The S&P 500 finally breaks above the key 2816 level. Here is an brief run down of last weeks trading action and notable stock news written by our Head of North American Research, Gary Christie.
The S&P 500 advanced by 2.89% last week.
On a daily chart, we have turned bullish on the SPX as the index has surpassed its challenging and widely watched 2816 level after 6 attempts, opening the way to test record highs at 2942. The index remains inside a bullish trend channel with a stop-loss set at 2745 and upside targets of 2860 and record highs of 2942.
The Dow Jones Utility index broke above a weekly bullish symmetrical triangle continuation pattern as the index reached record highs. Continued upside momentum is likely.
The Transportation index confirmed a bullish Hammer reversal candlestick on March 8 as prices rebounded off the 50-day moving average.
The VIX broke below short term support around the 13.30 level, we anticipate further decline towards Oct lows at 11.25 which is bullish for the S&P 500.
Regarding the sectors, the best performing stocks were in the Technology Hardware & Equipment (+6.13%), Semiconductors & Semiconductor Equipment (+5.99%) and Health Care Equipment & Services (+4.19%) sectors.
Economic snapshot:
On the economic data front, CPI rose 1.5% YoY in February (vs +1.6% expected, +1.6% in January) and core CPI grew 2.1% (vs 2.2% expected, +2.2% in January). Empire manufacturing index dropped to 3.7 in March (estimated 10) from 8.8 in the previous month. In other news, new home sales declined to 607k in January (forecasted 622k) compared to 652k a month earlier. Initial jobless claims slightly advanced to 229k in week ended March 9th (expected 225k) from 223k in the previous week Also, the University of Michigan sentiment index advanced to 97.8 in a preliminary estimate in March (forecasted 95.6) vs. 93.8 in the prior month. Durable goods orders advanced by 0.4% in a preliminary estimate in January (forecasted -0.4%) compared to an increase of 1.3% a month earlier. Finally, construction spending advanced by 1.3% in January (expected 0.5%) from -0.8% in December.
Here are the top 10 stock movers in the S&P 500 last week that traders will be watching:
On the corporate front, Boeing (BA -10.31% WoW to $378.99) 737 Max aircrafts have been grounded by many international aviation authorities due to the crash in Ethiopia including in Europe, Canada and the U.S. Finally, the Co was cut to "hold" from "buy" at Edward Jones.
Nvidia (NVDA +12.73% WoW to $169.81) reached an agreement to acquire Israeli chipmaker Mellanox Technologies (MLNX +7.85% WoW to $117.97) for $125 per share in cash, which would represent a total enterprise value of $6.9B. In other news, the Co gained traction as Fitch affirmed the co's long-term issuer default rating at "A-" with a "positive" outlook while S&P Global Ratings affirmed the co's issuer credit rating at "BBB+" with a "positive" outlook.
Barrick Gold (GOLD +0.54% WoW to $13) and Newmont Mining (NEM -1.69% WoW to $33.14) have signed an implementation agreement to create a JV "combining their respective mining operations, assets, reserves, and talent in Nevada" instead of the previously stated acquisition for Barrick Gold to acquire Newmont Mining for about $18B in stock. The Nevada will be the "world's single-largest gold producer".
General Electric (GE +3.97% WoW to $9.96) sees FY19 adj. EPS in the range of $0.5-$0.6 (expected $0.67). Looking ahead, the Co expects adj. industrial free cash flows to be positive in 2020 with the pace of improvement accelerating in 2021.
Dollar General (DG -4.06% WoW to $113.89) reported 4Q adj. EPS of $1.84 vs. $1.48 a year ago on net sales of $6.65B (forecasted $6.61B) from $6.13B in the previous year. Comparable sales improved by 4%, beating expectations of 2.6% and expects FY comparable sales to grow by about 2.5%. The Co boosted its quarterly dividend to $0.32 (estimated $0.31) compared to $0.29 while net income dropped by 32% YoY to $483M. The Co sees FY sales growing by about 7% and anticipates FY EPS in the range of $6.3-$6.5 (forecasted $6.65).
Facebook (FB -2.13% WoW to $165.98) is under pressure as it is cooperating with an ongoing federal investigation regarding the Co's data deals, reported the New York Times. In other news, the Co's Chief Product Officer, Chris Cox, has decided to leave Facebook, according to CEO Mark Zuckerberg.
Charles Schwab (SCHW +4.6% WoW to $45.45) traded higher as its client assets in February improved to $3.53T vs. $3.33T a year earlier, according to Bloomberg.
Take-Two Interactive Software (TTWO +7.48% WoW to $93.55) gained momentum on speculation that Sony may be interested in acquiring the video game company, reported Bloomberg.
Ulta Beauty (ULTA +10.45% WoW to $338.41) reported 4Q EPS of $3.61 (estimated $3.56) vs. $2.75 a year ago on net sales up 9.7% YoY to $2.12B (forecasted $2.11B). Comparable sales advanced by 9.4%, beating expectations of 7.9%.
Broadcom (AVGO +9.88% WoW to $290.29) announced 1Q adj. EPS from continuing operations of $5.55 (estimated $5.23) vs. $5.12 last year on revenue of $5.79B from $5.33B in the previous year. Gross margin improved by 150bps YoY to 55.4%.
Earnings preview this week:
FDX: On Tuesday, FedEx is expected to report 3Q EPS of $3.18 vs. $3.72 last year on revenue of $17.7B from $16.5B in the previous year. Also, the Co's price target was cut to $210 from $225 at Citi. Technically speaking, the RSI is above 50 while the MACD is below its signal line and negative. The penetration of 50 on the RSI should trigger further losses. Moreover, the stock is above its 20 and 50 day MA (respectively at 179.99 and 176.23). We expect to continue higher towards $192.3 with a stop-loss of $172.1.
MU: On Wednesday, Micron Technology is likely to announce 2Q EPS of $1.69 vs. $2.82 a year ago on lower revenue of $5.9B compared to $7.4B a year earlier. In other news, the Co was cut to "hold" from "buy" at Morningstar. Looking at the chart, the RSI is below 50 while the MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under its 20 day MA (40.83) but above its 50 day MA (38.08). As long as prices remain below $41.9, we are looking to reach the downside target of $33.9.
CCL: On Thursday, Carnival is awaited to post 1Q EPS of $0.438 vs. $0.52 last year on revenue of $4.3B from $4.2B in the prior year. In other news, the Co was raised to "buy" from "neutral" at Goldman Sachs. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under its 20 day MA (57.09) but above its 50 day MA (55.57). We anticipate further pressure towards $52.9 with a stop-loss at $57.5.
NKE: On same day, Nike is anticipated to unveil 3Q EPS of $0.636 vs. $0.68 a year ago on higher revenue of $9.6B compared to $9B in the previous year. Also, the Co was upgraded to "buy" from "hold" at HSBC. From a chartist point of view, the RSI is above its neutrality area at 50. The MACD is positive and below its signal line. The stock could retrace in the short term. Moreover, the stock is trading under its 20 day MA (85.01) but above its 50 day MA (80.92). Nike is currently trading near its 52 week high reached at 87.99 on 01/03/19. We are looking at the next upside target of $88.2 with a stop-loss at $82.6.
Happy Trading.
Gary Christie
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