Good morning and happy Saturday to all of you here on r/StockMarket. I hope everyone on this subreddit made out pretty nicely in the market this past week, and is ready for the new trading week ahead.
Here is everything you need to know to get you ready for the trading week beginning June 10th, 2019.
The market week ahead: Mexico tariffs and more data that may clear the way for a rate cut - (Source)
Stocks have been rallying hard on the idea the Federal Reserve will cut interest rates soon, but at some point the market needs to see progress on the trade wars and economic weakness that are bothering the Fed.
Friday's surprisingly soft May jobs report showed just 75,000 jobs created, 100,000 less than expected. That immediately raised expectations that the Fed could cut rates as early as July because the long resilient labor market is now seeing the impact of what has already been showing up in manufacturing data.
The stumble in the labor market raises concerns that trade-related weakness in manufacturing will creep into other sectors of the economy. For that reason, economic data, particularly CPI inflation data Wednesday, could be a key market factor in the week ahead, as investors attempt to game when the Fed could cut rates. There are also retail sales and industrial production on Friday.
"I think investors will be nervous around trade and tariffs. Those will continue to drive sentiment next week. I think it's interesting that you have this idea that the 'Powell put,' the central banks, come in to save the day," said Michael Arone, chief investment strategist at State Street Global Advisors. "It may feel good for investors, and it may extend the cycle longer, but I do think it compounds the longer term problems...Eventually this is going to catch up with the market in some way or other."
Mexico tariffs Investors are awaiting any developments in China, U.S. trade relations, and they are also closely watching developments with Mexico. President Donald Trump has threatened tariffs of 25% on all Mexican goods, starting with a 5% tariff on Monday, if Mexico does not show that it is making progress in stopping migrants from reaching the U.S. On Friday, Trump said in a tweet there's a good chance a deal will be made with Mexico.
"The market was shrugging it off this week. It's been a strong week for the market, so [investors] seems to be taking it in stride," said Arone, noting investors were looking past the Mexican tariffs for now and focused on the Fed rate cuts. "The market seems to be applauding [rate cuts] right now, but I'm not sure accommodative monetary policy in itself is enough of a catalyst for better economic growth and better earnings. We need more than that. This could be a bit of a quick hit or a sugar high."
Stocks rallied after the jobs report, with Friday's gains capping what was already setting up to be the strongest week for stocks since November. The S&P 500 was up 4.4% for the week, ending Friday at 2,873. Treasury yields fell to the lowest levels since December, 2017 in the past week, with the 10-year touching 2.05% on Friday. Fed funds futures also moved sharply, and were forecasting a 95% chance for a quarter point rate cut in July.
Jon Hill, rates strategist at BMO, said the markets are now focused on the timing of a possible Fed rate cut and whether the Fed would cut by a quarter point or a half point initially. That makes economic data especially important, as investors watch to see if weakness has spread to consumers, in the upcoming retail sales report Friday, or whether inflation is weakening. Core CPI has been running above the Fed's 2% target.
"You would think the [fed funds futures] market is gravitating toward one cut in July, one cut in September and another in December. We have 2.9, 25 basis rate cuts priced in for 2019. This really raises the stakes for next week's CPI, given core year over year CPI is over 2%, and also now because we're in the Fed blackout period. There won't be any additional guidance coming out of the Fed this week.," said Hill. Fed officials do not speak publicly just ahead of meetings, and they are scheduled to meet June 18.
Strategists have said the market is also holding up on the idea that President Donald Trump would not allow the trade conflicts to get so out of hand that they will cause a stock market collapse, since he views the market as a reflection of his success. That's the so-called 'Trump put.'
Dubravko Lakos-Bujas, J.P. Morgan equity strategist, said if Trump proceeds with his threat to put tariffs on the remaining $300 billion in Chinese goods that could spark a major sell-off in stocks, and the S&P 500 could go as low as 2,500. But he also expects that sell-off would result in both a 'Trump' put and a Fed 'put,' meaning Trump would take some action and the Fed could cut rates to ease financial conditions and help the economy. The strategist said he is maintaining his 3,000 target on the S&P for the year.
"We believe the next round of tariffs that the Trump administration is threatening—Mexico 5% and China Phase III—could substantially increase the risk of pushing the U.S. business and profit cycle into an outright contraction," he wrote. Lakos-Bujas said he still expects trade agreements to be reached, in part because the Trump administration will not want to risk a market collapse or recession, ahead of an election.
Lakos-Bujas said there are a wide range of possible outcomes, including a positive scenario where trade peace is achieved, earnings improve and the S&P shoots higher to 3,200.
In the coming week, investors will also be keeping an eye on China's data. On Monday, China reports balance of trade, imports and exports, first quarter GDP, current account and foreign exchange reserves. Chinese inflation data is released on Wednesday.
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:
Not a Triple Top Yet – Support Has Held
There has been a lot of chatter recently about an imminent "triple top' for the market across the January 2018, September 2018 and recent April 30, 2019 highs. It's not a triple top until it breaks support levels. Traders do need to be watching for support levels to be broken - which we have recently held.
Holding support was bullish technical action. But remember this is the Worst Six Months and we expect more volatility, more testing of support and more sideways action – backing and filling – over the weaker summer months.
We talked about these support levels on the blog a month ago as well. Here's an update to the chart from that May 7 blog post. I added some additional support levels. S&P 500 level of 2580 at February/April 2018lows is critical support – a 12.4% correction.
Breaking that level would bring the December 2018 lows into play, which would be bear market territory of -20% – and likely the low and a great buying opportunity. Good thing we are already in Worst Six Months Defense Mode since we shifted to market neutral after our official Best Six Months MACD Seasonal Sell signal for DJIA and S&P 500 on May 1.
Seasonally, Bonds Have Plenty of Room Left to Run
Barring some rather abrupt reversal in the current trend in trade, tariffs, tariffs and even higher tariffs, bonds could have even more upside in their near-term futures. Back in the beginning of April we noted the 30-year treasury bond had a seasonal tendency to dip in April and early May (around the time stocks like to make a seasonal high) before moving higher from sometime in May through the end of August. Thus far this year this trade has been a perfect textbook setup.
In the following chart weekly bars of the 30-year Treasury bond future appear on top with their seasonal trend since August 26, 1977. The 30-year Treasury bond did dip in April and as trade war concerns grew in May, as stocks slipped, bonds ripped higher. The recent rise has been brisk but considering the retreat in tech stocks further gains are not out of the question.
The Bespoke Report -- Negative Void Coefficient
Equity markets surged despite short term interest rate markets pricing near-certainty of multiple Fed rate cuts this year. How can an economy so bad that the Fed needs to cut mean stocks go up? We take a look around for some answers. We also review just how dovish the Fed has been relative to what markets have been pricing of late. While the domestic economy has definitely slowed down from the torrid pace of 2018, even the disappointing nonfarm payrolls number today paints a different picture than assumptions of multiple cuts from the front end. The global economy is less constructive, but there's a difference between weakness and a recession panic, as we show. Finally, we present an argument for why Fed rate cuts may not be necessary for the economy to stabilize and start to pick up again thanks to negative feedback loops.
STOCK MARKET VIDEO: Stock Market Analysis Video for June 7th, 2019
STOCK MARKET VIDEO: ShadowTrader Video Weekly 06.09.19
([CLICK HERE FOR THE YOUTUBE VIDEO!]())
(VIDEO NOT YET UP!)
Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
- $LULU
- $THO
- $AVGO
- $UXIN
- $HRB
- $RH
- $PLAY
- $HDS
- $FGP
- $LOVE
- $CHS
- $TLRD
- $SECO
- $DLTH
- $SHLO
- $ASNA
- $CPST
- $JW.A
- $AZRE
- $ADXS
- $CASY
- $LMNR
- $BBCP
- $NEPT
- $OXM
- $SPCB
- $DEST
- $TMDX
- $CBKC
- $TUFN
- $LIVX
- $RENN
- $SMMT
- $CRWS
- $UROV
- $CUP
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 6.10.19 Before Market Open:
Monday 6.10.19 After Market Close:
Tuesday 6.11.19 Before Market Open:
Tuesday 6.11.19 After Market Close:
Wednesday 6.12.19 Before Market Open:
([CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Wednesday 6.12.19 After Market Close:
Thursday 6.13.19 Before Market Open:
Thursday 6.13.19 After Market Close:
Friday 6.14.19 Before Market Open:
([CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Friday 6.14.19 After Market Close:
([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
lululemon athletica inc. $172.49
lululemon athletica inc. (LULU) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, June 12, 2019. The consensus earnings estimate is $0.71 per share on revenue of $757.03 million and the Earnings Whisper ® number is $0.77 per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat The company's guidance was for earnings of $0.68 to $0.70 per share on revenue of $740.00 million to $750.00 million. Consensus estimates are for year-over-year earnings growth of 29.09% with revenue increasing by 16.52%. Short interest has decreased by 6.5% since the company's last earnings release while the stock has drifted higher by 2.0% from its open following the earnings release to be 16.1% above its 200 day moving average of $148.56. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, May 31, 2019 there was some notable buying of 2,301 contracts of the $165.00 call expiring on Friday, June 21, 2019. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 12.1% move in recent quarters.
Thor Industries, Inc. $55.24
Thor Industries, Inc. (THO) is confirmed to report earnings at approximately 6:45 AM ET on Monday, June 10, 2019. The consensus earnings estimate is $1.74 per share on revenue of $2.67 billion and the Earnings Whisper ® number is $1.52 per share. Investor sentiment going into the company's earnings release has 47% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 31.23% with revenue increasing by 18.58%. Short interest has increased by 8.4% since the company's last earnings release while the stock has drifted lower by 8.1% from its open following the earnings release to be 19.2% below its 200 day moving average of $68.38. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, May 29, 2019 there was some notable buying of 3,079 contracts of the $60.00 put expiring on Friday, June 21, 2019. Option traders are pricing in a 8.9% move on earnings and the stock has averaged a 6.8% move in recent quarters.
Broadcom Limited $274.87
Broadcom Limited (AVGO) is confirmed to report earnings at approximately 4:15 PM ET on Thursday, June 13, 2019. The consensus earnings estimate is $5.18 per share on revenue of $5.66 billion and the Earnings Whisper ® number is $5.35 per share. Investor sentiment going into the company's earnings release has 71% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 1.97% with revenue increasing by 12.88%. Short interest has decreased by 13.5% since the company's last earnings release while the stock has drifted lower by 4.0% from its open following the earnings release to be 6.2% above its 200 day moving average of $258.77. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 3, 2019 there was some notable buying of 3,655 contracts of the $300.00 call expiring on Friday, September 20, 2019. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 4.8% move in recent quarters.
Uxin Limited $2.11
Uxin Limited (UXIN) is confirmed to report earnings before the market opens on Monday, June 10, 2019. The consensus estimate is for a loss of $0.19 per share. Investor sentiment going into the company's earnings release has 44% expecting an earnings beat The company's guidance was for revenue of $134.00 million to $141.00 million. Short interest has increased by 11.0% since the company's last earnings release while the stock has drifted lower by 60.6% from its open following the earnings release to be 53.9% below its 200 day moving average of $4.58. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 34.4% move on earnings and the stock has averaged a 11.9% move in recent quarters.
H&R Block Inc. $27.21
H&R Block Inc. (HRB) is confirmed to report earnings at approximately 8:20 AM ET on Tuesday, June 11, 2019. The consensus earnings estimate is $4.11 per share on revenue of $2.32 billion and the Earnings Whisper ® number is $4.16 per share. Investor sentiment going into the company's earnings release has 30% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 24.31% with revenue decreasing by 3.04%. Short interest has increased by 6.7% since the company's last earnings release while the stock has drifted higher by 15.6% from its open following the earnings release to be 4.1% above its 200 day moving average of $26.14. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, May 24, 2019 there was some notable buying of 769 contracts of the $29.00 call expiring on Friday, June 21, 2019. Option traders are pricing in a 5.3% move on earnings and the stock has averaged a 7.3% move in recent quarters.
RH $88.95
RH (RH) is confirmed to report earnings at approximately 4:25 PM ET on Wednesday, June 12, 2019. The consensus earnings estimate is $1.54 per share on revenue of $582.95 million and the Earnings Whisper ® number is $1.61 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 15.79% with revenue increasing by 4.58%. Short interest has decreased by 15.5% since the company's last earnings release while the stock has drifted lower by 21.1% from its open following the earnings release to be 27.6% below its 200 day moving average of $122.81. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, June 6, 2019 there was some notable buying of 8,104 contracts of the $80.00 put expiring on Friday, June 14, 2019. Option traders are pricing in a 16.0% move on earnings and the stock has averaged a 16.6% move in recent quarters.
Dave & Buster's Entertainment, Inc. $49.22
Dave & Buster's Entertainment, Inc. (PLAY) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, June 11, 2019. The consensus earnings estimate is $1.14 per share on revenue of $369.47 million and the Earnings Whisper ® number is $1.18 per share. Investor sentiment going into the company's earnings release has 79% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 9.62% with revenue increasing by 11.22%. Short interest has increased by 39.1% since the company's last earnings release while the stock has drifted lower by 8.1% from its open following the earnings release to be 8.3% below its 200 day moving average of $53.70. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 10.2% move on earnings and the stock has averaged a 6.3% move in recent quarters.
HD Supply Holdings Inc. $42.11
HD Supply Holdings Inc. (HDS) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, June 11, 2019. The consensus earnings estimate is $0.80 per share on revenue of $1.49 billion and the Earnings Whisper ® number is $0.82 per share. Investor sentiment going into the company's earnings release has 56% expecting an earnings beat The company's guidance was for earnings of $0.75 to $0.84 per share. Consensus estimates are for year-over-year earnings growth of 14.29% with revenue increasing by 7.27%. Short interest has decreased by 40.5% since the company's last earnings release while the stock has drifted lower by 3.2% from its open following the earnings release to be 2.0% above its 200 day moving average of $41.28. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, June 7, 2019 there was some notable buying of 1,304 contracts of the $42.50 put expiring on Friday, July 19, 2019. Option traders are pricing in a 7.1% move on earnings and the stock has averaged a 3.4% move in recent quarters.
Ferrellgas Partners, L.P. $1.10
Ferrellgas Partners, L.P. (FGP) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 10, 2019. Investor sentiment going into the company's earnings release has 16% expecting an earnings beat. Short interest has decreased by 3.5% since the company's last earnings release while the stock has drifted lower by 32.9% from its open following the earnings release to be 37.7% below its 200 day moving average of $1.77. Overall earnings estimates have been unchanged since the company's last earnings release. The stock has averaged a 20.0% move on earnings in recent quarters.
Lovesac Company $38.16
Lovesac Company (LOVE) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 10, 2019. The consensus estimate is for a loss of $0.47 per share on revenue of $40.54 million. Investor sentiment going into the company's earnings release has 28% expecting an earnings beat. Short interest has decreased by 1.5% since the company's last earnings release while the stock has drifted higher by 11.4% from its open following the earnings release to be 42.7% above its 200 day moving average of $26.74. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 13.6% move on earnings in recent quarters.
DISCUSS!
What are you all watching for in this upcoming week ahead?
I hope you all have a fantastic weekend and a great trading week ahead r/StockMarket.
![[link]](https://i.redd.it/kdmmoskqu4331.png){kind=link}
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