Palantir Confirms Goldman Sachs Warning After Earnings
The AI darling reported earnings as the market saw a choppy and sloppy day.
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Market action was choppy and sloppy on Monday as participants tried to figure out what comes next in Iran. Oil traded higher after the U.S. took out several Iranian fast boats and the possibility of increased hostilities pushed back into the tape.
The S&P 500 lost 0.4% and the Russell 2000 was down 0.6% with market breadth about 37% positive. New 12-month highs dropped to 238, partly the result of some mild rotational action out of the biggest recent winners like Google (GOOGL) and Advanced Micro Devices (AMD) . Oracle (ORCL) , Nebius Group (NBIS) , Palantir (PLTR) and Micron Technology (MU) led the AI-related group.
This looks like healthy consolidation after the indices hit highs last week. The big market-moving earnings plays are now in the rearview mirror, but there will be some interesting action within the hundreds of smaller stocks that are reporting.
Goldman Sachs noted that so far this earnings season the average reward for earnings beats has been particularly small. The median stock that beat consensus EPS estimates has outperformed the S&P 500 on the day after reporting by just 20 basis points, one of the smallest amounts on record. This is the sell-the-news mindset I have been yammering about recently. When expectations are high and stocks are technically extended, they don't have the juice to run up on a beat.
Palantir (PLTR) earnings are out and the company beat on both the top and bottom lines and raised guidance. This is a clean test of what Goldman flagged. Palantir is trading down slightly so far on the news, which tells you something about where the bar was set.
My game plan is to focus on the stocks I hold that have earnings coming up and look for trading opportunities on the reports. I am maintaining high cash levels and staying selective with any new buys. My primary goal is to protect recent gains and increase flexibility as we enter a choppier market environment.
Have a good evening. I'll see you tomorrow.
Related: How U.S. Investors Can Profit After Crazy Day for Japanese Yen
At the time of publication, DePorre was long GOOGL.
