Raytheon - A Potential Earnings Pump To WatchEveryone wants to get rich quick. Because getting rich quick means you:
a) Get rich
b) Quick
Then you can wear big ugly sunglasses, a crappy t-shirt, flipflops, sit on the beach, eat a lot of meat, drink a lot of alcohol, and be promiscuous with women.
This is the modern human's dream, right?
And so everyone loves to speculate on potential earnings pumps and dumps.
There really is more to aim for in life.
Raytheon is one of the U.S. Military Industrial Complex cornerstones and is more or less a weapons mill for the NATO proxy war in Ukraine, which is of note because of the recent escalations of the conflict and how it can affect the U.S. Petrodollar, and thus bonds, oil, gold, equities, everything.
DXY - The US Petrdollar And The "Prigozhin Coup" In Russia
Geopolitically, the conflict between China and the International Rules Based Order is heating up. The current edict is to "de-risk but not decouple" from China (notice they never say "from the Chinese Communist Party"?).
In mid-June CEO Hayes was quoted by the propaganda machines as stating that decoupling from China was pretty much impossible because of all the parts and components that are manufactured in the mainland.
What this means, if you ask me, is that going forward, certain companies are going to have a very hard time meeting their target EPS and revenue estimates.
Raytheon may very well be one of them, as foreshadowed by a salvo of sanctions the Xi Jinping administration placed on them and Lockheed Martin.
The situation in China is very volatile right now. The IRBO wants control of China when the CCP falls. Xi Jinping and the other nationalists want to make sure that outside forces do not steal the motherland.
And so one day soon, we may find that Xi has thrown away the CCP in the middle of the U.S. night, and the markets will have themselves a series of consecutive red days like we've all never seen before.
Xi can weaponize the crimes against humanity that the Party and the Jiang Zemin faction have committed in the persecution of Falun Gong that started on July 20, 1999, and use the truth to protect both himself and China.
Organ harvesting and genocide of a group of 100 million spiritual cultivators with upright faith is certainly enough of a weapon to handle all the threats the motherland can be facing.
So why do you care about this if you're trading Raytheon?
Because a basic principle of markets is they go up when big money is selling and go down when big money is buying.
Raytheon and other military companies ironically never really pumped following the QE recovery from the COVID pandemic dump.
It wasn't until the Ukraine War began that Raytheon finally ran the highs.
And then it retraced.
That kind of retrace is actually really bullish and what bulls should want to see if they want their $145 billion~ company to become a $1.4 trillion company.
But the problem with the theory is more manifest on the weekly charts:
31 weeks of ranging and no breakout is not bullish.
And yet, after taking lows, it continues to recover. The most notable price swing is the $105 to $92 leg that just occurred.
I feel that Raytheon has some fundamental hidden bearish divergences to it and this is why it has traded this way all along, with the ultimate purpose of selling a lot high, and then selling it all above the all time high.
This hidden divergence, I think, is that U.S.-based companies may find themselves cut off from the Chinese supply chain in the very near future.
Only to tip all the bulls on their backs like stranded turtles and then dump and dump and dump and dump and not come back.
So I believe that with the setup at hand, the catalyst is actually the July earnings.
But if you look back at previous earnings, Raytheon doesn't have major pumps. It can go a bit and then it will run after.
Implied volatility on options for the July 28 expiry are only 20%, slightly higher than the 17% average.
But before we get there, I expect we're going to see prices return to the $92-93 range and give the best buying opportunity.
The catalyst for this, I believe, will simply be market-wide correction, which I outline in the following two posts:
Nasdaq - The Great Bear Trap
And
SPX/ES - An Analysis Of The 'JPM Collar'
In summary, there will be a shakeout in equities that will probably not be long lived, even if it's violent.
And after that, things will make their final run up, many of which will set new highs or new 52W highs, etc.
What's left for the remainder of 2023 and the start of 2024 doesn't look like it's going to be very pleasant, to speak frankly.
So make sure if you see Raytheon at a new high, you don't go getting ahead of yourself, longing the top.
