Hey what's up r/stocks! Happy Saturday to all of you. I hope everyone on this sub had a pretty good trading week this past week admit all of the market volatility, and are ready for the new trading week ahead! :)
Here is everything you need to know to get you ready for the trading week beginning December 10th, 2018.
Stocks could be set up for another violent week of selling - (Source)
Stocks could continue to take a beating and aim for a retest of lows, after one of the most brutal weeks for the market this year.
The past week was one of the worst of 2018, with the Dow down 4.5 percent at 24,388, and the Nasdaq down nearly 5 percent, at 6,969. The S&P 500 was down 4.6 percent at 2,633, just 2 points above its November low. The S&P suffered its worst week since March and the third worst of the year.
As stocks melted down, bonds rallied, sending their own spooky message as the yield curve flattened and even inverted at some points — a sign of potential economic trouble ahead. The yield on the benchmark 10-year Treasury, which influences mortgages and other loans, started the week at 3.02 percent and was at 2.85 percent Friday, its biggest one-week move since October 2015.
There is some important data in the week ahead that the bond market will be focused on, including CPI inflation data Wednesday and November retail sales on Friday.
"I think we're in a holding pattern, waiting to see if we get oversold on the S&P and look for some sort of oversold bounce, and I wouldn't be surprised to see a lot of selling into that bounce until we get some substantive news, making investors feel confident. I think the market feels vulnerable," said Sam Stovall, chief investment strategist at CFRA.
Investors have been fretting about uncertainty over U.S. trade relations with China, as well as the fact the economy looks to be growing more slowly. What appeared to be a promising meeting last weekend between President Donald Trump and Chinese President Xi Jinping sparked a one-day rally but gave way to skepticism and doubts especially after the arrest of a prominent Chinese telecom executive.
The Fed has been a big concern, but central bank officials seem to have been making a concerted effort to assure markets they will move cautiously, even if they raise interest rates this month, as expected. Fed Chairman Jerome Powell has said the Fed is close to neutral, the point where it can stop raising rates, and Fed Governor Lael Brainard was the latest Friday to emphasize that the central bank will be data dependent and make its decisions on how the economy evolves.
Stovall said the market often touches a low point in mid-December, before taking off into year-end, but it's not clear this year whether the market will right itself for much a year-end rally.
The S&P is sending some negative technical signals, and its chart formed a "death cross," a technical pattern that suggests a bearish change in trend.
"The real question is are we headed for a global recession. That's what I think the problem is, and I think that because the trade issue is so uncertain. That could end up being a pretty influential catalyst," said Stovall. "Everyone keeps saying they're worried about a recession in 2020. What if it ends up being 2019? On average, the S&P 500 tops out seven months before a recession. I don't think we're heading for a recession. I'm thinking this is a correction that will right itself, but until we get to breakeven the jury is still out."
The stock market sell-off fits into a pattern the S&P 500 has experience In 26 of the years since World War II. In those years, it dipped more than 5 percent and then fell again later in the year.
"In 70 percent of those observations, the second decline was deeper than the first," Stovall said. The S&P fell 12.8 percent from late January to Feb. 9, and in October, it hit an intraday low of 2,603 that was 11.8 percent below its all-time high from September. It's that low strategists say the market could retest in the near future. So if it is like the majority of years, there could be a deeper move.
"It does that because we need to reset the dial. We just didn't reset the dial enough the first time around so we had to do it again. I was thinking a decline down to a pretty important support level like 2,550 on the S&P would be a decline threshold that would then be deeper than the first one," he said. "It references the low, where we bounced in February of this year. It just gives me reason to think that that's the kind of decline we could get."
Scott Redler, partner at T3Live.com, said Apple helped add to the negative sentiment, losing its gains for the year in Friday's trading, and the rest of tech was also a negative.
"There's not much to stay positive about but there was really no reason to sell off. There was no shock move, there was just a weak tape," said Redler. He said even with some positive comments from the White House on trade and a decent employment report, the market still could not rally.
Redler said he expects the S&P 500 to break the November low and test the October intraday low of 2,603 in the week ahead.
Ari Wald, technical analyst at Oppenheimer, said he also sees a retest of lows coming but the market is getting oversold. "We're due for a bounce," he said. "Risk assets face formidable resistance on the way back up. I think it's going to face significant problems in 2019. I think there's a ceiling out there."
In the bond market, strategists expect buying to continue, especially with the sell off in stocks. Bond yields move opposite price.
"I think (the 10-year) could dip below 2.80 percent," said Ian Lyngen, head of U.S. rate strategy at BMO. Lyngen said the market is watching inflation to see if it shows signs of weakening as some expect. Core CPI is expected to rise 2.2 percent year over year.
Retail sales are expected to rise by 0.2 percent.
"I think the combination of those two all-important headline data points are going to further confirm a soft patch in the real economic data or we're going to see a challenge to the notion that the Fed has gone too far too fast," he said.
If the data misses the mark, it could continue to pressure the long end of the curve — or the 10-year note and 30-year bond. The 2-year to 10-year spread is the most widely watched, and the two yields edged closer together in the past week, reaching just 9 basis points Thursday. If they invert, with the 2-year yield moving above the 10-year, that would be taken as a recession warning.
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This past week saw the following moves in the S&P:
Major Indices for this past week:
Major Futures Markets as of Friday's close:
Economic Calendar for the Week Ahead:
Sector Performance WTD, MTD, YTD:
Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:
S&P Sectors for the Past Week:
Major Indices Pullback/Correction Levels as of Friday's close:
Major Indices Rally Levels as of Friday's close:
Most Anticipated Earnings Releases for this week:
Here are the upcoming IPO's for this week:
Friday's Stock Analyst Upgrades & Downgrades:
Yield Curves Near Inversion
On Tuesday, the front end of the yield curve inverted as 3-year yields rose above 5-year yields. Other front end curves, by that measure, while not there yet, have also begun to dip to cycle lows. The 10-year minus 3-month spread is at its lowest level since 2007. Despite being at a low for the current cycle, the curve remains around 40 bps from inversion.
In the charts below we look at various yield curves over the past 15 years; this time frame allows us to see the curve's movement leading up to the last recession.
Perhaps the most widely followed curve, the 10 year versus the 2-year spread, is also at levels it has not seen since 2007. Although it is picking up slightly today as yields across the board fall, 2s10s is looking much more ominous at only 13 bps away from becoming inverted. This will be the main curve that investors will keep their eyes on; expect to see it ad nauseam in headlines if it moves those 13 bps lower.
Shifting our focus to the longer end of the curve, spreads are off of lows from earlier in the year, but may not have quite bottomed just yet. The 10-year versus the 5-year spread has recently fallen back down towards these lows.
Even longer maturities like the 30-year versus the 10-year have a higher spread still and has much more clearly made a bottom. It is important to note, leading up to the previous recession this curve was not inverted for long. Most of the bottoming occurred with a normal—albeit very flat—curve.
Time for Santa?
2018 has been a rocky year with a big dose of volatility, but could a late-year rally be in store for investors? History says it is quite possible. "Although the well-known Santa Claus rally is technically the last five days of the year and the first two of the new year, you can't deny the fact that December tends to bring with it good vibes and stocks gains," explained LPL Senior Market Strategist Ryan Detrick.
As our LPL Chart of the Day shows, since 1950, no month has a higher average return or has been higher more often than the month of December.
With Federal Reserve Chair Jerome Powell opening the door to potentially fewer interest rate hikes in 2019, the last component likely needed for a rally is some type of agreement between the United States and China regarding the ongoing trade issues. Given the G20 summit is this weekend, many are expecting some type of potential resolution to be announced. Stay tuned!
Last, an interesting stat: December has never been the worst month of the year for stocks. That's right—since 1950, the S&P 500 Index has never had its largest monthly drop in December. Given that the worst month this year was October with its 6.9% drop, history would say to not expect a similar big drop to end 2018.
Typical December Trading: Strength Early and Late, Choppy Between
Historically, the second trading day of December, today, has been a modestly bullish day with S&P 500 advancing 36 times over the last 68 years (since 1950) with an average gain of 0.13%. To find a worse second trading day of December, you would have to go all the way back to 1932 when S&P 500 dropped 3.86%. Trade remains a concern, but today's sell off appears to have been triggered by economic growth fears caused by a flattening Treasury yield curve and 5-year yields dipping below 2-year yields. As we have repeatedly noted, the Fed is the biggest risk to the market and the economy.
These fears could lead to a larger than usual amount of choppy trading during the first half of December. Historically December has opened with strength and gains over its first five trading days before beginning to drift. By mid-month all five indices have surrendered any early-month gains, but shortly thereafter Santa usually visits sending the market higher until the last day of the month and the year.
STOCK MARKET VIDEO: Stock Market Analysis Video for December 10th, 2018
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STOCK MARKET VIDEO: ShadowTrader Video Weekly 12.9.18
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Here are the most notable companies reporting earnings in this upcoming trading week ahead-
- $ADBE
- $AEO
- $SFIX
- $COST
- $DSW
- $PLAY
- $CIEN
- $PVTL
- $ASNA
- $INSE
- $FRAN
- $GTIM
- $CDMO
- $ASPU
- $ARWR
- $DLHC
- $CASY
- $PLAB
- $VRA
- $NCS
- $NX
- $TLRD
- $SEAC
- $ROAD
- $CHKE
- $IRET
- $OXM
- $NDSN
- $FTI
- $VERU
- $PHX
- $CIVI
- $SKIS
- $SMMT
- $PURE
- $STRM
- $MMMB
- $AXNX
Here are the most notable earnings releases for the trading week beginning December 10th, 2018.
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:
Monday 12.10.18 Before Market Open:
Monday 12.10.18 After Market Close:
Tuesday 12.11.18 Before Market Open:
Tuesday 12.11.18 After Market Close:
Wednesday 12.12.18 Before Market Open:
Wednesday 12.12.18 After Market Close:
Thursday 12.13.18 Before Market Open:
Thursday 12.13.18 After Market Close:
Friday 12.14.18 Before Market Open:
([CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Friday 12.14.18 After Market Close:
([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Adobe Systems, Inc. $238.00
Adobe Systems, Inc. (ADBE) is confirmed to report earnings at approximately 4:05 PM ET on Thursday, December 13, 2018. The consensus earnings estimate is $1.89 per share on revenue of $2.42 billion and the Earnings Whisper ® number is $1.93 per share. Investor sentiment going into the company's earnings release has 81% expecting an earnings beat The company's guidance was for earnings of approximately $1.87 per share. Consensus estimates are for year-over-year earnings growth of 51.20% with revenue increasing by 20.60%. Short interest has increased by 13.9% since the company's last earnings release while the stock has drifted lower by 11.5% from its open following the earnings release to be 1.6% below its 200 day moving average of $241.83. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, November 29, 2018 there was some notable buying of 7,182 contracts of the $255.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 7.1% move on earnings and the stock has averaged a 2.6% move in recent quarters.
American Eagle Outfitters, Inc. $18.96
American Eagle Outfitters, Inc. (AEO) is confirmed to report earnings after the market closes on Tuesday, December 11, 2018. The consensus earnings estimate is $0.47 per share on revenue of $1.04 billion and the Earnings Whisper ® number is $0.48 per share. Investor sentiment going into the company's earnings release has 59% expecting an earnings beat The company's guidance was for earnings of $0.45 to $0.47 per share. Consensus estimates are for year-over-year earnings growth of 27.03% with revenue increasing by 8.28%. Short interest has increased by 12.9% since the company's last earnings release while the stock has drifted lower by 23.4% from its open following the earnings release to be 16.1% below its 200 day moving average of $22.59. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, November 29, 2018 there was some notable buying of 8,379 contracts of the $22.00 put expiring on Friday, December 21, 2018. Option traders are pricing in a 13.1% move on earnings and the stock has averaged a 7.1% move in recent quarters.
Stitch Fix, Inc. $26.36
Stitch Fix, Inc. (SFIX) is confirmed to report earnings at approximately 4:15 PM ET on Monday, December 10, 2018. The consensus earnings estimate is $0.03 per share on revenue of $357.80 million and the Earnings Whisper ® number is $0.05 per share. Investor sentiment going into the company's earnings release has 49% expecting an earnings beat The company's guidance was for revenue of $354.00 million to $360.00 million. Short interest has increased by 40.8% since the company's last earnings release while the stock has drifted lower by 24.2% from its open following the earnings release to be 5.6% below its 200 day moving average of $27.91. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, December 6, 2018 there was some notable buying of 2,081 contracts of the $27.50 put expiring on Friday, December 14, 2018. Option traders are pricing in a 23.2% move on earnings and the stock has averaged a 21.8% move in recent quarters.
Costco Wholesale Corp. $224.86
Costco Wholesale Corp. (COST) is confirmed to report earnings at approximately 4:15 PM ET on Thursday, December 13, 2018. The consensus earnings estimate is $1.61 per share on revenue of $34.53 billion and the Earnings Whisper ® number is $1.62 per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 18.38% with revenue increasing by 8.55%. Short interest has decreased by 12.3% since the company's last earnings release while the stock has drifted lower by 0.1% from its open following the earnings release to be 6.4% above its 200 day moving average of $211.43. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, November 21, 2018 there was some notable buying of 4,330 contracts of the $245.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 5.0% move on earnings and the stock has averaged a 3.0% move in recent quarters.
DSW Inc. $24.21
DSW Inc. (DSW) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, December 11, 2018. The consensus earnings estimate is $0.53 per share on revenue of $785.61 million and the Earnings Whisper ® number is $0.53 per share. Investor sentiment going into the company's earnings release has 69% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 17.78% with revenue increasing by 10.91%. Short interest has decreased by 28.2% since the company's last earnings release while the stock has drifted lower by 27.9% from its open following the earnings release to be 6.9% below its 200 day moving average of $26.01. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, November 13, 2018 there was some notable buying of 3,697 contracts of the $25.00 put and 3,100 contracts of the $30.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 12.2% move on earnings and the stock has averaged a 12.6% move in recent quarters.
Dave & Buster's Entertainment, Inc. $52.99
Dave & Buster's Entertainment, Inc. (PLAY) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, December 11, 2018. The consensus earnings estimate is $0.21 per share on revenue of $274.21 million and the Earnings Whisper ® number is $0.28 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 27.59% with revenue increasing by 9.69%. Short interest has decreased by 10.9% since the company's last earnings release while the stock has drifted lower by 12.0% from its open following the earnings release to be 5.2% below its 200 day moving average of $55.92. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 9.4% move on earnings and the stock has averaged a 6.8% move in recent quarters.
Ciena Corporation $31.28
Ciena Corporation (CIEN) is confirmed to report earnings at approximately 7:00 AM ET on Thursday, December 13, 2018. The consensus earnings estimate is $0.48 per share on revenue of $860.31 million and the Earnings Whisper ® number is $0.52 per share. Investor sentiment going into the company's earnings release has 68% expecting an earnings beat The company's guidance was for revenue of $845.00 million to $875.00 million. Consensus estimates are for year-over-year earnings growth of 4.35% with revenue increasing by 15.56%. Short interest has decreased by 60.5% since the company's last earnings release while the stock has drifted higher by 3.4% from its open following the earnings release to be 13.6% above its 200 day moving average of $27.55. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, November 7, 2018 there was some notable buying of 1,087 contracts of the $33.00 put expiring on Friday, December 21, 2018. Option traders are pricing in a 10.2% move on earnings and the stock has averaged a 9.2% move in recent quarters.
Pivotal Corporation $17.75
Pivotal Corporation (PVTL) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, December 11, 2018. The consensus estimate is for a loss of $0.09 per share on revenue of $163.60 million and the Earnings Whisper ® number is ($0.06) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat The company's guidance was for a loss of $0.09 to $0.08 per share on revenue of $163.00 million to $165.00 million. Short interest has increased by 97.6% since the company's last earnings release while the stock has drifted lower by 18.9% from its open following the earnings release. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, December 7, 2018 there was some notable buying of 576 contracts of the $19.00 call expiring on Friday, March 15, 2019. Option traders are pricing in a 11.5% move on earnings and the stock has averaged a 26.5% move in recent quarters.
Ascena Retail Group, Inc. $3.01
Ascena Retail Group, Inc. (ASNA) is confirmed to report earnings at approximately 4:05 PM ET on Monday, December 10, 2018. The consensus earnings estimate is $0.03 per share on revenue of $1.55 billion and the Earnings Whisper ® number is $0.05 per share. Investor sentiment going into the company's earnings release has 41% expecting an earnings beat The company's guidance was for results to range from a loss of $0.04 per share to earnings of $0.06 per share. Consensus estimates are for earnings to decline year-over-year by 72.73% with revenue decreasing by 2.50%. Short interest has increased by 4.8% since the company's last earnings release while the stock has drifted lower by 35.7% from its open following the earnings release to be 31.6% below its 200 day moving average of $4.40. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, December 3, 2018 there was some notable buying of 6,003 contracts of the $3.50 put expiring on Friday, December 21, 2018. Option traders are pricing in a 15.8% move on earnings and the stock has averaged a 9.7% move in recent quarters.
Inspired Entertainment, Inc. $5.33
Inspired Entertainment, Inc. (INSE) is confirmed to report earnings at approximately 5:15 PM ET on Monday, December 10, 2018. The consensus estimate is for a loss of $0.14 per share on revenue of $37.05 million. Investor sentiment going into the company's earnings release has 50% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 66.67% with revenue increasing by 5.45%. Short interest has increased by 14.2% since the company's last earnings release while the stock has drifted lower by 16.1% from its open following the earnings release. Overall earnings estimates have been revised higher since the company's last earnings release.
DISCUSS!
What are you all watching for in this upcoming trading week ahead? Have a great week to everyone in here on this new week ahead!
Have a fantastic week ahead r/stocks!
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