Our call to short the Nasdaq Futures (/NQ) at 7,460 in yesterday's Morning Report made a lovely $1,000 per contract – you're welcome! Today we are shorting Oil Futures (/CL) below the $68.50 line (tight stops above) ahead of the 10:30 inventory report as API (a private report) showed a big draw in Oil (3.2Mb), Gasoline (4.9Mb) AND Distilates (1.3Mb) and yet, $68.50 is all they could manage – even with a weak Dollar. That sends a pretty clear sign that oil is in trouble and anything but a huge draw in the official EIA report is likely to send it down hard and fast but, as I said, we'll be thrilled to take a quick $500 off the table ahead of the report on any sort of dip.
Meanwhile, earnings season is off to a good start with 17% (85) of the S&P 500 reporting as of last night and 87% of them (74) have beaten expectations vs 70% (60) in a typical year. Those of you who know statistics may cringe at the small sampling and more so considering Banks and Big Tech have gone first but those are the kinds of numbers TV pundits throw out as if they are meaningful – I'm sure you'll hear plenty of examples of it this morning on any of the Financial Networks.
All this FABULOUS news was already baked in however as companies are only beating expectation by an average of 4.5%, vs 5.6% last year and revenues are only 1.4% ahead of expectations. Analysts are, in fact, LOWERING their Q3 expectations on companies that have reported, especially in the Non-Finanical, Non-Tech sectors (Energy, Industrials, Consumer Discretionary, Health Care, Utilities, Consumer Staples, and Real Estate).
Speaking of Real Estate, sales of new and existing homes in Southern California are down 11.8% from last year's first half while the median price of a home shot up to a record $536,250. Newly built homes were the hardest hit, with sales off 47% compared to last June – partly due to low inventory and partly due to rising rates putting prospective buyers on the sidelines.