You want to be negative? It's easy. The new Federal Reserve chief -- who knows how he'll do? Lots of margin debt -- always the sign of a looming top. More than a 63% retracement? Time to go back down. A scattered hedge-fund manager here saying "too far too fast," an investment titan there saying it's "all about rates and the bond bear market."
You can say those in your sleep. They require no work. They aren't dismissible out of hand because they are all cogent, prudent and have at times been right.
But what's against them? How about Pegasystems (PEGA) reporting a remarkable number? That shows how customer-relations management is incredibly important to all sorts of new clients, including Verizon (VZ) , Boeing (BA) , Toyota (TM) and Bank of America (BAC) .
When a person calls a company for information, it's frequently a process fraught with difficulty. Customer-service reps often don't know how to use the tools they've been given by their company to figure out if they should take the call and can be helpful. But Pegasystems uses artificial intelligence to figure out the conundrum, saving time and money while keeping the customer happy.
This $4 billion company (soon to be $5 billion) reported 27 cents in earnings per share after the bell Monday when the Street was looking for 15 cents. PEGA had also seen the fiscal year at 79 cents, but now it sees $1.20. A readthrough of the report is fantastic for everything from stocks like the red-hot ServiceNow (NOW) to the soon-to-report Salesforce.com (CRM) .
What else is against the market bears? How about the numbers from Palo Alto Networks (PANW) , the largest stand-alone cybersecurity company? Last year at about this time, the stock collapsed from $153 to $107 in a few days' time because of a missed quarter that was perceived as a slowdown in cybersecurity's inexorable growth. However, Palo Alto Networks' redoubtable and reliable CEO Mark McLaughlin said on his conference call that there was no slowdown, just a problem in execution.
Now, I've been interviewing Mark for six years now (pretty much every quarter), and he owned that miss on air, painfully. He said it would take a little while to work through a staff reorg, but that products would be ready and that PANW would be back taking market share and producing cyber thwarts for the hottest part of the industry -- the onboarding and management of the cloud.
Fast forward one year and Palo Alto Networks used Monday's earnings call to highlight its special relationship with Amazon (AMZN) and Amazon Web Services. PANW also talked about close cooperation with the Azure platform from Microsoft (MSFT) , and with the Google Cloud platform from Alphabet (GOOG) , (GOOGL) . All of that is part of what Mark calls a "second evolution" for cybersecurity.
The company reported 97 cents in EPS while the Street was looking for 79 cents, and the fiscal-year earnings went from $3.40 a share to $3.84 to $3.91. That's a remarkable turn, yet it was right on Mark's time schedule and the stock should now take out its old high. Readthroughs: Cloud stocks, Proofpoint (PFPT) , Fortinet (FTNT) and, yes, Cisco (CSCO) , even as Mark talked about a big win from Cisco.
Now, homework-driven people read through what I regard as excruciatingly boring conference calls. They go to company Web sites and watch product demos and see who's really being helped.
It's not something you do with your spouse. It's not something you can have a good cabernet with. It doesn't lend itself to watching Netflix (NFLX) at the same time. In short it's a lot harder than just saying that the 10-year U.S. Treasury yield is going to 3% and that margin debt is high.
But it is the fundament of what's going on, especially when you read about how Microchip Technology (MCHP) might finally be close to buying Microsemi (MSCC) to tighten the Internet of Things/semi world, bring up margins and get more scale.
Those of us forgoing the Schrader and skipping The Punisher have to deal with the fundament. We have to know the perennial issues that could drive the market down. However, we also know that in the things have gotten better not worse in the information-technology sector, and that that sector is the largest in the entire stock market.
My point? The evergreen issues will always overshadow such homework, as the evergreen issues directly impact the S&P 500 futures. And of course, the S&P 500 futures will overwhelm any sort of rigorous dialogue via a small series of sales that have the impact of creating a lower market environment.
That, in turn, can trigger Vol buying. It can create a hostile tone for buyers. It can sow fear that will be taken up by the cabernet-drinking macro folks.
But for those of us who killed the evening doing our homework? Bring it on! The year of 2018 is going to be the year of doing your homework. Lazy intellectuals and Dr. Denton wearers alike have no place in these new unfriendly confines. But nerds like us? We couldn't be happier.