We're well into 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 closed up 2.42% last week.
The S&P 500 remains bearish below the 200-day moving average which acts as a stop-loss pivot in the short term currently around the 2765 level. Prices remain below the 50-week moving average which is a bearish signal. First level of support is set at 2685 to fill the gap on oct 31. Our final target to the downside is at 2600 to challenge Oct lows. A bullish divergence in the RSI is taking shape with price action making new lows while the RSI makes a higher low. A break above its 50 level would be another bullish signal.
On a longer time horizon (weekly chart), the SPX broke below a rising trend line and remains below the 50-week moving average. We lowered our stop loss to 2816.5 to match the 20-week moving average. Look for a test of Feb lows around the 2530 and the overlap support are at 2400 long-term.
Regarding the sectors, the best performing stocks were in the Automobiles & Components (+7.68%), Consumer Durables & Apparel (+6.97%), Materials (+6.14%) sectors.
Key technical crossovers on Friday:
50D MA cross under: Apple (AAPL -6.63% to $207.48), Boeing (BA -1.47% to $357.75), Pfizer (PFE -1.69% to $42.93).
Relative strength stock/S&P500 50D MA cross over: MetLife (MET +3.96% to $43.6).
Relative strength stock/S&P500 50D MA cross under: Amgen (AMGN -3.03% to $187.06), Kinder Morgan (KMI -1.75% to $16.86), Kraft Heinz (KHC -9.73% to $50.73).
On the economic data front, The U.S. trade ballance widened more than expected to $54B in Sept from $53.3B in Aug. (-53.6B estimate). U.S Nonfarm payrolls gained more than forecasted with 250K jobs added in Oct (200K estimate) vs a revised 118K increase last month. The unemployment rate holds steady at 3.7% in Oct. The U.S. trade ballance widened more than expected to $54B in Sept from $53.3B in Aug. (-53.6B estimate). MBA mortgage applications fell 2.5% last week compared to a gain of 4.9% in the week prior. U.S. consumer confidence reached an 18 year high coming in at 137.9 for Oct (135.9 estimate) compared to a revised 135.3 in Sept. U.S. personal income increased 0.2% in September (0.4% estimate) compared to a revised 0.4% increase in August. Personal spending gained 0.4% in Sept, in-line with estimates vs a revised 0.5% gain in Aug. U.S. jobless claims fell 2000 to 214K (212K estimate) in the week ending Oct 27th compared to a revised 216K prior. Continuing claims for the week ending Oct 20 came in at 1631K (1640K estimate) vs a revised 1638K in the prior period.
On the corporate front, the big movers of the week were:
Fortinet (FTNT -7.2% WoW to $72.56) which declined after reporting 3Q adj. EPS of $0.49 ($0.42 estimate) compared to $0.28 last year on revenue of $453.9M ($450.8M estimate) compared to 374.2M a year ago. Looking forward the Co sees 4Q adj. EPS in the range of $1.72 to $1.76 ($1.67 estimate).
Apple (AAPL -4.08% WoW to $207.48) announced that 4Q diluted EPS rose 41% YoY to $2.91 (estimated $2.78) on revenue of $62.9B (estimated $61.4B), up 20%. International sales accounted for 61 percent of the revenue. The Co sold 46.89M iPhones during the quarter. The Co expects FY19 revenue to be $89-93B (estimated $92.7B). The Co's CEO said: "Foreign exchange rates will have a $2B negative impact on Apple's sales forecast."
Starbucks (SBUX +10.76% WoW to $64.32) posted that 4Q diluted EPS rose 13% YoY to $0.62, beating the $0.60 estimated on revenue of $6.3B (estimated $6.27B), 11%. Comparable store sales was up 3% globally (estimated +2-3%), in which growth in the U.S. was 4% (estimated +2-3%). The Co called recovering China comparable store sales of 1% is "better than feared". Looking ahead, the Co sees opening 2100 new stores globally and FY adj. EPS of $2.61 to $2.66 ($2.64 estimate).
Kraft Heinz (KHC -7.17% WoW to $50.73) was under pressure after releasing 3Q adj.EPS of $0.78 ($0.81 estimate) vs $0.83 a year ago on sales of $6.4B ($6.31B estimate) compared to $6.9B last year. " A number of one-off factors as well as our desire to insure customer service held back profit in the quarter" said CEO Bernardo Hees on a conference call.
DowDuPont (DWDP +11.02% WoW to $57.73) announced 3Q adj.EPS of $0.74 ($0.71 estimate) vs $0.47 a year ago on sales of $20.1B ($20.23B estimate) compared to $18.3B last year. The Co announced a new $3B stock buyback program. The Co also increased its cost synergy target to $3.6B and now expects YoY savings of appx. $1.5b.
Newfield Exploration (NFX +9.08% WoW to $21.87) has been purchased by Encana (ECA -12.5% to $8.96) in an all-stock deal valued at appx. $5.5B which will make Encana the second-largest producer of oil and natural gas from shale.
Molson Coors Brewing (TAP +13.32% WoW to $63.12) reported 3Q EPS of $1.84 beating the $1.59 estimate compared to $1.34 a year ago on revenue of $2.93B in-line with the same period last year. International volumes gained appx. 14% led by strong Latin American and European demand according to a statement made by the Co on Wednesday. The Co also expects to "secure a meaningful share" of the cannabis-infused beverage market when edibles are legalized in Canada.
Baxter International (BAX -7.33% WoW to $62.18) was under pressure after reporting 3Q adj. EPS of $0.80. Looking ahead, the Co sees FY18 adj. EPS in the range of $2.98 to $3.00 ($2.99 estimate) and sees 4Q adj.EPS in the range of $0.71 to $0.73, below the $0.77 estimate. Besides, the Co printed a new 52w low.
Anadarko Petroleum (APC -9.57% WoW to $53.21) said it swung to a 3Q adjusted EPS of $0.82, falling short of the $0.88 expected citing increased spending, from a LPS of $0.77 a year ago. Total sales volumes rose 9% to 682,000 mboe/d, and its onshore oil sales volumes averaged a record 175K boe/d, up 37% after adjusting for divestitures. In addition, the Co posted an 58% increase in per-barrel margins to $33.68. Cash flow from operations rose to $1.65B from $639M a year ago, and capital expenditures rose 8.4% to $1.44B, exceeding the Co's previous guidance of $1.05-1.25B. The Co still sees annual capital expenditure at $4.5-4.8B.
eBay (EBAY +9.25% WoW to $29.87) announced 3Q adjusted EPS from continuing operations rose 16.7% to $0.56 (estimated $0.55) on net revenue of $2.65B, in line with estimates, up 10.4%. Gross merchandise volume was up 5% to $22.7B, compared to the $23.2B estimated, and total gross merchandise volume rose 4.8% to $22.7B. The Co gave an upbeat profit forecast for the rest of the year by expecting 4Q adjusted EPS from continuing operations at $0.67-0.69 (estimated $0.68) and net revenue at $2.85-2.89B (estimated $2.90B).
General Motors (GM +10.35% WoW to $36.03) announced 3Q adj.EPS of $1.87 ($1.25 estimate) compared to $1.33 a year ago on revenue of $35.8B ($34.8B estimate) vs $33.6B last year. The Co said they still anticipate FY profit in the range of $5.80 to $6.20 per share but now expect to finish the year at the high end of that range.
COMPANY EARNINGS PREVIEW
On Tuesday morning, Regeneron Pharmaceuticals is anticipated to unveil 3Q EPS of $5.11 vs $3.99 a year ago on revenue of $1.6B compared to 1.5B last year. The current analyst consensus rating is 8 Buys, 16 holds and 1 sell recommendation with an average target price of $404. From a chartist 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 stands below its 20 and 50 day moving averages.
On Wednesday afternoon, Wynn Resorts is awaited to announce 3Q EPS of $1.67 compared to $1.52 last year on revenue of $1.7B vs $1.6B a year ago. The current analyst consensus rating is 9 buys, 10 holds with an average target price of $165. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the stock is trading above its 20 day MA (109.91) but under its 50 day MA (125.47).
Same day, Qualcomm is due to report 4Q EPS of $0.828 vs $0.92 a year ago on sales of $5.5B vs $6B last year. There are currently 16 buys, 12 holds and 1 sell recommendation from analysts covering the Co. Average target price is at $74.17. Looking at the chart, the RSI is above 70. It could mean either that prices are in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case). The MACD is above its signal line and positive. The configuration is positive. QUALCOMM is above its 20 and 50 period MA (respectively at 59.4 and 58.66).
On Thursday afternoon, Walt Disney is expected to release 4Q EPS of $1.36 compared to $1.07 last year on revenue of $13.8B vs $12.8B last year. The average analyst recommendation is even at 12 buys and 12 holds with a target of $121.60. From a chartists 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. Walt Disney stands below its 20 and 50 period MA (respectively at 115.2 and 115.44).