When Wall Street Hits the Deck

All clear?

I'm not sure.

You guys over there ... you OK? Everyone still has their fingers and toes?

Think so, boss. What was that?

I think a whole bunch of tech stocks, led by Nvidia NVDA, posted their quarterly earnings.

Wow. Is that all?

Yeah ... it was this week's "event of the week." You know, how every week, the media pretends that something so wild and so huge is going to make or break our year or even our career? Last night was this week's event.

What actually happened? First Salesforce CRM reported, and "they" bought the stock. Then, CrowdStrike CRWD reported, and "they" bought the stock. Then Nvidia reported, beat expectations, issued guidance that was better than expected and "they" sold the stock. Then "they" sold all stocks that had anything to do with generative artificial intelligence, including Salesforce and CrowdStrike. Is that it?

No. Overnight, Nikkei reported that Apple AAPL had ordered 10% more iPhones for this coming seasonal launch than they did last year. Suppliers were supposedly to prepare for demand of between 88 million and 90 million new iPhones vs. a rough 80 million a year ago. That saved the market? Well, it stopped the selloff and these stocks came well off of their overnight lows.

What's Next?

You mean the next "big thing" or market catalyst? Exactly. I'd like to tell you that the Federal Open Market Committee policy meeting that likely culminates with a rate cut on Sept. 18th was next. What's stopping you? Well, we do have another incorrect monthly employment report due a week from tomorrow from the Bureau of Labor Statistics. (The ones based on incorrect modeling that consistently overstate job creation? Yes.)

We're still going to focus on that series, even though that agency has come clean? We'll focus on just about anything, correct or not, if we think we can provoke the algorithms into doing something stupid. Ahh, now I get it. We also have the consumer price index on Sept. 11 and retail sales on Sept. 17. So, something "huge" every week? Exactly. I hate thinking about Sept. 11. I know you do.

The Not So Awful Auction

Earlier on Wednesday, the U.S. Treasury Department brought to auction $70 billion worth of new Five-Year Notes. The auction was described as "failed" by the media, but I don't really see it that way. Not as a complete failure, anyway. Sure, the high yield awarded of 3.645% got sloppy. That yield tailed the "when issued" at that time by 0.3 basis point, but the bid to cover was not terrible at 2.41. In fact, that's slightly above recent norms for this series.

Even more important than pricing as long as we're talking about small fractions of basis points, is for me, who's actually buying U.S. paper. Indirect bidders (foreign accounts) took down a strong 70.5% of this issuance, which was their largest slice of the pie for this series since the March auction.

Direct bidders (domestic accounts) grabbed their smallest slice of that monthly pie since May at 16.3%. Am I impressed that foreigners are willing to hold more U.S. sovereign debt? Yes. Am I impressed that our own people aren't all that interested? Of course not. That said, I really do like when dealers are not stuck with a huge number of unwanted notes. Dealers only took home 13.2% of this auction. The norm is more like 15% for this series. Quite difficult, despite the tail, to call this auction a failure in my opinion.

Wednesday Brought Some Heat

Equity markets sold off a bit in front of those high-profile tech sector earnings releases last night. That may or may not have softened the blow going into the event, leaving the marketplace quite receptive to something positive, such as the Apple news. The major indexes were all lower on Wednesday, with the S&P 500 down 0.6%, the Nasdaq Composite down 1.12% and the Nasdaq 100 backing up 1.18%.

Mid-majors were mostly lower, as well. Though the Dow Transports and KBW Banks were up modestly, the Philly Semiconductors gave up 1.83% for the session, led lower by Arm Holdings ARM and Micron Technology MU. The small to mid-cap indexes as well as the Dow Industrials all gave back between 0.26% and 0.65%.

Of the 11 S&P sector SPDR exchange-traded funds, two closed in the green (slightly), while the Utilities XLU closed unchanged and eight closed out the day in the red, led lower by Technology XLK and the Discretionaries XLY.

For the day, losers beat winners by about 5 to 3 at the New York Stock Exchange and by a rough 9 to 4 at the Nasdaq. Advancing volume took a notably minority share of trade for names listed at both exchanges (28.2% for NYSE-listings, 23.3% for Nasdaq-listings), while trading volume "popped." Activity increased by 9.1% day over day for names domiciled at the NYSE and by an incredible 19.5% on a day-over-day basis for Nasdaq-listed names. For the S&P 500, Wednesday was the busiest day since Friday. Whomp, whomp.

Salesforce: I'm Not Completely Sold

Here's the lowdown for Salesforce:

Adjusted earnings per share of $2.56 beat Wall Street by twenty cents.
Unadjusted EPS of $1.47 beat Wall Street.
Revenue of $9.33 billion (+8.5%) beat the street.
Adjusted operating margin of 33.7%, crushing estimates with a 31 handle.
Unadjusted operating margin of 19.7%, beating estimates with an 18 handle.
Free cash flow of $755 million was up but missed estimates.
Full-year guidance for revenue growth of 8% to 9% affirmed.
Full year adjusted earnings per share seen at $10.03 to $10.11, up from previous guidance, was above consensus.
Current quarter revenue was seen below consensus.
Current quarter adjusted EPS was seen one penny above consensus.

Salesforce is up nicely ahead of the U.S. open. I will be holding my fire for now. I am not entirely convinced that these numbers warrant this kind of euphoric reception. It does appear that the stock has had trouble taking back the half-way back point of its late February into late May selloff. I would like to see this morning's attempted breakout from the above ascending triangle pattern, which is bullish, hold. Should it not hold, then that ascending triangle will start looking more like a rising wedge pattern which is a pattern of bearish reversal.

Call me undecided on this one. I don't "take shots." I need to be convinced.

CrowdStrike: Still Beating the Crowd

And here are the numbers for CrowdStrike:

Adjusted EPS of $1.04 beat Wall Street by seven cents.
Unadjusted EPS of $0.19 met expectations.
Revenue of $963.87 million (+31.7%) beat the street.
Adjusted subscription gross margin of 81%, was up from 80%.
Ending annual recurring revenue was up 32% to $3.86 billion, adding $218 million.
Record second-quarter operating cash flow of $327 million, record second-quarter free cash flow of $272 million.
Full-year revenue guidance of $3.89 billion to $3.9022 billion, below consensus for $3.96 billion.
Full-year adjusted EPS was seen at $3.61 to $3.85, below consensus for $3.91.
Current quarter revenue seen at $979.2 million to $984.7 million, below consensus of $1.01 billion.
Current quarter adjusted EPS was seen at $0.80 to $0.81, below consensus for $0.96.

Note: The company had to take expectations down a notch as a result of the July issues that caused problems nationally and globally, adversely impacting Microsoft MSFT customers at that time.

This stock is trading lower this morning and that might not be such an awful thing. The conservative guidance could not have surprised anyone. What we have here is a developing cup-with-handle pattern. The handle will likely be added today. The pivot will be up at $279 with an unfilled gap between $316 and $336. The stock is facing an imminent "death cross" and that should help cement the addition of the handle. Once that's complete, depending on the depth of this handle, the set-up could be quite bullish. I am long the name and I most likely add on any sustained weakness going into the long weekend. Call me crazy, but this is still a "best in class" offering. That's an opinion, but the screw-up in July does not change that, and was not the result of any kind of breach. This may be opportunity knocking.

Nvidia: Still Processing ...

... Nvidia will need its own piece. Back in a couple of hours.

Economics (All Times Eastern)

8:30 a.m. - Initial Jobless Claims (Weekly): Expecting 234K, Last 232K.

8:30 - Continuing Claims (Weekly): Last 1.863M.

8:30 - GDP Growth (Q2-rev): Flashed 2.8% q/q SAAR.

8:30 - Goods Trade Balance (July-adv): Last $-96.8B.

8:30 - Wholesale Inventories (July-adv): Expecting 0.2% m/m, Last 0.2% m/m.

10:00 - Pending Home Sales (July): Expecting 0.2% m/m, Last 4.8% m/m.

10:30 - Natural Gas Inventories (Weekly): Last +35B cf.

The Fed (All Times Eastern)

3:30 p.m. - Speaker: Atlanta Fed Pres. Raphael Bostic.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: AEO (-.27), BBY (1.16), BURL (.96), DG (1.79)

After the Close: ADSK (2.00), DELL (1.69), LULU (2.95), MRVL (.29), MDB (.48), ULTA (5.51)

At the time of publication, Guilfoyle was long NVDA, CRWD, XLU, MSFT.