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Monday, April 30, 2018

When's This Tech Stock Move Coming?

We recently wrote that based on accelerating revenues and capex in FANG stocks and other companies tech stocks are going higher. We were asked when. The Fed meets on Wednesday and that can sometimes let the cap off stocks.

Fed Action Matters

Investors wait for Fed day. Tons of volatility and tons of volume trade on Fed day. This Wednesday at 2 EDT we get the Fed's latest take on the economy and the centuries old question, "To raise or not to raise, that is the question."

Quantpedia said returns on Fed day are 5-times higher than returns on other days. They meant when the Fed has a meeting markets tend to move higher.

The market didn't listen though in the last Fed meeting. The Fed raised rates on March 21st and the market dropped. That was a bad "action" omen for things to come.

Spy S&P 500
Source
When the market's supposed to go up and it goes down, that's a trading term called bad "action."

You saw what happened next. The market took everybody down for the next couple of days and weeks.

Investors are still sweating from that move.

But typically Fed days are supposed to be up.

No Rate Hike

I don't know why the Fed doesn't call me. They typically leak what they're doing to the Wall Street Journal. The WSJ tends to tell you what the Fed's going to do a couple of days before they do it so the market can take the actual news in stride.

Here's what The WSJ just said,

"Federal Reserve officials meeting this week are likely to hold interest rates steady...."

If so I'd guess the market has a better chance to go up than down but who knows, right? Markets can go up on bad news and down on good news. The main thing we care about is what the market actually does.

Whatever the market decides to do you see you can have follow through.

Buying Tech On A Bullish Fed Outcome

I'd guess if you have no hike you have market participants licking their chops with the stocks down waiting to buy these amazing earnings reports. So if the market reacts positively that will be everybody's cue to get into some of these stocks that just had great news.

That's the answer to the title, c'mon Elazar when's this up move coming.

But Seriously Give Me A Break, Look At This...

Here's the quarterly revenue growth rates of some of the big earnings reporters in the last couple of weeks.

I didn't pull some companies out of thin air. These are among the biggest companies that just reported earnings.

Amazon's recent quarter revenues, accelerated. AMD, same. Intel, same. Google, same. Facebook, same thing. Netflix, guess what? Same thing.

Come on that's nuts.  Nobody cares?

I think they care. I think they are just waiting for Fed day.






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