10/26/2022 UPTREND DAY 4 – Weak earnings among largest stocks deflates Nasdaq

The poor returns of Google and Microsoft impact the market, but do NOT hamper my enthusiasm for this market.
October 27, 2022

TODAY’s MARKET MESSAGE:   One-day pause in new Uptrend isminor concern but worth your attention

TODAY’s MARKET MESSAGE:   One-day pause in new Uptrend isminor concern but worth your attention

No UPtrending Market goes up every day. And I wish that this day did not show a major distribution day. See the comments below this table to understand why I am no too concerned.

Note divergence in the index changes of the major indexes:

In today’s Investors.com’sBig Picture column David Saito-Chung explained the unusual divergence in theindex changes in Wednesday’s Investor’s Business Daily’s Big Picture:

“Wednesday turned in one of the most lopsided performances among the major indexes in quite a while. … The top three companies [in the Nasdaq index]… including Microsoft (MSFT) and Google (GOOGL) … grab more than a quarter of the Nasdaq's valuation” because they have such a large capitalization (total valuation of all their stock.)

When these big guys report weaker than expected earnings, we get a results like Wednesday’s Nasdaq drop of 2.0%. Here are Wednesday’s stock price changes for the three largest stocks in the Nasdaq composite:

1        Apple            -2.0%

2        Microsoft      -7.2%

3        Google         -9.4%.

Wow!  That hurt!      But look at the QQQ which dropped only 2.2%.

David also suggested the “Equally /weighted” version of the QQQ named QQQE.

Here is the1-year history of the QQQE compared to the QQQ. The QQQ actually won – but does that “hair” of a difference really excite you? There is a difference between an exciting idea and the investing results.      

LESSON: Please check any new investing ideas with its long-term history beforejumping in.  Oh! You want to see a longercomparison?  Here is the comparison ofthe  QQQ versus the QQQE (equally weighted).The QQQE will product a higher return in some conditions but the QQQ overhistory has done much better.

Comparison of QQQ and QQQE long term

And over the life of the QQQE (the life of the QQQ is much longer), the comparisonis:

                   Total return of the QQQ     449%

                   Total return of the QQQE   233%

LESSON: Yes, the QQQE can protect you from times when the biggest stocks all have biglosses.  But overall, you are better offwith the QQQ.  NOTE: If you have a MarketSmith subscription and want to know how to prepare these slick comparison (and it’s okto add more stocks!), call me to walk you through if you’d like.  Charlotte (214) 995-6702.

Is it too late to buy the QQQ? Or to buy new stocks? NO! This is a prime time to build back your portfolio. Look at theprice-volume action for the last nine days on the following table.

Notice in the table above: Yesterday (10/26/2022) was the first distribution day in the last 12 days. And there will always be occasional days that do not match the general trend. I am not worried since we know it was a fair reaction to the poor results from Microsoft and Alphabet.

In this forth day of the new Uptrend, the MARKET FACTORS, COUNTS & RATINGS are very positive.

Notice how many positive (green) or transitioning (yellow) ratings are in the above table? Tha is a sign of the stength of this new Uptrend.

Now that I am up to speed on thisnow format, you will probably see more of these tables and charts in thenightly newsletters.

What else would you like to see in thenightly Armchair Investor Newsletter? Please send your ideas to me at editor@armchairinvestor.com.

OR… call me to discuss your ideas! I am always open to your creative input!

If you get my voice mail, it just means I’m on the other line. Please leave you name and number and I will call you back.


Wishing you, “Many Happy Returns,”

Charlotte Hudgin, the ArmchairInvestor,   (214) 995-6702


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Charlotte Hudgin
Editor, Armchair Investor
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