Watchlist: How to Trade What’s Hot and What’s Not

Shah Gilani Apr 12, 2021

Today marks the first edition of my Watchlist. From now on, every week, I’m going to tee-up what I’m watching in the days ahead, why it’s important, and how to trade what’s hot and what’s not.

This week is going to be crazy, I can guarantee you that.

Earnings reports for Q1 2021 start rolling in and they are going to make waves, because investors and traders are weighing, down to the penny, how much companies are earning and what the “market” (S&P 500) is earning.

Why? Because SO MANY individual stocks and the market itself are “priced for perfection.”

Misses are going to get punished and beats will be rewarded. But, more important than hits and misses, forward guidance will make or break price levels.

With the S&P 500 closing at 4,128 on Friday (4-9-21) and consensus estimates for S&P 500 forward 2021 earnings to be $175, that puts the market PE multiple at 23.5X. That’s rich. The long-term average post-WWII is 18X.

Wall Street is optimistic but the market’s a lot, LOT more optimistic. Consensus estimates for Q1 earnings are for a 24.5% jump over Q1 2020’s numbers. The way the market’s priced right now it’s expecting more like a 30%-35% increase over last year’s first quarter.

Like I said, we’re trading richly and either earnings must rise to meet lofty expectations and the big multiple investors have been willing to pay, or the market’s going to adjust itself backwards.

I’m still bullish, but I’m not the raging bull I’ve been. Still, you’ve got to be in it to win it!

We’ve got market momentum, we’ve got millions of people getting jabbed, we’ve got pent-up demand, we’ve got stimulus money, we’ve got consumers and households in good shape, and we’ve got infrastructure spending.

You have to be bullish, which doesn’t mean you can’t be a scared bull.

Wednesday the big action starts.

JPMorgan Chase & Co (NYSE:JPM) reports. Last year they posted 78 cents this quarter estimates are for $2.95. If they come up short or don’t guide positively for the rest of the year, take your profits for now.

Wells Fargo & Co (NYSE:WFC) posted a penny a share last year, they’re expected to party up to 67 cents this quarter, that’s a big gain and a reason to buy WFC if they hit that and guide positively. WFC’s got another 25%-50% higher to run in my opinion.

Goldman Sachs Group Inc (NYSE:GS) reported $3.11 last year, this year consensus estimates are for $9.52. There’s been a lot of upper management turnover at GS, if they miss, or don’t guide up the rest of the year, it’s time to take your profits. It will come down to trading at the big bank. Trading should be on fire, if their trading desks didn’t hit it out of the park, something’s wrong.

For the fast money crowd, Bed Bath & Beyond Inc (NasdaqGS:BBBY) reports on Wednesday. With all the action that stock’s been getting they better beat last year’s $0.27, with at least $0.38, as expected, or look out below. I’m betting they beat and the stock rips higher, but I’m not in the majority.

Thursday sees Taiwan Semiconductor Co Ltd (NYSE:TSM) hit the tape. They posted 75 cents last year, this quarter they’re expected to hit 91 cents. Everyone’s going to be watching TSM. If they beat by a good margin and guide positively, BUY IT, and buy a bunch of the other semiconductor stocks. We’re buying them in my subscription services.

Bank of America Corp (NYSE:BAC) reports Thursday. They made 40 cents last year and expect 65 cents this year. I like BAC, but I prefer WFC.

Citigroup posts on Thursday too. Last year they hit $1.06, this quarter analysts expect $2.33. If they miss it won’t be pretty.

Also, on Thursday Delta Air Lines Inc (NYSE:DAL) posts. Hang onto your hats because last year they posted a loss of 51 cents, this quarter analysts say they’ll lose $2.79 a share. Are you sure you still want to own the cyclical airlines? Be afraid if they lose a lot more, they’re all going down if that happens.

On top of earnings this week we get CPI (Consumer Price Index) on Tuesday morning at 8:30. Retail sales and Philly and Empire manufacturing on Thursday, along with initial jobless claims.

Friday’s got housing starts coming at us.

It’s going to be a crazy week.

And I’m going to make it fun for you.

I’ll keep you up-to-date with the latest stocks to watch every week here, and starting tomorrow – and every Tuesday going forward – is the new Total Wealth Options Tuesday.

Every Tuesday, I’m giving you one of my favorite options plays, for free. Because I can.

And, because it’s about you, every Friday’s going to be Friday BS.H Day. That’s BS as in Buy/Sell and .H for Hold. You send me in the stocks you’re trading and investing in and I’ll tell you in my opinion if they’re a buy, a sell, or a hold.

Got any for me now? Bring it on! Drop me a line at my new email

I look forward to hearing from you.

Shah Gilani

2 replies on “Watchlist: How to Trade What’s Hot and What’s Not”

  1. Robin Randall says:

    Dear Shah:

    Do you think Cisco Systems CSCO
    will ever recover?
    Will you be doing the markets live sessions again?

  2. Kurt Mongelli says:

    What do you think about Old Republic International Corp ORI

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