It seems like every time you turn around, we're at a "turning point" or we've reached an "inflection point" or "critical, make-or-break juncture."
The charts I watch every day tell us... pundits exaggerate. No matter how breathless the warning, the truth is, many "critical junctures" are really just another day - or, even better, a profit opportunity.
But with all due respect to Chicken Little, sometimes a critical juncture really is important - and they set us up to take advantage of the powerful bullish and bearish "snapbacks" that my readers have found so profitable.
What happens this week will have major repercussions in the coming days.
Let's take a look...
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If you've been with me for a while, you know I subscribe to the theory that markets have "narratives," underlying forces and events that help drive the behavior of the humans buying and selling stocks.
This week, we've got two to contend with. One is the "upside down, downside up" Fed-driven narrative, in which bad news is good news and any good news is taken as an ominous sign that the Fed will tighten up and close the throttle on the easy money flooding markets.
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The other is the perpetual "Trump tweet tariff tango," where investors will watch @realdonaldjtrump with rapt attention, and in which trade conflicts are front and center.
Has that got your head spinning? Here's the easy way to interpret events.
If there's tariff- and trade-oriented news and it's good, e.g., moving toward an agreement, or talk of delaying or dropping tariffs, the markets will react positively.
Any other economic news will be - you guessed it - upside down: Bad economic growth numbers in China or the United States, or the European Union? That's good for markets, as it will be perceived as nudging the Fed closer to a rate cut.
Good news, like a promising Labor Department employment report, will be met with anxiety; it could compel the Fed to delay a rate cut.
And then there's earnings...
Earnings season is in full flower. Three of the five most valuable companies on the planet will open the books in the next few days, and there are some other interesting and compelling reports, too.
It could be the most important set of earnings reports of the year - and these happen four times a year.
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If we get more disappointments than "upside surprises," it's bound to weigh on markets. In other words, bad news will be bad. Of course, the opposite is true, too, and positive reports will lend support to stocks.
Amazon.com Inc. (NASDAQ: AMZN) reports Thursday after the close. The world's second most valuable company is currently suffering the "trillion-dollar curse" after it crossed above... then back below that lofty mark on multiple occasions.
Amazon is so broad now that its results can and do affect tech companies, cloud computing niches, retail, and transportation. That means what management chooses to say about future earnings and outlook will be perhaps even more important than the current report.
Facebook Inc. (NASDAQ: FB) goes on Wednesday after the close. One year ago, Zuckerberg & Co. suffered the biggest single-day loss in market cap in history when rising costs and slowing growth triggered a mini-panic on the stock.
Since then, Facebook has righted the ship and become somewhat of a "Teflon stock"; privacy questions, along with serious regulatory and security issues, don't seem to "stick" in any meaningful way.
If Facebook continues to grow revenue at its recent outrageous pace, look for the stock to continue to climb. Most traders and investors seem to think things are largely back to normal with FB shares, so any negative surprises could have an outsized effect. However, I don't anticipate that will be the case.
Alphabet Inc. (NASDAQ: GOOGL), parent company of Google, will report Thursday after the close. Google has been hit by European Union fines and the announcement of an antitrust investigation, so it's underperformed the other mega-techs as a result.
Analysts are expecting good earnings and revenue numbers from the search behemoth. But the effects on the stock price - and the market at large - will come from the revenue growth numbers. That dropped to 15.5% from 19.9% in the previously reported quarter, and the cost of generating that revenue rose more than expected last quarter.
A motley crew of "mere" hundred-billion-dollar outfits like Visa Inc. (NYSE: V), Starbucks Corp. (NYSE: SBUX), Boeing Co. (NYSE: BA), Tesla Inc. (NASDAQ: TSLA), AT&T Inc. (NYSE: T), 3M Co. (NYSE: MMM) all report this week, as well. Each has the potential, albeit not as big as Amazon, to reverberate across other market segments. Visa and Boeing in particular are the companies to watch here.
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