We're into February and throughout the past month, we saw several big movers, significant technical events, earnings and notable corporate news! This article covers a brief rundown of this week's top U.S. Market pivotal movement written by our North American Research Desk.
The S&P 500 broke above its 61.8% level.
Looking at a daily chart, the S&P500 keeps trading higher above its 61.8% fibonacci retracement level from the most recent swing low of 2345 and December high of around 2805. We anticipate further upside towards 2816.5 and 2865 in extension. Our stop-loss has been raised to 2610 which is right on the 50-day moving average.
On a longer time horizon (weekly chart), the SPX has turned bullish with a stop-loss set at 2535 (February 2018 low) as we've closed above the 20-week moving average. The RSI has finally broken above its 50 level, which is a positive sign for the index.
The percentage of stocks in the S&P 500 trading above their 200-day moving average closed the week at 43%. Next resistance is set at the 50% level. The percentage of stocks in the S&P 500 trading above their 50-day moving average jumped to 83.5%. Finally, the percentage of stocks in the S&P 500 trading above their 20-day moving average pulled back towards 87.5%.
The VIX dropped towards 16.17 and is now testing the November and December lows, which continues to be a positive factor for the U.S. indices.
The S&P 500 increased by 1.57% last week. On the economic data front, On the economic data front, MBA mortgage applications decreased by 3% in week ended January 25th vs. a decline of 2.7% in the previous week. ADP employment change reached 213k in January (estimated 181k) from 263k in December. Initial jobless claims jumped to 253k in week ended January 26th (estimated 215k) from 200k in the previous week. Also, change in non-farm payrolls reached 304k jobs in January (estimated 165k) from 222k in the previous month. The unemployment rate slightly increased to 4% in January (forecasted 3.9%) vs. 3.9% in December. In other news, the Bloomberg consumer comfort index remained unchanged WoW at 57.4 in week ended January 27th. The Conference Board Consumer Confidence Index fell to 120.2 in January (estimated 124) from 126.6 in December. Finally, new home sales jumped to 657k in November (forecasted 570k) compared to 562k in October.
We had some big movers last week. Here's a look at the 8 most notable:
Apple(AAPL +5.55% WoW to $166.52) announced 1Q diluted EPS of $4.18 (estimated $4.17) vs. $3.89 a year ago on revenue of $84.31B (forecasted $83.97B) from $88.29B a year earlier. Services revenue jumped by 19% YoY to $10.88B. The Co sees 2Q revenue in a range of $55B - $59B (expected $58.97B) and expects gross margin between 37% and 38%.
Advanced Micro Devices(AMD +11.76% WoW to $24.51) unveiled 4Q adj. EPS of $0.08, in-line with estimates, vs. $0.01 last year on revenue of $1.42B (forecasted $1.44B) compared to $1.34B in the prior year. Gross margin improved to 38% vs. 34% in 4Q2017 while net income increased to $38M from a net loss of $19M a year earlier.
Whirlpool (WHR +6.33% WoW to $132.99) unveiled 4Q ongoing EPS of $4.75 (estimated $4.23) vs. $4.1 a year ago on net sales of $5.66B (forecasted $5.76B) from $5.7B in the prior year. Net earnings jumped to $170M vs. net loss of $272M a year earlier. The Co sees FY2019 ongoing EPS in a range of $14-$15.
Allergan (AGN -10.33% WoW to $144.07) reported 4Q adj. EPS of $4.29 (estimated $4.16) vs. $4.86 a year earlier on adj. revenue of $4.08B (forecasted $4.01B) compared to $4.33B in the previous year. The Co sees 1Q adj. EPS in a range of $3.4-$3.6, missing the estimate of $3.68. The Co expects FY adj. revenue to reach $15B-$15.3B (expected $15.4B) and anticipates adj. EPS of at least $16.36 (forecasted $16.32). Finally, the Co authorized a new $2B share buyback program.
Xerox (XRX +16.22% WoW to $28.52) announced 4Q adj. EPS of $1.14 (estimated $1.04) vs. $1.03 a year ago on revenue of $2.53B (forecasted $2.56B) compared to $2.75B in the prior year. The Co sees FY adj. EPS in the range of $3.7 - $3.8 (expected $3.53). Finally, the Co increased their share buyback program by $1B and expects at least $300M of share repurchases in 2019.
L3 Technologies (LLL +7.46% WoW to $198.25) released 4Q adj. EPS from continuing operations of $3.1 (estimated $2.69) vs. $3.34 last year on net sales increasing by 8% YoY to $2.77B (forecasted $2.69B). The Co sees FY net sales of $10.75B, in-line with estimates.
PGE Corp (PCG +11.13% WoW to $13.08) expects to make a Chapter 11 filing despite investors' efforts to keep the Co out of bankruptcy, reported Bloomberg citing people familiar with the situation.
Corning (GLW +8.99% WoW to $33.09) reported 4Q core EPS of $0.59 (estimated $0.57) vs. $0.46 a year ago on core sales up 15% YoY to $3.08B (forecasted $3.01B). Core earnings jumped by 18% YoY to $539M. The Co sees FY sales up low-to-mid single-digit percentage.
Nvidia(NVDA -9.63% WoW to $144.73) fell as the Co cut its 4Q guidance of revenue to $2.2B (+/- 2%) vs. previous estimate of $2.7B (+/- 2%) and of adj. gross margin to 56% vs. prior forecast of 62.5%, "reflecting weaker than forecasted sales of its Gaming and Datacenter platforms".
Juniper Networks (JNPR -9.06% WoW to $25.81) reported 4Q adj. EPS of $0.59 (expected $0.57) from $0.53 a year ago on net revenue of $1.18B (consensus $1.22B) from $1.24B in the prior year, citing "continued weakness" in cloud and service provider sales. The Co announced a $300M share repurchase program and raised the dividend by 6% to $0.19 per share. The Co expects 1Q adj. EPS in a range of $0.17-$0.23 (forecasted $0.37) and anticipates revenue to reach $950M - $1.11B (expected $1.11B). Finally, the Co sees FY adj. EPS in a range of $1.75-$1.85 (estimated $2.04).
Boeing(BA +6.38% WoW to $387.43) unveiled a record 4Q core EPS of $5.48 (estimated $4.59) vs. $5.07 a year ago on a record revenue of $28.34B (forecasted $26.93B) from $24.77B in the previous year. The Co sees FY core EPS in a range of $19.9 - $20.1 (expected $18.44) and expects revenue to reach $109.5B-$111.5B (estimated $107.13B).
Royal Caribbean Cruises(RCL +5.88% WoW to $118.31) posted 4Q adj. EPS of $1.53 (estimated $1.51) vs. $1.34 last year on revenue of $2.33B (forecasted $2.31B) compared to $2.05B a year earlier. Net income improved by 11% YoY to $320M. The Co sees FY adj. EPS in a range of $9.75 - $10 (expected $9.95) and expects 1Q adj. EPS of $1.1 (estimated $1.07).
Facebook(FB +11.21% WoW to $165.71) reported 4Q diluted EPS of $2.38 (estimated $2.18) vs. $1.44 a year ago on revenue of $16.91B (forecasted $16.39B) from $12.97B in the previous year. Net income jumped by 61% YoY to $6.9B. Monthly active users reached 2.32B, aligned with expectations, while daily active users reached 1.52B (estimated 1.51B). Around 2.7B people use Facebook, Instagram, Whatsapp or Messenger each month.
Amazon.com(AMZN -2.65% WoW to $1626.23) reported 4Q EPS of $6.04 (estimated $5.56) vs. $3.75 a year ago on net sales of $72.38B (forecasted $71.92B) from $60.45B in the previous year. Net sales for AWS reached $7.43B, beating estimates of $7.3B, while net income surged by 63% YoY to $3.03B. The Co sees 1Q net sales in a range of $56B-$60B (expected $60.99B) and expects operating income of $2.3B-$3.3B (estimated $2.99B).
Earnings preview this week:
GOOGL US: On Monday in the after-hours, Google is expected to report 4Q EPS of $10.88 vs. $9.7 a year ago on higher revenue of $31.3B from $25.9B in the previous year. The Co recently asked the Supreme Court to review its copyright dispute with Oracle over the use of software interfaces, according to a blog post. Technically speaking, the stock broke above a declining trend line in place since September. As long as we're trading above $1,065, we are looking to reach the upside targets of $1,160 and $1,212.
DIS US: On Tuesday in the after-hours, Disney is likely to announce 1Q EPS of $1.57 vs. $1.89 last year on revenue of $15.1B vs. $15.4B a year earlier. In other news, the Co's long-term issuer default rating was affirmed by Fitch at "A" which raised the Co's outlook to "stable" from "watch negative". Looking at the chart, the RSI is below its neutrality area at 50 while the MACD is above its signal line and positive. The break above the 50 area on the RSI would call for further upside. Moreover, the share stands above its 20 day MA (110.19) but below its 50 day MA (111.8). We expect to reach a lower target of $100.7 with a stop-loss set at $115.2.
GM US: On Wednesday, General Motors is anticipated to unveil 4Q EPS of $1.25 vs. $1.65 a year ago on lower revenue of $36.5B compared to $37.7B in the prior year. The Co is in talks with governments, unions and suppliers in Brazil in an effort to restructure its global operations, according to Bloomberg. From a chartist point of view, the RSI is above 50 while the MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 36.18 and 35.73). We anticipate further advance towards $42.8 with a stop-loss at $36.2.
TWTR US: On Thursday, Twitter is awaited to post 4Q EPS of $0.25 vs. $0.19 last year on higher revenue of $868.6M from $731.6M in the previous year. In other news, the Co gained traction as Citron Research reversed its previous bearish view on the stock and now mentions that it "will be A-OK". From a technical point of view, the RSI is above 50 while the MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at 32.08 and 31.93). If our stop-loss of $30 holds, we expect prices to move towards $40.2.
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