Netflix, Goldman Sachs And The Bitcoin Halving: Investing Action Plan

A seesaw week took a turn for the better, then slammed into a financial-sector sell-off on Friday, following JPMorgan’s earnings report. Goldman Sachs (GS), Charles Schwab (SCHW) and Bank of America (BAC) are next up, with earnings due early in the week. The Dow will keep busy with, in addition to Goldman, three other Dow names due to report. Netflix headlines the tech-sector’s earnings. And followers of cryptocurrencies are hotly anticipating bitcoin’s fourth official halving event, and its uncertain impact on the industry.

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Stocks To Watch: AI Leader Shapes A New Base

With the market still in a sideways pattern, a number of stocks are using the pause to forge bases. Nvidia (NVDA), the company and stock of the AI revolution, has just forged a new flat base along its 21-day moving average after flashing buy signals earlier in the week. Investment manager Ares Management (ARES) and trucking firm Saia (SAIA) are trading very tight, also in flat bases that show some early entry options. Denmark-based weight-loss drug giant Novo Nordisk (NVO) has a flat base as well, and has also pulled back in a test of support at its 10-week moving average. Uranium giant Cameco (CCJ) is flirting with a breakout.

Economic Calendar: All Eyes On Sales, Jobs Data

Economic data in the coming week will feature retail sales and a raft of housing reports, and could have some modest impact on the Fed’s rate cut strategy. March retail sales, out Monday, have been sluggish lately, but economists expect a moderate 0.35% rise overall, or 0.5% minus autos. Soft data or substantial downward revisions could support expectations that the U.S. economy is heading for a soft landing. A big upside surprise would cast more doubt on coming rate cuts. Outside of retail sales, only weekly jobless claims on Thursday, may have market-moving impact — if the upward trend many economists have anticipated finally begins to emerge.

Market Breaks Expectations; What To Do Now

Netflix: Accelerating Earnings Views

Internet television network Netflix (NFLX) will release its first-quarter results late Thursday. Analysts polled by FactSet expect Netflix to earn $4.51 a share on sales of $9.27 billion in the March quarter. That would translate to year-over-year growth of 56.6% in earnings and 13.6% in revenue. It also would mark the company’s third straight quarter of accelerating sales growth. Analysts predict Netflix will add 4.88 million net new subscribers in the first quarter. It ended 2023 with 260.28 million subscribers worldwide. Netflix shares sit on a six-month gain, up almost 28% this year and 80% above an October low. The stock is now less than 13% from its record high, set in November 2021.

Cryptocurrencies: Bracing For The Halving

The bitcoin economy moves toward a process it calls “the halving,” a 50% cut in the rewards paid to the blockchain processors known as miners. The change, intended the slow the roll out of the currency’s capped supply, is expected April 18 to 21. It is likely to pressure the price of bitcoin higher, eventually. Meanwhile, it could cause a shakeout among miners.

Blue Chip Notebook: The Dow Gets Down To Business

Earnings season gets underway in earnest for Dow industrials in the coming week with Goldman Sachs, Johnson & Johnson (JNJ), UnitedHealth Group (UNH), IBM (IBM) and Travelers (TRV) all set to deliver results. In that group, Travelers is the year’s fastest mover — up 16% — with FactSet projecting an 18% earnings gain. The others face lower targets. Goldman is poised for a rebound from support. Travelers is also testing support, after a run-up following its January breakout.

Earnings Season: A Smallcap Comeback?

At the end of March, the stock market traded at a 3% premium over the composite of fair values, Morningstar reported. Heading into earning season, that doesn’t necessarily put the market into overvalued territory. But it’s important to note that, since 2010, the market has traded at this much of a premium (or more) only 14% of the time. Morningstar expects ongoing gains to diversify, getting away from the artificial intelligence concentration, as investors rotate into undervalued segments. Morningstar says value stocks currently trade at a 6% discount to fair value. Small cap stocks are undervalued by 18%.

A Year Ago: The Bank Crisis, Rate Hike Worries

In April 2023 the banking sector was busy assessing what led to the prior month’s meltdowns of Silicon Valley (SIVBQ) and Signature Bank of New York (SBNY). The U.S. economy slowed to 1.1% growth in Q1. China’s economy appeared to be rebounding after the release of Covid era restrictions. The S&P 500 had bounced off a March low and was headed toward a short-term high in July. The 10-year yield was around 3.39, getting ready to rally as markets worried over ongoing Fed rate increases. At the end of April, President Joe Biden would announce plans to run again for the presidency.

Earnings In Brief

Charles Schwab has been on a losing streak, with earnings falling and revenue growth slowing to nil for the past three quarters. Analysts see the trend continuing when it reports Q1 results on Monday, with EPS down 21% and an 8% revenue slip. Shares are off about 3% year to date, but up 46% from an October low.

Bank of America delivers its first-quarter report early Tuesday. The bank broke a four-quarter earnings and revenue advance in Q4. FactSet points to a change of luck for Q1, targeting a 17% earnings drop. Shares are just off their highest level in 17 months.

United Airlines (UAL) has pulled back heading into Tuesday morning’s earnings report. Earnings slowed from big gains in ’22 and ’23 to a slump in Q4. Analysts see a modest Q1 rebound, as sales growth dips to single digits. The stock has been flying low since the 2020 crash, but it’s up 30% from an October low.

Interactive Brokers (IBKR) has run up nearly 18% after the most recent in a string of breakouts. FactSet sees the outfit’s luck holding, expecting a 21% earnings jump and an equal rise in revenue in a Tuesday afternoon report. Shares ended Friday a fraction below their 21-day moving average.

Tech Major ASML, Robotic Surgery Systems Firm Intuitive On Tap

ASML Holding (ASML) will post its first-quarter results early Wednesday. Analysts predict the Netherlands-based chip gear leader will earn $3 a share, down 40% year over year, on sales of $5.52 billion, down 18%. ASML’s sales have been negatively impacted by export restrictions to China.

Intuitive Surgical (ISRG) reports first-quarter results late Thursday. FactSet expects adjusted earnings of $1.42 per share on $1.87 billion in sales. Earnings would climb more than 15% as sales rise about 10%. Shares have formed a flat base, and are testing support at their 10-week moving average.

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