Stocks Breakout Into Earnings

Stock Breakout into Earnings

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Two weeks into October and we’ve started to see some optimism even in the face of macro geo-political risk. When I was writing issue 41 of The LongVol Report last weekend my read on sentiment was unclear. 

I came into the month of October short with some decent risk and a few tail-risk shorts through Nvida (discussed in prior posts) which did not pan out but that’s fine. 

Right now the theme into Q4 is still pretty much the same for me so we’ll cover that as well as the main topic of the post: stock breakouts into earnings season. 


Housing Update

For the last 7 weeks this has been a macro theme for me and we saw many of the hombuilders come off there highs dramatically. 

  • Listings are rising, fear of higher mortgage rates 
  • JOLTS Jobs ticking higher slightly better than expected 
  • Email from a Phoenix agent talking about downside
  • Home prices need to adjust for inflation – many seem to not want to but my view is that when they do it’s a run for the exits/race to the bottom 

Energy Lower = Positive for New Net Longs

Energy has been a big long theme for the last two quarters and this pullback was needed. 

We traded higher on Sunday night with geopolitical risk adding in risk premium. There was a lot of long liquidation the prior week but underlying issues are still there. 

Add in increased insurance costs due to the War and that just adds in more effect. 

  • There’s still risk premium here based on the war so it’s hard to look short this market 
  • Still waiting out some equity longs in energy – but not yet 
  • A few thoughts with US World news here.

Stocks Breakout into Earnings

Major S&P-500 earnings names begin reporting in just a few weeks and ahead of that we look as if we’re ready to see these same names carry the market. 

FOMC minutes released and there were a few highlights to look at. 

  • FOMC Minutes: Officials Saw Monetary Policy Working to Restrain the Economy ‘As Intended’
  • FOMC Minutes: Majority of Fed Officials Saw One More Rate Increase as Appropriate
  • Led by the same 7 names 
  • Real estate negative -6.1% YTD
  • Consumer staples -9.1% YTD
  • Utilities -15.7% YTD
  • A look back at CELH – DeltaOne Idea
  • DIS and consumer staples



Final Word

The market is still in the same situation and earnings likely lift a lot of these names unless there is a larger scale escalation in the Middle-East. 

There are a lot of consumer staple names that are well off the highs that warrant attention if you can be patient – I am so there have been some additions into the report. 

The first of many AST Alerts were released as we started for Q423 with that which is a good approach for stock-replacement. 

I wrote a primer on DITM here. 

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About the Author

Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital L.L.C., a multi-strategy hedge fund management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.

He is also the founder of, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.


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