We're almost done with November and there have been numerous big movers, significant technical events, earnings preview and notable corporate news! This article covers a brief rundown of this week's top U.S. Market pivotal movement written by the head of our North American Research Desk, Gary Christie.
The S&P 500 fell 3.58% last week.
On the economic data front, housing starts increased by 1.5% MoM to 1.228M units in October, in-line with estimates, from 1.21M in September. Existing home sales advanced by 1.4% MoM to 5.22M units in October (expected 5.2M) from 5.15M a month earlier. In other news, initial jobless claims slightly increased to 224k in week ended November 17th (estimated 215k) from 221k in the previous week. MBA mortgage applications declined by 0.1% in week ended November 16th from a fall of 3.2% in the previous week. Also, the Bloomberg consumer comfort index increased to 61.3 in week ended November 18th vs. 60.5 a week earlier. The Leading Index improved by 0.1% in October, in-line with estimates, from an increase of 0.6% in September. Finally, the University of Michigan sentiment index declined to 97.5 in November (estimated 98.3) compared to 98.6 in October.
The SPDR S&P 500 ETF (SPY) is bearish below 271 as this corresponds to the 50% fibonacci retracement level from the swing high of 281.25 and low of 260. Our downside targets are set at 260 to test Oct lows and ultimately 254.7 to test April lows.
The VIX, a measure of market fear and volatility remains elevated above 15.9 and the 50-day moving average is trending higher.
We had some big movers last week. Here's a look at the 8 most notable:
- Agilent Technologies (A +5.39% WoW to $68.21) posted 4Q adj. EPS of $0.81 (estimated $0.74) vs. $0.58 a year ago on net revenue of $1.29B (forecasted $1.26B) compared to $1.19B a year earlier. Net income improved by 10% YoY to $195M while the Board authorized a new $1.75B share buyback program. The Co sees 1Q adj. EPS of $0.71 - $0.73 (estimated $0.72) and revenue reaching $1.27B - $1.28B (forecasted $1.27B). Finally, the Co expects FY adj. EPS in a range of $3 - $3.05 (expected $2.97) and anticipates revenue of $5.13B - $5.17B (estimated $5.18B).
- L Brands Inc (LB -16.03% WoW to $29.97) announced 3Q adj. EPS of $0.16 (estimated $0.15) vs. $0.3 a year ago on net sales of $2.77B (forecasted $2.78B) from $2.62B in the prior year. Comparable sales grew by 4% while the Board decided to cut its annual dividend to $1.2 from $2.4 beginning with the quarterly dividend to be paid in March 2019. Finally, the Co raised its FY guidance on adj. EPS to a range of $2.6 - $2.8 (expected $2.65) vs. the prior view of $2.45 - $2.7 and expects 4Q EPS of $1.9 - $2.1 (forecasted $1.99).
- TJX Companies Inc (TJX -12.6% WoW to $45.86) reported 3Q adj. EPS of $0.54 (estimated $0.61) vs. $0.5 a year ago on net sales of $9.83B (forecasted $9.49B) from $8.76B in the previous year. Comparable sales jumped by 7%, beating expectations of 4.1%, while gross margin decreased by 0.9pts YoY to 28.9%, missing estimates of 29.2%. The Co sees 4Q adj. EPS of $0.56 - $0.57 (forecasted $0.71) and expects FY adj. EPS of $2.08 - $2.09 (expected $2.47).
- Target (TGT -16.6% WoW to $67.35) announced 3Q adj. EPS of $1.09 (estimated $1.12) vs. $0.9 a year ago on total revenue of $17.82B (forecasted $17.7B) from $16.87B in the prior year. Gross margin reached 28.7% (forecasted 29.6%) vs. 29.6% a year earlier while comparable sales advanced by 5.1%, lower than expectations of 5.2%. The Co still sees FY adj. EPS of $5.3 - $5.5 (estimated $5.48).
- Ross Stores (ROST -16.71% WoW to $80.36) unveiled 3Q diluted EPS of $0.91 (estimated $0.9) vs. $0.72 a year ago on sales of $3.55B, in-line with estimates, compared to $3.33B a year earlier. Comparable sales advanced by 3%, beating expectations of 2.9%, and expects 4Q comparable sales to grow by 1% - 2%. Finally, the Co sees 4Q adj. EPS in a range of $1.02 - $1.07 (forecasted $1.08) and anticipates FY EPS in a range of $4.15 - $4.2 (expected $4.13).
- PGE Corp (PCG +34.39% WoW to $23.84) fell as the Co filed an additional "initial electric incident report" with California regulators regarding a power line failure near the initial location of the wildfire the morning it began.
- Copart (CPRT -4.07% WoW to $48.73) reported 1Q adj. EPS of $0.47 (estimated $0.46) vs. $0.33 a year ago on revenue of $461.4M (forecasted $460M) compared to $419.2M in the previous year. Net income jumped by 47% YoY to $114M.
- Best Buy (BBY -7.72% WoW to $62.55) authorized a quarterly cash dividend of $0.45 per common share payable on December 31st to shareholders of record as of the close on December 11th.
Earnings preview this week:
CRM: On Tuesday, Salesforce.com is expected to report 3Q EPS of $0.501 vs. $0.39 a year ago on increased revenue of $3.4B compared to $2.7B in the previous year. Also, Third Point cut its stake in the stock while BNP Paribas Arbitrage boosted its stake in the Co, according to Bloomberg. From a technical point of view, the RSI is below 50 while the MACD is negative and below its signal line. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at 133.79 and 144.55). Finally, Salesforce.com has penetrated its lower daily Bollinger band (122.45). We expect to reach a lower target of $93.6 with a stop-loss at $134.6.
DLTR: On Thursday, Dollar Tree is likely to post 3Q EPS of $1.15 vs. $1.01 a year ago on revenue of $5.6B from $5.3B a year earlier. In other news, Waddell & Reed Financial removed the Co from its investments while Glenview Capital Management added the stock its list of investments, according to Bloomberg. From a chartist point of view, the RSI is below its neutrality area at 50 while the MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at 84.91 and 84.08). Dollar Tree is currently trading near its 52 week low at 78.78 reached on 11/10/18. We anticipate the stock to drop towards $73.7 with a stop-loss of $86.
HPQ: On the same day in the after-hours, HP is anticipated to unveil 4Q EPS of $0.54 vs. $0.44 last year on higher revenue of $15.1B compared to $13.9B in the prior year. Also, Credit Agricole cut the Co from their investments while Point72 Hong Kong added the stock to its investments, according to Bloomberg. Looking at the chart, the RSI is below 50 while the MACD is negative and below its signal line. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at 24.17 and 24.65). As long as prices are trading below $25.5 we expect further pressure towards $21.4.
PVH: On the same day in the after-hours as well, PVH is awaited to announce 3Q EPS of $3.15 vs. $3.02 a year ago on revenue of $2.5B from $2.4B in the previous year. In other news, the Co was raised to "neutral" from "sell" at Goldman Sachs. Technically speaking, the RSI is below 30. It could either mean that the stock is in a lasting downtrend or just oversold and therefore bound to retrace (look for bullish divergence in this case). The MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at 120.25 and 128.75). Finally, PVH Corp has penetrated its lower daily Bollinger band (110.2). PVH Corp is currently trading near its 52 week low at 106.63 reached on 20/11/18. We are looking at our next target of $94.7 with a stop-loss of $114.9.