With the US stock market in deep correction territory, it is worth noting the critical events that are coming up this coming week (24th Jan 22 to 28th Jan 22), so you can strategize what to do with your stocks or how you want to trade in the market.
FOMC Meeting of 2022
The Fed’s first Federal Open Market Committee (FOMC) meeting for 2022 begins on Tuesday (25th Jan) with the two-day meeting’s results due for release on Wednesday (26th Jan)
While the Fed isn’t expected to raise interest rates just yet, the meeting could pave the way for multiple rate hikes this year and offer more guidance on when they’ll come. With rising consumer inflation hitting 7% year-over-year at multi-decade highs, the Fed is under pressure to raise rates to cool prices and could act sooner than anticipated.
An insightful video that I watched over the weekend shared an interesting perspective, that is the fear that is happening right now is not due to tapering or raising of interest rate, but rather the uncertainties surrounding these events. If the Fed can step forward and confirm their exact plans, the market will digest them and fears will subside.
If you have 16 mins to spare and can understand Mandarin (Chinese), do check out the video below:
Mega Cap Earnings Report
Some of the most valuable companies in the world are having their earnings announcements this coming week, notably Microsoft on Tuesday (25 Jan), Tesla on Wednesday (26 Jan) and Apple on Thursday (27 Jan).
To get a boost on their share prices, these companies must not only beat analysts’ expectations but also give strong guidance for the next quarter.
As we see from Netflix’s case, the company beat expectations but gave weak guidance for the next quarter and the share price dropped more than 20% the next trading day.
However, if the companies give strong guidance for the next quarter, it can be a double-edged sword because it is signaling to the Fed that consumer spending is still going strong, which creates inflation and the Fed have to increase the interest rate to curb inflation.
Other prominent companies also reporting their earnings include Visa, Mastercard, Amex, Johnson & Johnson, Lockheed Martin, Boeing, and IBM.
It will be interesting to see consumer spending behavior from Visa, Mastercard, and Amex earning results. If these companies are doing very well, it means consumer spending is strong.
Full List here:
Monday (January 24):
IBM (IBM), Koninklijke Philips (PHG), Logitech (LOGI).
Tuesday (January 25):
Microsoft (MSFT), Johnson & Johnson (JNJ), Verizon (VZ), Texas Instruments (TXN), NextEra Energy (NEE), Raytheon Technologies (RTX), American Express (AXP), General Electric (GE), Lockheed Martin (LMT), 3M (MMM).
Wednesday (January 26):
Tesla (TSLA), Abbott Laboratories (ABT), Intel (INTC), AT&T (T), Boeing (BA), ServiceNow (NOW).
Thursday (January 27):
Apple (APPL), Visa (V), Mastercard (MA), Comcast (CMCSA), Danaher (DHR), McDonald’s Corporation (MCD), Mondelez International (MDLZ), Marsh & McLennan (MMC), Blackstone (BX), Sherwin-Williams (SHW), Atlassian (TEAM).
Friday (January 28):
Chevron (CVX), Caterpillar (CAT), Charter Communications (CHTR), Colgate-Palmolive (CL), and Phillips 66 (PSX)
Other Events
Tuesday’s S&P Case-Shiller Home Price Index will provide an update on changes in home prices in America’s largest cities in November, and there will be a report on new home sales for the month of December on Wednesday.
The Mortgage Bankers Association had earlier reported that the average mortgage price in America had hit a record in early January, as demand continues to outpace supply. The National Association of Realtors projected home prices will climb another 3% to 5% in 2022 and in 2023.
My Thoughts
In my humble opinion, I think the market is going to see more red days in the upcoming week. Why?
Earnings don’t meet expectations: Stocks go down.
Earnings meet expectations but weak guidance: Stocks go down.
Earnings meet the expectation and strong guidance: Fed thinks it will likely create more inflation, Fed raises interest rate faster and then, the stock market falls
Fed turns hawkish and raises rates faster: The stock market falls
The only scenario that will help the market rebound is for the Fed to reassure the market that the interest rate will be raised progressively and at a slower than expected pace.
So invest/ trade carefully, bearing all these factors in mind. For me, I am going to keep selling and rolling my covered call contracts on my existing stocks as the market continues to fall. By the end of the week, my Apple PUT contract will most probably be exercised and I will be selling covered call on Apple from next week onwards.
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Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES
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How To Buy Options on Interactive Brokers (Step-By-Step)
If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
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I Cut $135,715 Worth Of Losses In The Last 1.5 Months
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