It's been a shaky February for the earth and for the markets. Today we'll look what some Talk Markets contributors think it all means, while markets head into the last day of the month in the green.

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Yesterday the S&P 500 closed at 3,983, up 12 points, but still below the bell weather 4,000 mark. The Dow Jones Industrial Average closed up 72 points at 32,889. The Nasdaq Composite, also up 72 points, closed at 11,467.

Chart: The New York Times

Tesla (TSLA) up 5.5% retained the number one spot in the most actives column, followed by Ford (F), up 1.5% and Amazon (AMZN), up 0.3%.

Chart: The New York Times

In early morning futures trading S&P market futures are down 12 points, Dow futures are down 86 points and Nasdaq 100 futures are down 44 points.

Contributor Bob Lang has some words for beaten down investors in Suffering From Trading Losses? How To Get Back In The Game. Here is some of what he says:

"Over my trading career, I have had my share of big wins and spectacular losses. The victories are often very sweet, but it is the losses that I remember – even those that happened 20 years ago. Losing money is embarrassing and demoralizing."

"If we are in a losing trade, the pressure starts to build – we need to recover those losses. There’s no time to consider what we did wrong. The result becomes more important than the process, and we end up repeating the same mistakes."

"When I am faced with a loss or a have been on a losing streak, I tend to stop trading for a while – even up to a couple of weeks."

"Before I get back into the game, I’ll usually do some paper trading to make sure my head is in the right space. I want to feel confident but not too bold. Before I know it, I have a renewed outlook and am finding the trades that will make money."

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Contributor Herb Blank wonders if we have seen all this before in Déjà Vu - Will Tech Stocks And ETFs Crash Again?

"Watching tech stocks lead the market resurgence beginning the first six weeks of Q1 2023, I was hit with a flash of déjà vu. Just six months ago, the market slaughter of the first six months of 2022 was followed by a strong upsurge in the first six weeks of 2022 led by beaten-up growth stocks. It didn’t last."

"The first six weeks of 2023 looked about the same while weeks 7 and 8 have eaten those gains, some “innovative” and “next generation” ETFs still have impressive returns nearly two months into the quarter. Most had performed very poorly during the prior 10 months.

To illustrate the point, let’s take a look at 15 of the top-performing non-leveraged US stock ETFs year-to-date in comparison to their 12-month returns."

Talk about charts with bad optics. Blank's article has a full analysis of this chart along, with comments about some interesting stock picks. Worth a closer look, but here is his summary:

"Our predictive models currently have very few highly ranked stocks and ETFs in the Technology Sector. It appears as if the sector may have gotten out of the gate well ahead of itself...The big picture remains murky. Putting the QQQM and IVV returns for the first six weeks of the third quarter of 2022 (July 1 – August 15, 2002) side-by-side with this quarter, the patterns having QQQM shooting ahead of the S&P 5-00 (as measured by IVV) seem eerily familiar. The reversal of the past two weeks saw losses very similar although not quite as steep to the collapse between August 15 – August 31, 2022. Déjà vu all over again?"

Also with an eye on 2023 market performance to date, contributor James Picerno, in a TalkMarkets Editor's Choice column, asks Is It Time To Rethink Stock-Bond Allocations After Rate Hikes?

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"The case for raising equity allocations when interest rates were close to zero was easy. After a year of interest rate hikes by the Federal Reserve, the calculus is more complicated."

"deciding how or if to raise weights in bonds – Treasuries in particular – requires thoughtful analysis. Granted, a 10-year Treasury yield at 3.88% (as of Feb. 23) is close to the highest level in more than a decade and a world above the 2020 low of roughly 0.5%. What’s not to like?

But deciding how much to hold in Treasuries requires thinking about more than yields. It’s also a task of factoring in your time horizon, risk tolerance, and other variables that are specific to you. It’s important to also make some assumptions about how equity returns will unfold over a relevant time horizon vs. the bond maturity you favor. A good place to start is considering how the US stock market (S&P 500 Index) compares on a rolling 10-year basis vs. buying and holding a 10-year Treasury Note, which is summarized in the chart below for results since the early 1960s.

As an approximation of what you would have earned in a 10-year note, I’m using the current yield for a 10-year Treasury as a return estimate. For example, assume you bought a 10-year Note a decade ago when the current yield was just below 2%. Buying and holding that Note implies a 2% return over the subsequent decade, as shown by the last point in the red line in the chart above. By comparison, the S&P 500 earned an annualized 10.2% over the trailing decade (black line). The blue line marks the current 10-year Treasury yield: 3.88% (Feb. 23), which serves as a reliable forecast of expected return for a 10-year Note for the decade ahead.

The key takeaway: the S&P’s 10-year return varies widely relative to the implied return for buying and holding a 10-year Note. No surprise, but it’s a reminder that when you buy a Treasury, and how long you hold it, will cast a long shadow on how the investment fares."

"Clearly, recent history has been unusually kind to a heavy allocation in equities...Is it timely to switch to a heavy bond (Treasury) allocation? Maybe, but the answer requires more than simply comparing current yields in the bond market, although that’s a good place to start the analysis."

Taking a look a two stocks that have been making market news over the last couple of years we certainly do find a whole lot of shaking going on.

The Staff at ValueWalk find that Beyond Meat Stock Is Not Beyond Hope.

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"If you’ve wondered about Beyond Meat (BYND), this company is not beyond hope. The rollout of plant-based meat products by McDonald’s (MCD) and Yum! Brands (YUM) were flops but there is still demand for products and profitability remains within reach. Last year’s failures were a wake-up call for the market and the company, resulting in a strategy shift."

"The biggest takeaway from the Q4 results is that positive cash flow is still expected in the second half of 2023 and that has the short-sellers at least buying back their shares. 

The short interest in Beyond Meat is a whopping 37% going into the Q4 release, and the figure is more astounding when you count in the dark pool activity. Fintal.io has the dark pool short interest at 75% which suggests more than 100% of this company is short on the market. The stock price could skyrocket in this scenario, as seen in the pre-market action.

Shares are up more than 10% on the news, and this stock is set up for a reversal. The key resistance point ranges from $20.25 to $21.50, and it may fall in the coming weeks.

The analysts have kept this stock at Hold albeit a weak Hold despite the downturn in share price. The post-release activity is sparse so far; Marketbeat.com has picked up a single commentary which is from Mizuho and includes a price target increase. This is the first activity since the last earnings release and is noteworthy because the price target nearly doubled from $11 to $20.

This is above the current price action and the Marketbeat.com consensus which implies about 5% of upside. Assuming this trend continues, the bottom for Beyond Meat is in, and the rally may be about to begin."

"Beyond Meat’s shares are ready to reverse, but they may not confirm this move soon. The resistance at $20.25 to $21.50 is potentially substantial, and the company still needs to prove it can succeed on its transition. At best, this stock has hit bottom and will consolidate within the new range until more proof is available. Until then, the short sellers and bottom fishers will drive volatility."

See the article for a summary of Beyond's Q4 results.

The second stock on the block is Zoom Video and contributor Greg Feirman writes there is Value In ZM.

"Zoom (ZM) just reported 4Q22 earnings – including full-year 2023 guidance – and I think there is value in shares here. ZM is guiding 2023 revenue to $4.435-$4.455 billion and Non-GAAP EPS to $4.11-$4.18. They also have $5.4 billion in cash and marketable securities on their balance sheet which works out to $18/share."

"In other words, ZM has about 25% of its market cap in cash and short-term securities. So you’re really only paying $56 for the business. And that business is highly profitable. While I’m concerned about competition in the space there is also the possibility of an acquisition by a larger player. ZM shares are currently +6% in the after-hours."

Caveat Emptor X 2.

Have a good one.

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