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Michael Lebowitz and Lance Roberts



Articles by Michael Lebowitz and Lance Roberts

Walmart Shares: Great Fundamentals But At A Frothy Price

4 days ago

Walmart’s (WMT) shares opened higher as its earnings report surpassed expectations. EPS and revenues beat expectations. Moreover, the company increased its sales guidance for next year by a full percent.

As its latest earnings report reminded us, Walmart is doing very well financially. Furthermore, its share price has surged, reflecting the company’s health. While the price of Walmart shares should increase with its fundamentals, we must ask if the stock performance is commensurate with earnings. This is where technical analysis can look beyond fundamental analysis and play an important risk management role for shareholders.

Over the last year, Walmart shares have risen by nearly 100%. As the longer-term weekly graph below shows, Walmart’s Williams R% and

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Gold Miners Enter The Bears Den

5 days ago

Many investors consider a decline of 20% or more to be a bear market. We can debate the merit of the random 20% figure, but according to that definition, gold miners, down 25% from its peak on October 22, are in a bear market. We have noted numerous times in the last month or so that gold and gold miners were getting very overbought based on their technicals. Furthermore, our recent article – Why Is Gold Surging? – highlights how the price of gold is diverging from its fundamentals. As we wrote:

The speculative atmosphere can continue, but beware because gold is getting overbought and deviating from its long-term fundamental drivers. When speculative momentum fails, gold may eventually catch down to its fundamental relationships.

The SimpleVisor graph below

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5X5 Inflation Expectations: A New Benchmark To Follow

6 days ago

At the last FOMC meeting, Jerome Powell was asked if they were concerned that inflation expectations are “de-anchoring, or put another way, are anchoring at a slightly higher level?” His answer specifically referenced the 5×5 forward inflation expected rate. He could have used many data points to answer the question. However, the fact that he specifically mentioned the 5×5 rate gives us an inflation expectations benchmark to better gauge how the Fed will manage monetary policy.

The 5×5 inflation rate uses five and ten-year inflation expectations, as derived from the difference between nominal and TIPS yields, to calculate what they imply about inflation for the five-year period beginning in five years. For example, if the 5yr expectation was 1% and the 10yr was

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Seeking Beta

11 days ago

While the "Trump rally" appears to have just begun, one of its initial hallmarks is that investors want beta. Beta is a measure of the volatility of a stock versus the broader market, most often the S&P 500. For instance, a stock with a beta of 1.50 implies that based on prior trading, investors should expect the stock to be 1.50% more volatile than the S&P 500. Investors seeking beta must assume the market will be heading higher in the short term; thus, higher beta stocks should outperform the market.

The paragraph below, courtesy of Bloomberg, supports the beta chase into year-end.

In fact, it’s a trend that plays out year in, year out. Bank of America notes that stocks with the highest volatility, known as beta, have tended to beat the market in the final

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Crypto Soars

12 days ago

On the campaign trail, Donald Trump favored the crypto industry, including appointing "crypto-friendly" regulators. Moreover, one of the plans he mentioned several times was the creation of a federal strategic reserve of crypto assets. Trump’s decisive victory, along with the Republican sweep of Congress, makes it even more likely the crypto industry and related cryptocurrencies will benefit from a Trump presidency. Accordingly, in the aftermath of the election, crypto has been soaring. The following quotes are courtesy of a Bloomberg article on the topic:

“We believe a significant portion of the institutional market de-risked in the lead-up to the election and is now re-entering post Trump’s win, creating material buying pressure — this is likely to be

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Super Micro Is Not So Super Anymore

13 days ago

Super Micro Computer Inc. (SMCI) was the market’s darling only six months ago. Amazingly, Its stock, had risen 3x in just the first three months of 2024. Consequently, S&P Global announced its addition to the S&P 500 Index. The announcement is annotated below with a box in early March. Furthermore, the circle, which coincides with the peak in Super Micro shares, was the date it started trading in the index. From the day it joined the index to today, it has been a one-way downhill ride for shareholders.

The bad news continued last Friday, with shares already down about 80% from the March peak. Super Micro’s stockholders learned the company could face a liquidity problem. If the company does get delisted from the Nasdaq stock exchange, it could be forced to make

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Crypto’s Crash and Stocks Head Higher

November 17, 2021

“Crypto’s Crash,” says some financial news headlines. The reality is Bitcoin, Ethereum and others are down about 10-15% in the last few days. The word “crash” may seem appropriate to describe the sharp decline, except 10%+ moves in a matter of days is the norm, not the exception for crypto.
Ignoring the crypto crash, the S&P 500 went higher. The index is up over 25% this year. Despite such an outsized gain, the table below from LPL Research argues we should be optimistic for 2022. Of course, it’s worth noting some of these outsized returns were coming off of major bear market lows such as 1975, 2003, and 2009.
What To Watch Today
Economy
7:00 a.m. ET: MBA mortgage applications, week ended Nov. 12 (5.5% during prior week)
8:30 a.m. ET: Building

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Bitcoin and $BITO Mania Grip the Stock Market

October 21, 2021

$BITO, the first Bitcoin ETF was issued Tuesday morning. The ETF provides retail investors their first true access to Bitcoin without having to open up a crypto wallet account. BITO tracks bitcoin futures and is expected to track the cryptocurrency much closer than the Grayscale Trust (GBTC).
Stocks rallied alongside BITO and posted a fifth straight green day. The index is now well established above its 50dma and aiming for new record highs. However, not surprisingly, the market surge has quickly taken the index back to overbought conditions short-term. Such suggests we could see some consolidation, or a potential retest of the 50-dma, before attempting all-time highs.

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What To Watch Today
Economy
7:00 a.m. ET: MBA mortgage applications, week ended Oct. 15 (0.2%

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