Prepared by Kara, analyst at BAD BEAT Investing
As the newest member to the incredible team at BAD BEAT Investing I have been overwhelmingly impressed with the past and ongoing performance of the high quality ideas have come out of this service. We have locked in a number of gains in recent weeks, and issued 3 new ideas this past week alone with solid upside potential. And, we have reduced for new members the one-month down from $199 to Just $50, for “$50 February“, a great price to try out the service. If you are interested you can sign up here:
$50 February, Limited Time Offer for New Members! (Click to Start now)
We also wanted to share a few of the recent ideas closed out for big gains.
First was Power Solutions (PSIX) at $58 cost basis: The 50% Correction In This Power Solution Name Is Looking Buyable (NASDAQ:PSIX)
Another was Lumentum (LITE) at $335 cost basis: The Recent Dim In This Lite May Soon Brighten (NASDAQ:LITE)
We also closed out of a play in United Foods (UNFI) this week with $32.50 cost basis: The Drawdown Here Is Opportunity In This Foods Name (NYSE:UNFI)
These were all nice short-term returns. Typically, we issue one new idea a week on average, but this past week, we issued 3 new ideas. All of them are in the buy zone, and 1-3% below where first highlighted so you can access them now as the in the buy zone when joining. Finally, we wanted to share our service leader’s thoughts on the market:
Prepared by Chris
Welcome to another edition of Thoughts on the Market, I’m your service lead Dr. Christopher Davis writing to you early Saturday morning in New York. Sometimes you lose a few, most of the the time you win. That is the mantra we have. We cut losses in losing ‘hands’ to save our chips to play better ‘pots.’ It has been a while since I reference the poker analogy, part of which Seeking Alpha’s flagship performing investing group service references when we talk about BAD BEATs.
This week was full of BAD BEATs off of earnings. What we mean is we saw a plethora of companies deliver double line beats and issue guidance that was strong and still get clobbered. It was a highly risk-off week to be sure, though we finished Friday with a bounce in many assets, as well as the averages. The software malaise took a breather as well Friday, perhaps we are finally seeing the heat come off of those names. We quipped in a public column on AMD’s bad beat on a public article in the comments, “AI giveth, and AI taketh.” That was incredibly true this week. And, while not many use the Dow Jones as an index (everyone follows the S&P500, and then the Nasdaq), seeing it cross and close above 50,000, that is a milestone. I remember saying in the first year of this service that in my life time we would see 100,000 on that metric. We are halfway there and I think, ahead of schedule!
So, for the many football fans among the membership, enjoy the Superbowl. And, as my family always says, enjoy the ads too. The biggest companies will feature ads, and many that are in our holdings to be sure. If you are going out for it, be safe. If home, enjoy the food. If not watching or no interest, then, well, ignore that last two sentences, but a major event. Speaking of major events, and if not a football fan, how about the kickoff of the 2026 Winter Olympic Games. We have many international members, including in the host nation of Italy. Wherever you hail, certainly there is a national pride uniting behind your countrymen to compete in the games. I personally will have them on as much as possible this month. They fly by. I like the winter events, an avid hockey fan, but love the bobsleigh, the artistic figure skating, the luge which is so fast, the competitive speed skating, and what I find to be “old school” the biatholon where the athletes snow shoe a course and then have to shoot.
Ok, so, what should we talk about here more market related? Well, jobs and inflation data, following the brief delay in government data, will be released together next week, bringing the interest rate outlook to the forefront for us.
Can we extend the gains from Friday into next week? We will hope so, but its up in the air right now. We are mostly through the major earnings but still have the latter quarter to go roughly. January’s nonfarm payrolls report and consumer price index, coming days after their original release dates, could re-instill confidence in the market following a recent bout of panic selling. So long as the data turns out better than investors fear. The big jobs report Wednesday is expected to show the U.S. added 60,000 jobs last month, up from an increase of 50,000 in December. It’s also forecast to show the unemployment rate stayed unchanged at 4.4%. January CPI, set to come out next Friday, is expected to show inflation increasing 0.29% and 2.5% on a monthly and yearly basis, respectively, an improvement from December, though still short of the Federal Reserve’s 2% target.
What the two reports suggest about the Fed outlook on the economy will be critical for the market, which is still pricing in two cuts for 2026, more than the central bank has indicated it might deliver. Still leaning toward 3 myself, things change quickly. And, remember, a new Fed Chair is coming in a few months who is likely to be more dovish. We will see. Oh, and these reports are coming two weeks after policymakers, at their January Federal Open Market Committee meeting, indicated a somewhat hawkish bent toward monetary policy. Those are the two things that we are largely looking at to try to figure out how aggressive the Fed’s going to be in light of the central bank’s dual mandate to ensure price stability and maximum employment. And, yes, those two data points are huge next week. How the central bank may shift in its assessment of its dual mandate is especially acute now that Kevin Warsh has been named as the nominated next Chair. Now that said, some indications suggest that the jobs report could come in weaker than expected. If you remember in the Governor Waller, was one of two dissenting voices to vote in favor of easier money at the last FOMC meeting. And, he has gone on record as saying weakness in the labor market requires more rate cuts. He said last year’s employment data will likely be revised down to show zero job growth in 2025.
Outside the big jobs report, the few recent employment data reads we have gotten have shown the labor market has become a bit more questionable. This is a fact. This week, payrolls processing firm ADP said private companies added just 22,000 positions in January, far weaker than forecast. Other data showed layoffs hit their highest January total since the global financial crisis, while hiring intentions are at their lowest since the same period. That is not great. But our regional bank coverage has shown no impact to borrowing power, demand, or ability to pay, nor a rush on deposits. But it is something we watch. And we have found that it can coincide or even be a precursor to jobs.
Think about it. Businesses having trouble repaying loans, and/or less demand, that can mean future cuts or less hires. Its an interesting way to get a read on the economy. That my friends is some tuition at a discount for you, but it takes work to get in there and read the results and assess the asset quality. From a higher level view, it accompanies all of the other data. If this jobs report comes in HOT though, in a big surprise, that could skew the monetary policy outlook even more hawkish. By and large the Street wants more interest rate cuts that will support consumer spending and corporate profits, but not so many that would indicates the economy is slowing down or at risk of recession. It is a balancing act to be sure. For now, I remain convinced that the economy is holding up. Markets were last pricing in two interest rate cuts, according to the CME FedWatch Tool.
Now, back to the Dow highlights, as that hits new records, the SP 500 cant get above 7k and the nasdaq is still a good chunk off highs. The Dow is the only one of the major averages to close out a winning week, however. The Nasdaq Composite is down 1.8% this week, and off 0.9% this year. What does this mean? It means a large rotation inside the stock market has been underway. This is why our ideas range across sectors, and many of our profit taking has been in diverse sectors benefitting. At the same time, we are nibbling into some select oversold rotated out of names. This rotation may continue in the week ahead if economic data and earnings continue pointing to a rosy outcome.
Now, I mentioned that we are mostly through the big earnings, but so far companies in the S&P 500 overall have reported Q4 earnings growth of 13%, better than at the end of last week. While many major reports are done, plenty of financial results are still to come, with Coca-Cola (KO), Ford Motor (F), On Semiconductor (ON), Robinhood Markets (HOOD), Cisco (CSCO), McDonalds (MCD), Humana (HUM) and Applovin (APP) among those reporting next week.
Enjoy your weekend and the big Game.
Respectfully,
Chris
Week ahead calendar
All times ET.
Monday, Feb. 9
Selected Earnings
UDR, Principal Financial Group, ON Semiconductor, Cincinnati Financial, Becton, Dickinson & Co., Apollo Global Management, Waters, Loews
Tuesday, Feb. 10
Selected Earnings
American International Group, Welltower, Robinhood Markets, Ford Motor, Gilead Sciences, Edwards Lifesciences, Assurant, S&P Global, Fiserv, Masco, Marriott International, Incyte, Duke Energy, Datadog, Xylem, Trimble, Coca-Cola Co., Zimmer Biomet Holdings, Hasbro, DuPont de Nemours, Ecolab, Quest Diagnostics
Wednesday, Feb. 11
8:30 a.m. January Jobs Report
Selected Earnings
MGM Resorts International, Motorola Solutions, Paycom Software, Equinix, Cisco Systems, Tyler Technologies, Rollins, International Flavors & Fragrances, Applovin, Albemarle, T-Mobile US, McDonald’s, Kraft Heinz, Westinghouse Air Brake Technologies, NiSource, CVS Health, Humana, Hilton Worldwide Holdings, Generac Holdings, Martin Marietta Materials, Ameren
Thursday, Feb. 12
Selected Earnings
Arista Networks, Expedia Group, Applied Materials, Wynn Resorts, Vertex Pharmaceuticals, Public Storage, Ingersoll Rand, Federal Realty Investment Trust, Eversource Energy, DexCom, Coinbase Global, Airbnb, Baxter International, Zoetis, Howmet Aerospace, American Electric Power Co., CBRE Group, Kimco Realty, Exelon, Iron Mountain, Zebra Technologies, West Pharmaceutical Services, PG&E, Entergy
Friday, Feb. 13
8:30 a.m. Consumer Price Index (January)
8:30 a.m. Real Earnings (January)
Selected Earnings
Moderna, Alison Transmission, Wendy’s, Advance Auto Parts
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