Stocks are on the slide on Monday, pushing the Dow Jones Industrial Average back under the 20,000 level, as Wall Street’s post-election honeymoon with President Donald Trump is devolving into typical marital bickering, as his controversial immigration ban and plans to clamp down on H-1B skilled worker visas is sending chills up the spines of many, especially in Silicon Valley.
Adding to the change in sentiment are reports that Trump’s tax reform plans — of which the corporate tax cut and a possible repatriation holiday Wall Street was most focused on — could be delayed until 2018.
Among the areas hardest hit are energy stocks, which are being hammered by bearish inventory data, evidence of a ramp up in U.S. shale oil activity and increasing doubts about the implementation of that hyped-up OPEC production freeze deal.
Case in point is Chevron Corporation (NYSE:CVX), which has tumbled below its 50-day moving average to return to levels not seen since late November after reporting disappointing earnings late last week.
The company reported earnings of 22 cents per share vs. the 68 cents expected. Revenues rose 7.7% from last year, but also missed estimates. Cash flow for 2016 was $12.8 billion vs. $19.5 billion in 2015. The disappointing results came despite a large cut to expenditures, with capex spending down to $22.4 billion vs. $34 billion in 2015.
I’m looking for a possible drop all the way back to the 200-day moving average, which would be a 6%-plus decline from here. In preparation, I have recommended the CVX February $110 puts to my Edge Pro subscribers.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
