Daily Reports
Mon
Any major news:
UK manufacturing PMI below forecast (50.9 vs 51.4) & below previous result.
US manufacturing PMI also below forecast (51.6 vs 51.7), though ahead of previous result. A little concerning for production & reads through in the themes, as most Industrial sub sectors are down over the past month or so. I guess both still expanding though. Maybe just not the ideal time to invest in industrial stocks.
Tue
Earnings results:
Supreme (SUP) Full year 24 results – Excellent as expected with revenue growth of 42% & EPS growth of 87%. However forward guidance is quite meagre at 10% for revenue & 3% for EPS. The proposed ban on disposable vapes will hurt their growth prospects for the next couple of years as their largest growth this year, at 713%, came from their Branded Distribution segment, which is mainly disposable vapes. They have developed their own rechargable products though & are actively diversifying their portfolio to reduce exposure to vaping. Such as their very recent purchase of ‘Clearly Drinks ltd’ a soft drink manufacturer & distributor. All other aspects of the business grew reasonably well in the mid to high single digits, so not 100% reliant on vaping. Definitely one to keep an eye on after the big run up it had last week.
Wed
Earnings results:
Cairn Homes (VRN) H1 trading update – In line trading update, though very strong none the less. “Cairn is poised to deliver an exceptional output and financial performance in 2024, and expects to deliver year-on-year growth of c. 30%.” Expect to output 2,200 units, achieve OP of €145m & ROE of 15%. Analyst estimates are for €873m revenue. They closed on 894 units in the half generating revenue of €365m, a 66% YoY increase. Though this does mean their second half needs to be a lot stronger to meet revenue expectations & their own quoted unit number of 2,200. Say that their closed & forward order book is up to 3,100 new homes, worth €1.2B, so they have some fantastic visibility & security going forward.
Any major news:
UK services PMI ahead of forecasts (52.3 vs 51.7). Good to see this expanding as the UK is a services heavy country, delivering on our bread & butter.
US services PMI also ahead of forecasts (55.3 vs 55.1) & heavily expanding.
Thu
Any major news:
UK construction PMI below forecasts (52.2 vs 54.0) & down on previous of 54.7. Still expanding, though quite a way below forecast.
Fri
Any major news:
UK election result – Labour landslide victory with huge majority of seats. Immediate reactions from the stock market was actually positive, though I guess it was almost certain so there were no surpises. The real test will be when they start bringing in changes and announcing new budgets. There’s nothing I can do though so just wait & see.
Weekly wrap
Trades made:
No trades made, a very quiet week.
Best themes & subsectors. General market trend:
In the US the S&P 500 & Nasdaq have both set new all time highs this week, with the tech stocks continuing to push them higher. Big positive weekly candles from pretty much all of the tech sub sectors. Healthcare is looking weak for now, with all red weekly candles & short term down trends in most sub sectors. Consumer & Industrial themes are a mixed bag, with the electric vehicle sub sector breaking through resistance, probably led by Tesla that put some huge gains in the past week.
In the UK the FTSE 100, FTSE All share & AIM All Share all continue their mini corrections. Nothing drastic, they’ve basically just taken a breather, likely due to the election. It will be interesting to see if they continue upwards once we get a bit more certainty coming through with the new government.
Thoughts on strategy, anything else:
I can’t help but think the US markets are due a more serious correction. They have been on such a strong upward trajectory, powered by the big tech stocks, that it’s got to end some time. I saw a post on X this week showing the best 20 first six months of the year for the S&P 500 (or maybe Dow Jones / Nasdaq, can’t remember), of which this year was 12th I think. All but one of them had a worse second half of the year. I know history doesn’t repeat itself but I think there’s a very strong chance the US markets run in to some form of struggle later this year.
This upcoming earnings season could be the catalyst. If the big tech stocks don’t come in beating expectations then we’re likely to see a big fall I think. I don’t even think in line results will be good enough. There’s so many people, myself included, looking for an excuse to lock in their gains. This could see a rotation into the other sectors, such as healthcare, industrial & just generally mid & small cap stocks. My system should see me through any such rotation so I’m not concerned at all, it will be interesting to see how it unfolds.
I’m hoping we see some more strength coming in to the UK small caps & AIM as well. There’s been strength at the top end recently with new ATH’s for the FTSE 100 this year, though AIM is still down 40% plus from it’s 2021 highs. My strategy definitely brings up stocks in that AIM area more so than the large caps, so I haven’t really seen much of the run up so far.
Looking to next week
Stocks setting up the best:
UK stocks:
Solid State (SOLI) – still on the list, in a tight sideways channel. Earnings due this week & took a run up to the top of the channel on Friday. I really think this one could go this week if earnings are strong.
AJ Bell (AJB) – I already have a position, though not a full one. Setting up nicely to take out previous long term highs. Could see a big break, though would want to see decent volume come in to add to my existing position.
Aquis Exchange (AQX) – Continues to set up really well in a very tight sideways channel. I’m not actually expecting this to go this week, unless there’s some news, but one to keep an eye on until it breaks one way or the other.
Auto Trader (AUTO) – Not ideal as the optimal entry was the breakout on 30th May, or back in November. However it is putting in a sideways channel. Ideally I want to see this continue for another couple of months. But one to consider if it breaks with volume sooner.
US stocks:
BellRing Brands (BRBR) – Still in it’s sideways channel & heading back up to the top. I think it will need the next earnings to break out, but you never know.
Medpace Holdings (MEDP) – Still in it’s sideways channel. Had a go at breaking out recently, though failed on low volume. The 150MA is coming up to meet the price, I can see it going one way or the other in the next 2-3 weeks.
AppFolio (APPF) – not the best set up as still really in a strong up trend and quite a wide channel. Though could be a good entry if it breaks with decent volume, especially with a catalyst such as good earnings.
Palantir (PLTR) – Similar to AppFolio in that it’s not perfect as it hasn’t had much of a correction. However it has put in some sideways movement and fell right back to the 150MA. Needs to be a strong break, but certainly a tradable opportunity.
Upcoming earnings:
None for the US that I follow. Earnings season starts again the week after so the break is quite nice, as it’s going to be manic again for a month then.
In terms of the UK, I’m not sure how reliable these are as they seem to change & some appear un-announced. I think the UK system definitly needs improving. Anyway the only one I can see is:
Monday – Solid State (SOLI)
Upcoming news events:
Tuesday – US Retail sales
Wednesday – UK CPI numbers
Friday – UK retail sales
Game plan:
It looks like it’s going to be a quiet week, so focus on being as prepared as possible for the upcoming earnings season. Make sure I understand all the companies on my watchlist & go back through the previous earnings reports for the few new stocks on the list I haven’t done that for yet.