Good News for Tesla and Meta, But Good Enough to Attract New Buyers?
Mark Zuckerberg said his company hit major milestones toward what he calls personal super intelligence.
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The action on Wednesday looked a lot like what we saw during the second-quarter reporting season. A good report from a leading name created some positive sympathy, but it was not sustained, and buying interest slowed as the afternoon wore on.
This time there was a specific trigger. Reports that two people were killed when a drone was shot down over Saudi Arabia’s Shaybah oilfield, followed by a Reuters report that the U.S. State Department was preparing to pull personnel from embassies across the Gulf, were good excuses to be more cautious.
Gap Won’t Close Smoothly
Breadth turned negative at about 49%, and new 12-month lows swelled to around 285 after running near 100 on Wednesday morning. The AI group, the Invesco QQQ Trust (QQQ) and the VanEck Semiconductor ETF (SMH) outperformed, while the Russell 2000 was flat after a couple of days of leading. It is unlikely that the gap between the two tiers of this market is going to close smoothly. Small caps get a day or two of catchup, then the money goes right back to the handful of names that keep reporting.
Meta and Tesla
The issue now is the reaction to Tesla (TSLA) and Meta Platforms (META) after the close. Both stocks are seeing initial positive reactions. Tesla earned 48 cents a share against a 45-cent consensus, with revenue in line, and the stock is up about 3% in the after-hours session. Meta earned $7.40 against $6.54, with revenue ahead of estimates and fourth-quarter revenue guidance that brackets the consensus, and the stock is up less than 1%. Mark Zuckerberg said the company hit major milestones toward what he calls personal super intelligence, including the launch of its first frontier model, and that “our investments are paying off, the core business is strong.”
The question is whether this is good enough to attract new buyers or whether it will be an opportunity for some reduction in risk. The SpaceX (SPCX) report was good enough to keep that stock green all day, but it faded some late. These reports don’t look as good, and Meta is already off its initial highs.
Game Plan
I spent a lot of time on Wednesday looking for new setups and didn’t find much of interest. I like the bounce I’m seeing in biotechnology, but there isn’t much in the way of new entries right now. I’m staying patient and am ready to hit the buy button when the right setup appears.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre was long SPCX.
