A Teachable Moment Amid the Chaos

Lost in the shuffle of whether or not there will be another round of talks in Pakistan this week is the fact that the heart of earnings season is in the early stages of ramping up into May. Indeed, there are plenty of other headlines to distract us from that fact, be it Kevin Warsh's confirmation hearing on Capitol Hill, as well as the various and conflicting chaotic headlines about Iran and 24/7 Trump soundbites. 

Still, the post-earnings selloff in Netflix in last week seems like a teachable moment which is easy to overlook given the plethora of current distractions.

Specifically, NFLX (below on the updated daily chart) rallied hard into earnings only to sell off after the report. This was a classic, "buy the rumor, sell the news," reaction, which may be in store for the multitude of names which surged in recent weeks given the record-breaking (or rivaling) broad market rally. 

Tesla and Lam Research are two of the more prominent names reporting this week (tomorrow evening) before we get into the real Mag7 heavy hitters starting next week. TSLA was oversold before the recent market surge, while LCRX has been one of the monsters in AI chips alongside MU SNDK in recent quarters.

Here, again, I would be on the lookout for a sell-the-news reaction, even if the earnings come in solidly, as the market begins to price in a high water mark with some of these earnings in the face of a margin squeeze due to sticky inflation coupled with slowing economic growth, not to mention steep uncertainty given the Iran War.