Fixing PayPal With Dan Dolev, Stop Crying and Buy Bonds
Oct 31, 2023
01:34:42
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Quick takeaways
The possibility of a Q4 rally in the stock market is diminishing due to narrowing breadth, cautious factor leadership, falling earnings revisions, and fading consumer and business confidence.
Apple's new MacBook Pro laptops equipped with advanced M1 chips position the company as a strong competitor in the chip industry, potentially impacting companies like NVIDIA and Intel in the semiconductor space.
Ford's stock has broken below long-standing support levels, indicating potential downside ahead and highlighting the difficulty of buying and holding individual stocks for the long term.
Recent market fluctuations have led to a rare washout condition in the stock market, suggesting a potential buying opportunity as historical data shows positive returns in similar situations.
Deep dives
The Chances of a Q4 Rally Have Fallen Considerably
The possibility of a Q4 rally in the stock market is diminishing due to narrowing breadth, cautious factor leadership, falling earnings revisions, and fading consumer and business confidence.
Negative Reactions to Q3 Earnings Reports
Q3 earnings season has seen lower performance and negative reactions during announcements compared to the previous quarter.
Weak Breadth and All-Time Low Percentage of Stocks Above Moving Averages
The percentage of stocks above their two-in-10-day moving averages is under 30%, while the percentage above their 50-day moving average is at all-time lows.
The Case for a Fourth Quarter Rally
Despite the bearish sentiment and seasonal tendencies, historical data suggests that there is a possibility of a fourth quarter rally. The S&P 500 has shown gains in the majority of cases over a three-month and six-month period when the economic surprise index has been positive.
Apple unveils new MacBook Pro laptops with advanced M1 chips
Apple has launched new MacBook Pro laptops equipped with advanced M1 chips, signaling its move away from Intel chips. The company introduced three new versions of the M3 chip, showcasing impressive capabilities in graphics and computing power. This move positions Apple as a strong competitor in the chip industry, joining other technology giants like Google, Microsoft, and Meta, who are also developing in-house chips. The combination of CPUs and GPUs in the new MacBook Pros is expected to offer a significant boost in performance and is likely to impact companies like NVIDIA and Intel in the semiconductor space.
Ford's stock has experienced a significant break below long-standing support levels, suggesting potential downside ahead. The stock has traded in a volatile range over the past 25 years, but recently saw a sharp decline from $11 to under $10. Additionally, Ford's market cap has seen a decline from highs of $60 billion to $40 billion, highlighting the challenging times for the company. This chart demonstrates the difficulty of buying and holding individual stocks for the long term, as most stocks do not deliver sustained returns. Only a few select stocks, such as those held by Warren Buffett, have proven to be successful long-term investments.
Washout in stock market presents potential buying opportunity
Recent market fluctuations have led to a washout condition in the stock market, which traditionally indicates a potential buying opportunity. The washout occurs when a significant percentage of stocks are below their 200-day moving average, while fewer than 20% of stocks are above their 50-day moving average. This rare occurrence has only happened 14 times since 1985 and has resulted in positive returns one year later in all but the two instances that coincided with the financial crisis. This data suggests that the recent washout could be a favorable time to consider investing in stocks.
On this episode of TCAF Tuesday, Downtown Josh Brown is joined by Dan Dolev to discuss Paypal, SoFi, Affirm, and the latest in Fintech! Then Josh teams up with Michael Batnick for an all-new episode of What Are Your Thoughts. See what they have to say about a 4th quarter rally, the American economy, interest rates, dumb money, Apple's M3 chips, and much more!
Thanks to Public for sponsoring this episode! Go to https://public.com/compound to lock in a historic 5.5% yield on your cash.
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