Choppy trading action continues, but the market is shrugging off the trade war worries again and is focusing on some good earnings reports instead.
Microsoft (MSFT) is doing most of the heavy lifting with its solid report and target increases. It is giving the FAANG names some sympathy strength as it bodes well for more positive reports in the big cap technology space. Cleveland-Cliffs (CLF) is the primary earnings winner today with a gain of over 6% on a beat of $0.24 per share. CLF is a steel tariff beneficiary as it supplies iron ore pellets that saw a nearly 40% increase during the past quarter.
In the oil sector, Action Alerts PLUS holding Schlumberger (SLB) posted in-line revenues and earnings Friday morning. The company earned 43 cents per share on revenues of over $8 billion, but management commentary was positive and the stock had not run-up into its report. It is trading largely flat on the news, but is still under its 200-day simple moving average and needs to generate a little better momentum to bring in the technical buyers.
Value buyers are giving SLB some support, but the oil sector in general is confused. There are efforts to increase supply, but so far they have not proven very successful. Combine trade war issues and currency considerations, and it is a tricky sector right now. SLB doesn't look like it has much downside risk, but it may not be a mover in the near term.
One smaller-cap alternative that is on my radar in oil services is Solaris Oilfield Infrastructure (SOI) . The company offers fracking solutions and has a cost effective system. It is expected to earn $1.76 in 2018 and grow that 52% in 2019 to $2.68. It has a PE of just 22.
There is substantial more risk in a small-cap like that compared to an SLB that is more likely to hit its estimates, but that is the nature of small-caps.
Speaking of small-caps, the Russell 2000 ETF (IWM) is not building on yesterday's outperformance, breadth is about even and there are some pockets of strength but it is very mixed and choppy. I've been making a few smaller transactions and have my eye on a few names such as Evolent Health (EVH) but I'm not doing much.