CHRIS VERSACE: Good morning, Action Alerts Plus members. As we look to the back half of this week's trading, one that will feature a slew of corporate earnings and a number of Fed officials speaking, I wanted to share a few of the stocks and other things that are catching my attention.

Laying the groundwork for that, as we know, the market is trying to determine a few things-- the true speed of the economy, the likely path forward for Fed policy, earnings growth, not just for individual companies, but the larger market, as well as the valuation for both individual stocks and the overall stock market. And that, of course, brings us back to the speed of the economy and the prospects for monetary policy.

In recent Alerts, we've shared, the market has had a good run so far in 2023, especially for the NASDAQ. But the reports we're starting to get are raising some fresh questions about the underlying expectations that have fueled that move higher in the market.

Some of these reports that we're alluding to are comments in the last 24 hours from F5 networks, American Express, DR Horton, Lam Research, Tesla, and Taiwan Semiconductor. In particular, with Taiwan Semiconductor, it missed revenue expectations for the March quarter and widened its guidance for the current quarter to the downside. Looking for roughly $15.2 to $16 billion. That compares to the consensus forecast for the current quarter of just under $16 billion.

Now, we like context, because it really helps us frame what we're seeing properly. So the context for this is that $15.2 to $16 billion guidance that TSM provided for the current quarter is down, from $16.7 billion in the March quarter we just completed, and also down compared to the revenue of 18.16 billion it reported for the June 2022 quarter.

Now, we see this and other comments out today and last night calling into question the big run up we've seen in tech stocks in particular so far in 2023. And as you know, we watch all of this rather closely, with an eye towards what it means for earnings expectations for, again, individual companies related to these companies that have reported, but especially for the S&P 500.

Those expectations have fallen in recent months, to the point that they are almost flat for 2023, compared to 2022. And again, for context, back in late September, the consensus expectations for the S&P 500 for 2023 were to grow 8% compared to 2022. And now, they're flat.

However, what we're starting to see now is, another round of downward revisions is likely. We also have five Fed heads making the rounds today alone. And with no new insights on inflation until tomorrow's flash PMI report and next week's PCE price Index Report, odds are these five Fed officials will do what we've seen from recent ones. And by that, I mean stick to the playbook.

Now, those comments that they're going to make that likely suggest we aren't going to see any rate cuts in the back half of 2023 are going to be paired with another round of negative earnings revisions, especially for the S&P 500. This is likely to make for a very bumpy ride in the market in the near term. Let's remember, over the next two weeks alone, we have more than 2,500 companies reporting their latest quarterly results.

All of this led us to make a prudent move with the portfolio this morning by adding back to our cash levels. We did this by trimming back our positions in Apple, Sebo, Microsoft, and UPS. And those moves build on the large gains we took yesterday with Chipotle shares.

We spelled out all of those moves in their respective Alerts. But the cut to the quick of it is this. Each of those stocks have moved significantly year to date, or they're encroaching on our price targets. Or in the case of Microsoft, it has moved past our price targets. All of that led us to prudently lock in some of those gains ahead of that onslaught of earnings reports in the coming weeks.

Now, as we build the portfolio's cash, we're shifting into a more defensive mode in the near term. We will patiently build out newer positions, looking to improve the portfolio's cost basis in each of them. And for reference members, if you want to see each position's average cost basis, can head over to the portfolio on the website and look right down in one of the columns. And there it is for each and every position.

Now, before we close out today's rundown, I do want to share some positive developments. First, Costco increased its quarterly dividend by 13%, to $1.02 per share. And perfume company Inter Parfums boosted its guidance. That is the latest positive data point for our shares of Coty.

That'll do it for today's rundown. JD Durkin will be back tomorrow for a look at the technical landscape, with AAP member Helene Meisler. Thanks, members. Thanks for watching.