[Charts] Chip and Earnings Boom 2.0

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily. [Unsubscribe](. [Trend Trader Daily]( [Charts] Chip and Earnings Boom 2.0 Friday, January 14, 2022 Can I get a whoop whoop? Because it’s Friday in the Trend Trader Daily Nation. That means slinging words takes a backseat to flashing pictures, so I can quickly convey an important investment insight or two. This week’s edition includes an urgent reminder about why I’ve been pounding the table about chip stocks since, oh… since the beginning of the pandemic! Don’t fret, though. This profit party’s just getting started, based on the latest quarterly report from the world’s largest chip maker. Speaking of earnings, we’re about to enter the all-important reporting season. And today, I’m sharing the key stats to keep an eye on if we expect this bull market to keep charging higher. So let’s get to it… > ADVERTISEMENT < Profit from Apple's Secretive "Project Titan" Apple has tried to keep "Project Titan" under wraps for years — but one savvy trader has discovered the truth. Learn [Apple's secret]( and see how you could use this rare knowledge to make an early move on a [potential $50 BILLION opportunity](. Spending Spree Straight Ahead In [yesterday’s column](, I made the crystal clear case to stop fretting about inflation and to get busy buying semiconductor stocks. Well, here’s another data point to drive home the urgency and opportunity. Taiwan Semiconductor Manufacturing Company Limited (TSM), the world’s largest maker of chips, revealed during its latest earnings report that it plans to spend a record $44 billion in 2022 to expand production capacity. That comes on top of almost $30 billion last year, bringing the five-year total to a robust $116 billion. (click image to enlarge) As one industry insider tweeted out following the report, “This sends a clear bullish message for the whole #semis sector.” Indeed! So get busy buying! Speaking of earnings… Mark Your Calendars The flip of the calendar means we’re rapidly approaching another earnings reporting season. Who cares? This guy! After all, if stock prices ultimately follow earnings (and they do), this represents the most important data to come out each quarter. As you can see below, the reporting activity really starts to heat up next week, and then it goes into overdrive the following week. (click image to enlarge) So what should we be looking for exactly? You’ll recall, I previously shared the [three most important earnings statistics]( to track each quarter to divine the future direction of the stock market: - The Revenue Beat Rate — The percentage of companies reporting higher than expected sales figures. - The Earnings Beat Rate — The percentage of companies beating their earnings expectations. - The Guidance Spread — The difference between the percentage of companies raising guidance and those lowering guidance. As a frame of reference, the current three-month rolling average for each statistic is running higher than the historical averages, by a wide margin. More specifically: - The revenue beat rate stands at 68.4% compared to the historical average of 56.5%. - The earnings beat rate stands at 69.5% compared to the historical average of 59.4%. - And the guidance spread checks-in at 15.9% versus the historical average of negative 0%. As Bespoke Investment Group notes, “As 2022 progresses, we would expect earnings and sales beat rates as well as instances of raised guidance to continue pulling back towards their historical averages.” I agree and firmly believe that the markets are pricing in such a reality. But that means any surprises to the upside promise to send stocks soaring higher in a hurry, which is precisely why I’ll be monitoring these statistics so closely in the weeks ahead. And you should too! That’s it for this week! And keep an eye on your inbox next week… Because I have a unique series of educational content lined up that promises to help you beat the markets by as much as four to five times. Year-in and year-out! TREND TRADER PRO TRADE OF THE WEEK [ ACTION TO TAKE ] FOR TREND TRADER PRO READERS ONLY [> Learn more]( Ahead of the tape, [Lou Basenese] Lou Basenese Founder & Chief Investment Strategist Copyright © 2022 Trend Trader Daily, All rights reserved. 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