The Ugly Stick Swings at Palantir, the Market, the Data
The Sarge stock gets hit this morning, and so does the broader market and the October ISM numbers. Can Lisa Su save us when AMD reports?
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Pity The Fool
Interviewer: What's your prediction for the fight?
Clubber Lang: My prediction?
Interviewer: Yes, your prediction.
Clubber Lang: Pain!
Exchange from Rocky III (1983)
Prepare Thee...
... For a visit from the "Ugly Stick." Every once in a while, the closet door opens on its own and out comes the stick. Not just a normal stock. The "Ugly Stick" hurts everything it touches. Last night it touched Palantir (PLTR) . This morning, it comes for most of us. Oh... Monday was a decent enough day for a trading session. Our beloved Palantir Technologies, which was to report after the close, ran higher into the afternoon bell. I never like when one of my names runs higher into a known news event. Almost always seems to produce a bout of profit-taking, which is exactly what happened overnight. I will admit to having seen this movie before. Hence, I did make a small sale of some PLTR shares after the close when the stock knee-jerked in a northerly direction.
I am still long the name. I am not discouraged. Fundamentally, Palantir is stronger than ever. But it is time for the shares to consolidate. That's OK. Just be mentally prepared to see something you do not like on your screen for when the worm turns, profits are taken where profits exist and almost all of Wall Street has huge profits in Palantir. Want some more risk? Advanced Micro Devices (AMD) , another Sarge name, will report tonight. That stock is up just 57% over a month. No danger there?
I would expect another strong release from a fundamental perspective and a less than predictable algorithmic reaction. The difference between the two is that PLTR closed last night valued at 217-times forward looking earnings and 623-times trailing 12 months' earnings. AMD closed valued at a far less fantastical 28-times forward looking earnings and at about 101-times trailing earnings. Can AMD CEO Lisa Su save a market trying to hang onto a longstanding bullish trend? Captain Su, can you hear us? Come in, Captain Su!
On The Bright Side
Microsoft (MSFT) has achieved a new AI inference record with its Azure ND GB300 v6 virtual machines {powered by Nvidia (NVDA) GPUs} processing 1.1 million tokens per second on a single rack. The testing was done using the Llama 2 70B generative text model and Nvidia's TensorRT-LLM open-source library for the optimization of large language model inference. Think that was tough to read? Try reading it and then writing so that you think it will make sense to a generally very smart, but also broad audience.
TensorRT LLM, for those about to ask, provides users with an "easy to use" Python API to define LLMs and support state of the art optimizations performing efficiently on Nvidia GPUs. You know we used to hide in the dark, and nobody could see us. We used to cover our bodies in mud to hide our "civilized" scent and fend off mosquitoes. We used to be the "smart guy" simply because we read the Wall Street Journal on the way to work instead of the New York Daily News. Times have changed.
Less Than Thrilling
In an era of far less macroeconomic data to look at than usual, on Monday, the Institute for Supply Management published its October survey of purchasing managers for manufacturing. The headline print landed at 48.7, down from September 49.4. October was an eighth-straight month of headline-level contraction from the month prior for the series.
New orders, which is the single most important subcomponent of any manufacturing-focused survey, hit the tape at 49.4, up from September's 48.9. For those new to the game, 50 is the line between expansion and contraction. This means that (even though the number is higher) new orders still slowed down in October from September, but that the pace of this contraction decelerated slightly.
Now for some uglier numbers. Employment printed at 46, for a ninth consecutive month of contraction, while inventories landed at 45.8 for a sixth straight month of contraction. It gets worse. Backlog of orders hit the tape at 47.9. This made for a 37th consecutive month on the downslide. Yes, that's more than three years for those who've never had their fingers whacked in math class by a nun or a monk.
Want to see something in expansion? OK, we have one. Prices printed at 58 for a 13th-straight month of expansion. The good news? That was down from September's 61.9 so at least rising prices at the manufacturing level are decelerating. Rah.
Markets
Markets got off to a sleepy start on Monday as traders and investors braced for some key earnings releases. The S&P 500 added 0.17% as the Nasdaq Composite gained 0.46%. As I mentioned above, Palantir raced forward into that rather solid earnings report. The small caps and transports closed in the red as the Russell 2000, S&P 600 and Dow Transportation Average all gave up some ground. Treasuries gave up a few basis points too, as yields increased moderately across the slope of the curve.
Five of the 11 S&P sector SPDR ETFs ended the day's regular session in the green, led by the Discretionaries (XLY) , as Communication Services (XLC) led the losers. Interestingly, the four defensive sector SPDRs, which had been slapped around pretty good of late, inched their way into the third, fourth, six and tenth places on the daily performance tables. Not great, but certainly, up off of the canvas. Somebody did see this morning's weakness coming.
As for breadth, winners beat losers by a 4-to-3 margin at the NYSE and a 5-to-3 margin at the Nasdaq. Advancing volume, though, took just a 44.8% share of composite NYSE-listed trade and a 50.8% share of composite Nasdaq-listed activity. Breadth has been softening up for about a week now. Aggregate trade contracted on a day-over-day basis by 5.2% across NYSE-listings and by an even 5% across NYSE-listings. That made Monday's trade close to meaningless technically. Now, let's keep an eye on trading volume to see if we end up with a bearish "Day One" of trend reversal. At zero dark-thirty on Tuesday morning, it seems likely.
Economics
(All Times Eastern)
08:55 - Redbook (Weekly): Last 5.2% y/y.
4:30 p.m. - API Oil Inventories (Weekly): Last -4M.
The Fed
(All Times Eastern)
06:35 - Speaker: Reserve Board Gov. Michelle Bowman.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: (ADM) (.85), (MAR) (2.39), (PFE) (.64), (SHOP) (.34), (UBER) (.87)
After the Close: (AMD) (1.17), (AMGN) (5.01), (KTOS) (.12), (RIVN) (-.71), (SWKS) (1.53)
At the time of publication Guilfoyle was long AMD, KTOS, PLTR, MSFT, NVDA equity.
