Market analysis 19Jul2022- Doom Earning Season Coming?

MooMoo's account update 19Jul2022

A volatile but doom forecast coming?

Earning seasons is starting but I would say that, this round, is nothing to excite about. We know that there are two major factors to decide an earning move of a stock: Double beat/miss and forecast. Sometimes, forecast plays more important role in the earning move.

However, because of the higher inflation and higher interest rate environment, we could anticipate companies will provide a worse forecast, which most likely will send the stock down- depending on how much it has been pricing in previously. We may even need to see the forecast to include the possible recession in the near future.

When stock especially big cap down, it will pull the index down, and the other stocks will move with sympathy with it. Remember what has happened to META gap down of 20% last time?

But i would say nothing to worry about. It is a natural selection. It is time for the company to readjust their forecast from too optimistic to realistic. Adjust forecast to downside mean it will be more realistic to beat in the next earning, easier to beat, and the future forecast will be better- and move the stock up again.

Stay tuned, tighten the seat belt, and see how this earning season will go.

"International Business Machines Corp. had a better-than-expected second quarter, but shares were not rewarded Monday as an executive warned about the effects of the strengthening dollar."

However, do you spot the key point that only a BIG CAP company can do?

"Kavanaugh also confirmed that IBM has been raising prices to deal with higher salaries and inflation."

Strong moat companies can just increase their price to cope with the inflation, this is what the weak moat and speculative company not able to do it.

Overall, earning play may be doom but it is just a cycle. Nothing to worry about. Stay cash if not comfortable, or just buy with a fix cash ratio on the strong moat profitable company