Twitter, Inc.'s (TWTR) earnings report was so unpleasant to the ears of investors that they sent the stock 17% lower at the open. For those who might think of this development as a harbinger of doom for tech stocks, social media stocks, or even stocks in general, they would do well to check out the result of Tesla, Inc.'s (TSLA) earnings report, which sent that stock 17% higher. Clearly, investors are not pessimistic on all stocks, just those that don't live up to easy expectations (see chart below).
Goldman Sachs analysts downgraded Twitter stock even while still maintaining they had confidence that company could still continue to grow. One wonders exactly how much confidence that amounts to. Meanwhile, the major market indexes again traded within a tight range. The S&P 500 (SPX), the Nasdaq 100 (NDX), and the Dow Jones Industrial Average (DJX) all continued their downtrend in average true range. This bullish signal sets the market up for a break into higher prices in general.
Apple Shares May Be Forecasting Bullish Market Moves
The idea that, within a group of stocks used to form a market index, one stock should outpace all the others is not particularly surprising. It happens all the time. But for a high-profile company like Apple Inc. (AAPL) to be doing better than all other companies that make up the top 15 holdings in Invesco's Nasdaq 100-tracking ETF (QQQ) seems unusual. The next nearest well-known growth company is NVIDIA Corporation (NVDA), whose shares are 20 points behind Apple for the year.
Considering the level of performance by Apple, one pertinent question arises. Is Apple stock driving the markets, or is the market driving Apple stocks? Apple stock is represented within over 300 exchange-trade funds (ETFs), more than any other single issue. Unless this is a strange market anomaly, it is likely to be a bullish indication, as it seems to flow from the fact that investors want to invest. They just want to invest in a company likely to execute well. (Tweet that!)
The Supplier to Semiconductor Companies
One stock analysts in the semiconductor space to keep an eye on is Applied Materials, Inc. (AMAT). Since it is a supplier to most, if not all, of the biggest semiconductor companies, it acts as a bellwether stock. The thinking goes that, since semiconductor companies have to buy manufacturing equipment well in advance of a chip-manufacturing run, and they have to project demand for those chips, then increased sales at Applied Materials could signal that semiconductor companies think consumers will increase demand, which in turn implies that the economy is on the rise.
Applied Materials stock shot higher by 9% today on a mild analyst upgrade. This is on top of the fact that the stock is already up more than 80% for the year and 30% percent higher than VanEck's vectors semiconductor-tracking ETF (SMH). Additionally, earnings are still a couple weeks away, so it is possible that there is still more good news to come for this company. From all indications, this move seems to imply that the markets are healthy and that investors want to invest.
The Bottom Line
Companies have published a wide variety of results as earnings have unfolded so far. Most investors have reacted positively to the news, except in a few standout cases like Twitter's shares. Apple's shares are climbing markedly higher, much higher than most other large companies in the Nasdaq 100. One stock doing even better is perennial bellwether Applied Materials.
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