got eyes on that next move to $254.00
The Shift Towards Defensive Plays
💡 Investors are turning to defensive stocks like $Procter & Gamble(PG)$ , $John Deere(DE)$ and utilities to weather the uncertainty. These sectors offer more stable returns in times of economic stress, as they focus on essentials that consumers can’t cut back on .
Trading Strategy:
• Now is the time to shift capital from sectors highly dependent on consumer confidence (retail, finance, automotive) towards defensive plays like utilities and consumer staples.
• Monitor support and resistance levels closely for opportunities, while keeping an eye on Put/Call ratios to stay ahead of sentiment changes in the market. 🧐📈
Source: The Kobeissi Letter:
Americans have never been so worried about the year ahead:
The share of consumers uncertain about business conditions over the next year spiked to 51% in September, the most on record.
The percentage has DOUBLED in 4 months.
Over the last 30 years, the share of consumers concerned about short-term business prospects has never been so high.
Americans have been hit by historically high costs of living, elevated borrowing costs, and the deteriorating job market.
US households are struggling.
Youth unemployment is rising:
The US unemployment rate for people aged 16-24 jumped to 9.7% in August, the highest level since June 2021.
By comparison, the national unemployment rate is at 4.2%, near a 3-year high.
Since April 2023, the youth unemployment rate has skyrocketed by 3.1 percentage points.
Such a material increase usually occurs during an economic downturn.
Currently, 16% of 18 to 24 year-olds are neither employed nor enrolled in high school/college according to Fed data.
When the labor market deteriorates, the youth are usually the first to feel it.
Happy trading ahead. Cheers, BC 🍀
@Tiger_comments @Daily_Discussion @TigerPicks @TigerStars @TigerGPT @TigerPM
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Stock Analysis: Wal-Mart (WMT)
Introduction:Wal-Mart (WMT) is a multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. It is one of the largest retail companies in the world, serving customers both in-store and online. The company is well-positioned in the retail industry, and its focus on providing essential goods makes it resilient during economic downturns.
Earnings Analysis:The latest earnings report for Wal-Mart is for the second quarter of 2025 (2025Q2). The company reported an EPS of $0.56, with a gross profit margin of 25.11%. Wal-Mart has a strong return on investment of 12.86%, indicating efficient use of its assets. The net profit margin for the quarter was 2.66%.
Looking ahead, the earnings forecast for Wal-Mart is positive. Analysts estimate EPS of $2.45 for 2025FY and $2.72 for 2026FY. The forecasted gross income for 2025FY is $678.32 billion, and the estimated EBIT is $29.39 billion. These figures indicate a steady growth trajectory for the company.
Trend Analysis:The support price for Wal-Mart as of September 20, 2024, is $67.90, indicating a level at which the stock has historically found buying support. The resistance price is $79.10, which represents a level where selling pressure may increase. The average cost of the stock is $72.69.
As of September 23, 2024, the stock price of Wal-Mart is $79.06.
Valuation Analysis:Analysts forecast a target price range for Wal-Mart. The mean target estimate is $80.79, with a low estimate of $69.99 and a high estimate of $90.00. These estimates reflect the analysts' outlook on the stock's potential upside.
The analyst recommendation for Wal-Mart is as follows: 11 recommend, 26 buy, and 3 hold.
Capital Flow Analysis:The capital flow data for Wal-Mart shows a positive inflow of $312.69 million over the past 5 days. This indicates that investors have been buying the stock. However, it's important to note that capital flow data can be volatile and subject to change.
Please note that the above analysis is for informational purposes only and should not be considered as investment advice.
Stock Analysis: John Deere (DE)
Introduction:John Deere (DE) is a leading manufacturer of agricultural machinery, construction equipment, and forestry equipment. The company serves customers worldwide and has a strong presence in the agricultural industry. With a history dating back to 1837, John Deere has established itself as a reliable and innovative provider of equipment and related services.
Earnings Analysis:The latest earnings report for John Deere is for the second quarter of 2025 (2025Q2). The company reported an EPS of $6.32, with a return on equity (ROE) of 30.32% and a gross profit margin of 29.39%. John Deere has a strong liquidity position, with a quick ratio of 1.80 and a current ratio of 2.08. These ratios indicate the company's ability to meet its short-term obligations.
Trend Analysis:The support price for John Deere as of September 20, 2024, is $375.00, which represents a level at which the stock has historically found buying support. The resistance price is $405.90, which indicates a level where selling pressure may increase. The average cost of the stock is $371.96.
As of September 23, 2024, the stock price of John Deere is $405.89.
Valuation Analysis:Analysts forecast a target price range for John Deere. The mean target estimate is $416.17, with a low estimate of $341.21 and a high estimate of $495.00. These estimates reflect the analysts' outlook on the stock's potential upside.
The analyst recommendation for John Deere is as follows: 5 recommend, 7 buy, and 12 hold.
Capital Flow Analysis:The capital flow data for John Deere shows mixed results over the past 5 days, with some days experiencing inflows and others experiencing outflows. It's important to consider the overall trend and monitor capital flow data for a more accurate assessment of investor sentiment.
Please note that the above analysis is for informational purposes only and should not be considered as investment advice.
Stock Analysis: Utilities Select Sector SPDR Fund (XLU)
Introduction:The Utilities Select Sector SPDR Fund (XLU) is an exchange-traded fund (ETF) that tracks the performance of the Utilities Select Sector Index. The fund provides investors with exposure to the utilities sector, which includes companies involved in the generation, transmission, and distribution of electricity, as well as natural gas and water utilities.
Trend Analysis:The support price for XLU as of September 20, 2024, is $73.59, indicating a level at which the fund has historically found buying support. The resistance price is $80.09, which represents a level where selling pressure may increase. The average cost of the fund is $73.77.
As of September 23, 2024, the stock price of XLU is $80.08.
Capital Flow Analysis:The capital flow data for XLU shows mixed results over the past 5 days, with some days experiencing inflows and others experiencing outflows. It's important to consider the overall trend and monitor capital flow data for a more accurate assessment of investor sentiment.
Please note that the above analysis is for informational purposes only and should not be considered as investment advice.
Stock Analysis: Vanguard Utilities ETF (VPU)
Introduction:The Vanguard Utilities ETF (VPU) is an exchange-traded fund (ETF) that provides investors with exposure to the utilities sector. The fund seeks to track the performance of the MSCI US Investable Market Utilities 25/50 Index and holds a diversified portfolio of utility companies.
Trend Analysis:The support price for VPU as of September 20, 2024, is $159.55, indicating a level at which the fund has historically found buying support. The resistance price is $172.85, which represents a level where selling pressure may increase. The average cost of the fund is $159.93.
As of September 23, 2024, the stock price of VPU is $172.84.
Capital Flow Analysis:The capital flow data for VPU shows mixed results over the past 5 days, with some days experiencing inflows and others experiencing outflows. It's important to consider the overall trend and monitor capital flow data for a more accurate assessment of investor sentiment.
Please note that the above analysis is for informational purposes only and should not be considered as investment advice.
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