by Ian Harvey
October 27, 2019
The Past Week…..
Stock market expectations were basically correct after a positive start to the week, with encouraging news on the U.S.-China trade front.
There was plenty of reaction to the mass of earnings reports – both good and bad.
Also, a phase one deal between Washington and Beijing could be right around the corner, according to the Office of the U.S. Trade Representative.
To review the details on the trade talks read these two articles.....
There were plenty of positive signs.....
But, on the minus side......
Caterpillar (CAT) was forced to lower its full-year profit guidance on the back of weak demand in Asia, but did make a comeback later in the week; and 3M (MMM) also slashed its full-year outlook.
The Dow Jones Industrial Average managed to be up 0.7% for the week. The S&P 500 added 1.2% and the Nasdaq Composite was up by 1.9% for the week.
EARNINGS PREDICTIONS RESULTS FOR WEEK BEGINNING OCTOBER 21, 2019
|DATE||TRADE||EXITING BEFORE EARNINGS||GAIN/LOSS AFTER EARNINGS|
|October 22, 2019||UTX NOV 15 2019 140.000 CALL||32.5% P.P.||160% P.P.|
|October 22, 2019||SNAP NOV 15 2019 14.000 CALL||60% P.P||-36%|
|October 23, 2019||WM NOV 15 2019 120.000 CALL||56% P.P||142% P.P|
|October 23, 2019||BA NOV 15 2019 320.000 PUT||109% P.P.||-47%|
|October 24, 2019||TWTR NOV 15 2019 40.000 CALL||28% P.P||-96%|
If you wish to part of this action CLICK HERE.
Stock Market Expectations for the Week Ahead…..
Stock market expectations are still high for the week ahead for the major indices to continue to add to last week’s positives, particularly if there is good news from Jerome Powell. The Fed’s two-day meeting is likely to be the high point.
The Federal Open Market Committee is expected to make its third quarter point interest rate cut Wednesday afternoon, followed by comments from Fed Chairman Powell.
Also, the central bank could remove the language stating it will “act as appropriate to sustain the expansion” that has been in play since June.
Tech earnings will continue to dominate Wall Street in the coming week, with FAANG names Apple (AAPL), Alphabet (GOOGL), and Facebook (FB) making their reports.
At the moment the market has been led by the defensive sectors, but there is movement witnessed that there are moves into consumer discretionary. This seems to mean that the market is seeing growth; and a move more and more into the cyclical and growth sectors. As well there appears to be a steepening of the yield curve.
Stock Market Calendar for the Week Ahead
Besides earnings, the Brexit deadline will dominate the news. But still, there will be some important economic reports being released, with a Fed meeting and the October jobs report that need attention.
Stock Market Expectations for Earnings
The earnings calendar remains heavy with about 145 S&P 500 companies releasing earnings, including Alphabet Monday and big oil Exxon Mobil and Chevron Friday. On Wednesday, earnings are expected from Apple, which is setting new highs of its own.
Of the approximately 200 S&P companies that reported by Friday morning, more than 78% have beaten on earnings per share. Earnings are expected to decline by 2% for the third quarter, based on estimates and results from companies that already reported.
Alphabet, AT&T, Walgreens Boots Alliance, Beyond Meat, Restaurant Brands Intl, Enterprise Products, ON Semiconductor, T-Mobile US , Diamond Offshore, Vornado Realty, Everest Re, Akamai, Canon, CNA Financial, Check Point Software
BP, General Motors, Mastercard, Merck, Pfizer, ConocoPhillips, Amgen, Electronic Arts, Chubb, Cummins, Kellogg, Corning, KKR, Martin Marietta Materials, AutoNation, GrubHub, CNX Resources, Penske Auto, Advanced Micro, Mondelez, Xerox, Allstate, Boston Properties, FireEye, Mattel
Apple, Facebook, General Electric, Starbucks, Airbus, Bayer, AK Steel, Airbus, Sony, Samsung, Zynga, Deutsche Bank, Glaxo SmithKline, Western Digital, Cirrus Logic, Sprouts Farmers Market, Etsy, Perkin Elmer, American Water Works, MetLife, Cree, Williams Logic, Continental Resources, Wingstop, Yum Brands
Bristol-Myers Squibb, Archer Daniels Midland, Altria, Estee Lauder, Wayfair, Fiat Chrysler, BNP Paribas, Parker Hannifin, International Paper, Marathon Petroleum, Thomson Reuters, Clorox, Dunkin Brands, Hanes Brand, Abiomed, Nintendo, Encana, Kraft Heinz, U.S. Steel, Avis Budget, Pinterest Murphy Oil, Lazard, Yeti, AMC Networks, Tenneco
Exxon Mobil, Chevron, Colgate-Palmolive, Alibaba, Abbvie, Dominion Energy, AIG, Sempra Energy, Booz Allen Hamilton, Seagate Technology, Newell Brands, TC Energy
Besides some of those companies mentioned above, which will be part of our considerations for members of “Earnings Predictions;” there are several that will be recommended to other members - of “Armchair Traders,” “Cut-to-the-Chase” and “Mentorship.”
Action to Take Based on the Stock Market Expectations…..
Stock market expectations for year end, excusing the 2018 20% three-month loss by Christmas Eve, according to the seasonal rule of thumb is the fact that the broad sweep of history has shown a general bias toward strength at year end. And, yes, pre-election years have a more pronounced upside tilt.
Stock market expectations for the bullish case is starting to look even better now due to the resilience of stocks through a growth scare, trade-war flare-ups, an earnings-growth lull, yield-curve inversion and repo-market stress episode.
The current bull market started in March 2009 and is the longest on record. In that time, the S&P 500 has surged more than 300%. The S&P 500 has had a great year so far, rallying about 20%.
Global leading growth indicators might have bottomed, the Fed appears on track to offer a third “insurance” rate cut, sentiment is cautious and credit still flowing. The next rally could prove that the bull rally has plenty of steam to continue for some time yet!
However, as an investor, you need to take into consideration your own economics, your risk tolerance, time horizon and financial goals before reconfiguring your investment portfolios. This is an appropriate time where you shouldn’t be overly bearish, or overly bullish; moderation is the name of the game at this stage!
Overall though, it appears that the way ahead points to the stock market moving upwards!
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