Get ready for the trading week beginning December 17th, 2018

by bigbear0083

 

 

Fed meeting could be pivotal for stock market looking for ‘knight in shining armor’ – (Source)


The Fed may not be able to turn the tide for the stock market in the week ahead, but it could soothe some of the wild volatility that has been crushing stocks since October.


The Fed is expected to raise interest rates Wednesday by a quarter point, and the pressure is on for Fed Chairman Jerome Powell to sound dovish — but not too dovish. Fed officials are also expected to revisit their fed funds rate forecasts and roll back some of the rate hikes expected in the next several years.


“Equities are hoping that the Fed is almost done or [for] signals that they’re going to pause. I think it’s too premature for them to do that,” said George Goncalves, head of fixed income strategy at Nomura. “The Fed was a little too optimistic for next year, and now they’ve got to come down. The recent price action is almost an overshoot on the bearish side.”


The Fed should tweak its economic forecast, and it could note that it has concerns about global growth. Powell is also expected to hold a briefing, where he could discuss Fed officials’ concerns about the impact of trade wars and possibly financial conditions.


There has been some speculation the Fed could hold off on a rate hike Wednesday, but it is widely expected to move forward and use its forecast and dovish tone to ease market fears that it is moving too aggressively.


“Is the change in tone going to be enough to jump-start this market that only reacts to bad news? It may well be. It may be the pivot point,” said Art Hogan, chief market strategist at B. Riley FBR.


Some strategists said if the Fed sparks a rally, there’s a chance stocks could find a near-term bottom.


Robert Sluymer, technical strategist at Fundstrat, said key for the stock market will be how it trades coming out of the Fed meeting. “I think it’s huge,” he said. “A tremendous number of stocks have been selling off through 2018. You have a lot of weak stocks, but they’re also deeply oversold from an intermediate standpoint. … My guess is coming out of the Fed you’re going to see some relief from that.”


Sluymer said the market is testing the lows of its 2018 trading range. The S&P 500 closed at 2,599, off 1.9 percent Friday and 1.2 percent for the week. It is now down 2.8 percent for the year.


“I think the markets want way too much out of the Fed. Market participants want a knight in shining armor,” said Goncalves. Goncalves said Nomura expects the Fed to eliminate one of the rate hikes in its collective forecast for next year, taking it to two instead of three on its so-called “dot plot.”


Trade-war worries and the Fed’s interest rate hikes have topped the list of what’s scaring risk markets and sending buyers into safe havens like Treasurys. On Friday, stocks plunged after a surprise slowing of consumer and industrial data in China, even though U.S. retail sales were strong and economists upped their outlook for fourth-quarter growth to 3 percent.


But the U.S. economy is expected to grow at a slower pace next year, and the Fed is expected to emphasize its policy decisions will be dependent on data. Economists expect growth to fall from about 3 percent to 2.4 percent next year, according to CNBC/Moody’s Analytics rapid GDP update.


“If the Fed sounds overtly too dovish, it sounds like they’re trying to appease the equity market. If they end up being too dovish they run the risk of having us wonder what they know that we don’t know,” said Goncalves.


Patrick Palfrey, equity strategist at Credit Suisse, said the economic outlook and earnings expectations are still solid but the global economy has weakened somewhat and the market has to adjust. “If you look at valuations in the sell-off, what the market is pricing at the moment is a recession, an economic recession or a profit recession. The question is when you look at ISM or the pace of job gains, the question is are they recessionary? And the answer is no,” Palfrey said.


Goncalves said the Fed will be careful not to be too fearful about the economy. “The economy is not yet at a point where you can say clearly that we’re heading for a downfall,” he said.


Besides the Fed in the week ahead, there are a few earnings reports, including Oracle on Monday, Micron and FedEx on Tuesday, and Nike on Thursday.


Economic reports include homebuilders sentiment on Monday, home sales Wednesday and personal income and durable goods Friday.


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This past week saw the following moves in the S&P:

(CLICK HERE FOR THE FULL S&P HEAT MAP FOR THE PAST WEEK!)

Major Indices for this past week:

(CLICK HERE FOR THE MAJOR INDICES FOR THE PAST WEEK!)

Major Futures Markets as of Friday’s close:

(CLICK HERE FOR THE MAJOR FUTURES INDICES AS OF FRIDAY!)

Economic Calendar for the Week Ahead:

(CLICK HERE FOR THE FULL ECONOMIC CALENDAR FOR THE WEEK AHEAD!)

Sector Performance WTD, MTD, YTD:

(CLICK HERE FOR FRIDAY’S PERFORMANCE!)
(CLICK HERE FOR THE WEEK-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE MONTH-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 3-MONTH PERFORMANCE!)
(CLICK HERE FOR THE YEAR-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 52-WEEK PERFORMANCE!)

Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday’s close:

(CLICK HERE FOR THE CHART!)

S&P Sectors for the Past Week:

(CLICK HERE FOR THE CHART!)

Major Indices Pullback/Correction Levels as of Friday’s close:

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Major Indices Rally Levels as of Friday’s close:

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Most Anticipated Earnings Releases for this week:

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Here are the upcoming IPO’s for this week:

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Friday’s Stock Analyst Upgrades & Downgrades:

(CLICK HERE FOR CHART LINK #1!)
(CLICK HERE FOR CHART LINK #2!)

The Bespoke Report — Fresh Lows

We’ve just published our weekly Bespoke Report newsletter for subscribers. Below is one of many tables and charts featured in this week’s report. The table shows all years in which the S&P 500 fell 10%+ in the fourth quarter. As shown, Q4 2018 is tracking to be just the 10th time since 1928 that the S&P has fallen 10%+ in Q4. Not good. And unfortunately, when Q4s have been bad for the S&P, the following Q1s have been bad more often than not as well.

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US Stock Market Performance During Years Ending In…

Below is a quick market stat to log as 2018 nears an end and 2019 approaches. In the chart, we show the S&P 500’s average price change in years ending in 0 through 9. This data goes back to 1928 when the S&P 500 begins.

As shown, years ending in “8” have historically seen the S&P 500 gain an average of 10.7%. At one point earlier in 2018, this type of gain seemed likely, but not anymore now that the S&P is down 2% YTD.

Years ending in “9” have historically seen an average gain of 8.1%, which is just a hair above the average of 7.5% seen for all years since 1928.

The best years have come in years ending in “5” with an average gain of 22.4%. Years ending in “3” rank second with a gain of 15.4%.

On the negative side, years ending in “0” and “1” have both averaged losses throughout history.

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Below we show the consistency of positive returns for the S&P 500 in years ending in “0” through “9”. As shown, years ending in “5” have been positive 88.9% of the time (8 out of 9), while years ending in “0” and “1” have been positive just 44.4% of the time (4 out of 9).

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Stocks Tend to Ignore Shutdowns

Next week could bring the third government shutdown of 2018, especially after the fireworks out of Washington yesterday. In a widely watched live TV debate, President Trump sparred with Senate Minority Leader Schumer and House Minority Leader Pelosi regarding funding for the proposed wall on the Mexican border and potentially shutting down the government.

What exactly does a shutdown mean for stocks? “Although shutdowns get a lot of media hype, the reality is that stocks tend to take them in stride. In fact, the S&P 500 has gained during each of the five previous shutdowns,” explained LPL Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, shutdowns rarely push stocks significantly lower and have corresponded with a flat median return in the previous 20 shutdowns going back more than 40 years.

One would think shutdowns in December might be rare, but they’re actually fairly common. Three shutdowns in the same year, however, is not. Could this year be the first since 1977 with three separate shutdowns? If yesterday’s drama was any indication, the odds may have increased. However, next summer’s debt ceiling debate will be a more important issue when Treasury interest payments are at risk.

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STOCK MARKET VIDEO: Stock Market Analysis Video for December 17th, 2018

([CLICK HERE FOR THE YOUTUBE VIDEO!]())

(VIDEO NOT YET UP!)

STOCK MARKET VIDEO: ShadowTrader Video Weekly 12.16.18

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Here are the most notable companies reporting earnings in this upcoming trading week ahead-


  • $MU
  • $FDX
  • $NKE
  • $BB
  • $ORCL
  • $RHT
  • $GIS
  • $DRI
  • $RAD
  • $PAYX
  • $NCS
  • $FDS
  • $NAV
  • $WOR
  • $ACN
  • $HEI
  • $CSBR
  • $WBA
  • $KMX
  • $SCS
  • $LOVE
  • $CAG
  • $JBL
  • $WGO
  • $CCL
  • $APOG
  • $MLHR
  • $NEOG
  • $CTAS
  • $PIR
  • $SAFM
  • $ABM
  • $AIR
  • $CAMP
  • $ATU
  • $REVG
  • $SCHL
  • $LAKE
  • $TWST
(CLICK HERE FOR THIS WEEK’S MOST NOTABLE EARNINGS RELEASES!)
(CLICK HERE FOR THIS WEEK’S HIGHEST VOLATILE EARNINGS RELEASES!)

Here are the most notable earnings releases for the trading week beginning December 17th, 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 12.17.18 Before Market Open:

([CLICK HERE FOR MONDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!]())

NONE.

Monday 12.17.18 After Market Close:

(CLICK HERE FOR MONDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 12.18.18 Before Market Open:

(CLICK HERE FOR TUESDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 12.18.18 After Market Close:

(CLICK HERE FOR TUESDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Wednesday 12.19.18 Before Market Open:

(CLICK HERE FOR WEDNESDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Wednesday 12.19.18 After Market Close:

(CLICK HERE FOR WEDNESDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Thursday 12.20.18 Before Market Open:

(CLICK HERE FOR THURSDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Thursday 12.20.18 After Market Close:

(CLICK HERE FOR THURSDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Friday 12.21.18 Before Market Open:

(CLICK HERE FOR FRIDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Friday 12.21.18 After Market Close:

([CLICK HERE FOR FRIDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())

NONE.


Micron Technology, Inc. $34.20

Micron Technology, Inc. (MU) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, December 18, 2018. The consensus earnings estimate is $2.90 per share on revenue of $8.01 billion and the Earnings Whisper ® number is $2.86 per share. Investor sentiment going into the company’s earnings release has 63% expecting an earnings beat The company’s guidance was for earnings of $2.87 to $3.02 per share. Consensus estimates are for year-over-year earnings growth of 20.33% with revenue increasing by 17.74%. Short interest has decreased by 13.2% since the company’s last earnings release while the stock has drifted lower by 23.0% from its open following the earnings release to be 30.4% below its 200 day moving average of $49.16. Overall earnings estimates have been revised higher since the company’s last earnings release. On Friday, December 14, 2018 there was some notable buying of 12,524 contracts of the $35.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 9.3% move on earnings and the stock has averaged a 4.9% move in recent quarters.

(CLICK HERE FOR THE CHART!)


FedEx Corp. $184.11

FedEx Corp. (FDX) is confirmed to report earnings at approximately 4:15 PM ET on Tuesday, December 18, 2018. The consensus earnings estimate is $4.05 per share on revenue of $17.75 billion and the Earnings Whisper ® number is $4.10 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 27.36% with revenue increasing by 8.81%. Short interest has decreased by 4.9% since the company’s last earnings release while the stock has drifted lower by 26.3% from its open following the earnings release to be 22.4% below its 200 day moving average of $237.16. Overall earnings estimates have been revised higher since the company’s last earnings release. On Thursday, December 13, 2018 there was some notable buying of 5,835 contracts of the $195.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 6.3% move on earnings and the stock has averaged a 2.8% move in recent quarters.

(CLICK HERE FOR THE CHART!)


Nike Inc $72.53

Nike Inc (NKE) is confirmed to report earnings at approximately 4:15 PM ET on Thursday, December 20, 2018. The consensus earnings estimate is $0.45 per share on revenue of $9.16 billion and the Earnings Whisper ® number is $0.50 per share. Investor sentiment going into the company’s earnings release has 59% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 2.17% with revenue increasing by 7.08%. Short interest has increased by 15.4% since the company’s last earnings release while the stock has drifted lower by 12.2% from its open following the earnings release to be 2.1% below its 200 day moving average of $74.07. Overall earnings estimates have been revised higher since the company’s last earnings release. On Friday, November 30, 2018 there was some notable buying of 6,530 contracts of the $80.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 4.7% move in recent quarters.

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BlackBerry Limited $7.60

BlackBerry Limited (BB) is confirmed to report earnings at approximately 7:00 AM ET on Thursday, December 20, 2018. The consensus earnings estimate is $0.02 per share on revenue of $212.58 million and the Earnings Whisper ® number is $0.04 per share. Investor sentiment going into the company’s earnings release has 62% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 33.33% with revenue decreasing by 5.94%. Short interest has decreased by 28.9% since the company’s last earnings release while the stock has drifted lower by 27.1% from its open following the earnings release to be 27.9% below its 200 day moving average of $10.54. On Thursday, December 13, 2018 there was some notable buying of 2,196 contracts of the $8.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 11.4% move on earnings and the stock has averaged a 8.5% move in recent quarters.

(CLICK HERE FOR THE CHART!)


Oracle Corp. $46.60

Oracle Corp. (ORCL) is confirmed to report earnings at approximately 4:05 PM ET on Monday, December 17, 2018. The consensus earnings estimate is $0.78 per share on revenue of $9.53 billion and the Earnings Whisper ® number is $0.78 per share. Investor sentiment going into the company’s earnings release has 43% expecting an earnings beat The company’s guidance was for earnings of $0.77 to $0.79 per share. Consensus estimates are for year-over-year earnings growth of 14.71% with revenue decreasing by 0.95%. Short interest has decreased by 22.4% since the company’s last earnings release while the stock has drifted lower by 1.9% from its open following the earnings release to be 2.2% below its 200 day moving average of $47.65. Overall earnings estimates have been revised lower since the company’s last earnings release. On Monday, November 26, 2018 there was some notable buying of 4,262 contracts of the $44.00 put expiring on Friday, December 21, 2018. Option traders are pricing in a 6.5% move on earnings and the stock has averaged a 6.2% move in recent quarters.

(CLICK HERE FOR THE CHART!)


Red Hat, Inc. $176.50

Red Hat, Inc. (RHT) is confirmed to report earnings at approximately 4:15 PM ET on Monday, December 17, 2018. The consensus earnings estimate is $0.87 per share on revenue of $853.58 million and the Earnings Whisper ® number is $0.91 per share. Investor sentiment going into the company’s earnings release has 67% expecting an earnings beat The company’s guidance was for earnings of approximately $0.87 per share on revenue of $848.00 million to $856.00 million. Consensus estimates are for year-over-year earnings growth of 17.57% with revenue increasing by 14.12%. Short interest has increased by 28.8% since the company’s last earnings release while the stock has drifted higher by 29.8% from its open following the earnings release to be 15.6% above its 200 day moving average of $152.74. Overall earnings estimates have been revised higher since the company’s last earnings release. On Friday, December 14, 2018 there was some notable buying of 12,500 contracts of the $140.00 put expiring on Friday, March 15, 2019. Option traders are pricing in a 1.6% move on earnings and the stock has averaged a 6.8% move in recent quarters.

(CLICK HERE FOR THE CHART!)


General Mills, Inc. $37.38

General Mills, Inc. (GIS) is confirmed to report earnings at approximately 7:00 AM ET on Wednesday, December 19, 2018. The consensus earnings estimate is $0.81 per share on revenue of $4.51 billion and the Earnings Whisper ® number is $0.81 per share. Investor sentiment going into the company’s earnings release has 56% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 1.22% with revenue increasing by 7.41%. Short interest has decreased by 29.0% since the company’s last earnings release while the stock has drifted lower by 19.7% from its open following the earnings release to be 15.7% below its 200 day moving average of $44.36. Overall earnings estimates have been revised higher since the company’s last earnings release. On Monday, December 3, 2018 there was some notable buying of 6,005 contracts of the $42.50 put expiring on Friday, December 21, 2018. Option traders are pricing in a 6.8% move on earnings and the stock has averaged a 4.4% move in recent quarters.

(CLICK HERE FOR THE CHART!)


Darden Restaurants, Inc. $103.20

Darden Restaurants, Inc. (DRI) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, December 18, 2018. The consensus earnings estimate is $0.92 per share on revenue of $1.98 billion and the Earnings Whisper ® number is $0.94 per share. Investor sentiment going into the company’s earnings release has 85% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 26.03% with revenue increasing by 5.24%. Short interest has increased by 18.2% since the company’s last earnings release while the stock has drifted lower by 15.8% from its open following the earnings release to be 1.0% above its 200 day moving average of $102.20. Overall earnings estimates have been revised higher since the company’s last earnings release. On Friday, December 14, 2018 there was some notable buying of 1,972 contracts of the $95.00 put expiring on Friday, December 21, 2018. Option traders are pricing in a 7.8% move on earnings and the stock has averaged a 6.7% move in recent quarters.

(CLICK HERE FOR THE CHART!)


Rite Aid Corp. $0.89

Rite Aid Corp. (RAD) is confirmed to report earnings at approximately 4:15 PM ET on Wednesday, December 19, 2018. The consensus estimate is for a loss of $0.01 per share on revenue of $5.48 billion and the Earnings Whisper ® number is ($0.01) per share. Investor sentiment going into the company’s earnings release has 81% expecting an earnings beat. Consensus estiamtes are for year-over-year revenue growth of 2.37%. Short interest has decreased by 28.2% since the company’s last earnings release while the stock has drifted lower by 30.2% from its open following the earnings release to be 57.6% below its 200 day moving average of $2.11. Overall earnings estimates have been unchanged since the company’s last earnings release. On Friday, December 14, 2018 there was some notable buying of 1,617 contracts of the $1.00 call expiring on Friday, December 21, 2018. The stock has averaged a 8.8% move on earnings in recent quarters.

(CLICK HERE FOR THE CHART!)


Paychex, Inc. $65.90

Paychex, Inc. (PAYX) is confirmed to report earnings at approximately 8:30 AM ET on Wednesday, December 19, 2018. The consensus earnings estimate is $0.63 per share on revenue of $856.73 million and the Earnings Whisper ® number is $0.63 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 6.78% with revenue increasing by 3.66%. Short interest has decreased by 8.5% since the company’s last earnings release while the stock has drifted lower by 10.4% from its open following the earnings release to be 3.2% below its 200 day moving average of $68.10. Overall earnings estimates have been revised lower since the company’s last earnings release. On Friday, November 30, 2018 there was some notable buying of 4,002 contracts of the $65.00 put and 4,000 contracts of the $65.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 5.0% move on earnings and the stock has averaged a 1.9% move in recent quarters.

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DISCUSS!

What are you all watching for in this upcoming trading week ahead?

 

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