Microsoft And Mastercard Exhibit Bearish Post-Earnings Behavior

Commenting on the bearish post-earnings behavior of Microsoft and Mastercard, and today’s trading, Gorilla Trades strategist Ken Berman said:

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Q3 2020 hedge fund letters, conferences and more

The major indices are all trading significantly lower at midday following another volatile and bearish morning session on Wall Street, with the deteriorating COVID picture weighing on global risk assets. European stocks, currencies, and crude oil all fell sharply overnight amid fears of another lockdown period in Europe, and the negative sentiment affected U.S. index futures as well. Several benchmarks broke below important technical support levels yesterday, and today’s plunge reinforced the fears of a broad-based short-term trend change in stocks.

How Warren Buffett Uses Discount Rates To Value Stocks

Berkshire Hathaway Warren BuffettWarren Buffett has never detailed the process he uses to value the businesses he acquires for Berkshire Hathaway. However, over the years, he has provided some limited insight into his methods. Q3 2020 hedge fund letters, conferences and more Based on these comments, it is widely assumed that Buffett uses a discount cash flow model Read More

Microsoft And Mastercard Continue The Trend Of Bearish Post-Earnings Behavior

Microsoft (MSFT, -3.6%) and Mastercard (MA, -6.2%) both reported positive earnings yesterday afternoon and this morning respectively but both stocks opened deep in the red, continuing the worrisome trend of bearish post-earnings behavior. Mastercard’s travel segment posted very weak numbers due to the pandemic, and due to that and the gloomy COVID headlines, the hardest-iht industries got hit hard in early trading. In economic news, crude oil inventories surged higher by over 4 million barrels this week, adding to the pressure on the energy sector and other cyclical issues.

Market Wrap

Dow: 26,591, - 8873 or 3.2%

S&P 500: 3,285 - 106 or 3.1%

Nasdaq: 11,066, - 324 or 3.2%

Russell 2000: 1,547, - 47 or 2.7%

Market breadth has been in line with the performance of the major indices this morning, with decliners outnumbering advancing issues by a more than 13-to-1 ratio on the NYSE at midday. 113 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 12 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. There was nowhere to hide from this morning’s steep selloff on Wall Street, and while the utilities and real estate sectors were helped by the drop in Treasury yields, even the best-performing sectors are down by around 2% at midday, and the relatively weak materials and energy-related issues already shed close to 4%. Stay tuned!