Earnings Season in Full Gear, Stocks Lose Altitude

S2 S1 PP R1 R2 Daily change Last Index
          (-0.30%) 19,827 DJX
225.30 225.77 226.28 226.75 227.26 (-0.30%) 2,268 SPX
122.15 122.47 122.75 123.07 123.35 (-0.63%) 5,539 Nasdaq

 

By: Shlomo Cooper, Senior Analyst at Tradenet

Stocks on Wall Street fell on Tuesday, led lower by the financial sector (XLF) and the transportation sector (IYT), and some of the stocks which had performed the best after the presidential elections now find themselves losing altitude as the earnings season enters full gear. Another weight on stocks was concern about the protective trade policies set out by president-elect Donald Trump which dragged the U.S. dollar down to its lowest level in a month, and brought down U.S. T-bond yields.

In summary for the day, the S&P 500 slipped 0.3%, the NASDAQ falling 0.6%.

The financial sector (XLF), which has rallied since the elections on the background of expectations for higher interest rates and curbed regulation in a Trump administration, recorded its worst trading day since June 27th, leading the whole market lower. The XLF fell sharply by 2.3% on the day.

Morgan Stanley (MS) fell 3.8%, despite having doubled its Q4 earnings. In the meantime, we’re continuing to see a rally in 10 year T-bonds, and so there are potential headwinds for financial companies. The more bond yields fall, banks’ spread drops, meaning lower profits.

Biotech and pharma stocks fell after Trump said in an interview to the Washington Post that he’s setting his sights on pharmaceutical prices – and that he’s on the verge of revealing a plan to replace Obamacare, the signature accomplishment of the outgoing president. The biotech sector (IBB) fell 1.96%.

The transportation sector (IYT), which rallied after the November 8th elections, closed off by 1.1%. The stock of the rail service company, CSX, fell 3.4% in late trading after releasing its results for last quarter. CSX had already fallen 1.8% during regular trading.

On the S&P 500, 9 stocks rose to new 52-week highs, just one stock dipping to a new yearly low; on the NASDAQ, 57 stocks recorded new 52-week highs, 20 falling to new yearly lows.

About 6.7 billion shares changed hands on U.S. exchanges, above the 6.3 billion average over the last 20 trading days.

Wednesday: Consumer inflation is expected to surpass an annual level of 2% for the first time in 2 years, December’s figures to be released today before trading opens on Wall Street.

The CPI reading is expected to come to 0.3%, which would mean an annualized clip of 2.1%. This figure is expected to grab the market’s attention seeing that the Fed has long set its inflation target at 2%.

Investors are expected to also respond to the headlines coming out of Trump Tower and Washington D.C. today, seeing that disappointment is evident that the tax reform is likely to take longer than the market had anticipated. The Trump administration is now giving priority to the replacement of Obamacare, and traders are fretting that that could come at the expense of other executive activity. Some market strategists are saying that they don’t expect the Senate to debate tax reform until autumn. Until now, investors had only considered what Trump could do for them, and things were looking good. Now, though, investors are thinking to themselves: “What are we waiting for? What does it mean that he’s going to impose import tariffs? Why should we have to wait until February for tax reform?”

Besides consumer inflation figures at 8:30 N.Y. time, the other figures on the Economic Diary include industrial output at 9:15, the NAHB contractor confidence index at 10:00, and the Fed Beige Book at 14:00.

Fed Chair, Janet Yellen will be speaking in San Francisco at 15:00.

Wednesday’s Hot Stocks: CSX, UAL, GIMO, NBIX, GS

IPOs: None

Have a great trading day!

 

Economic Calendar
DAY TIME (EST) Event Forecast Impact
Tuesday 8:30 Empire Manufacturing 8.3 Medium
Wednesday 8:30 CPI 0.3% High
Wednesday 9:15 Industrial Production 0.6% Medium
Wednesday 10:00 NAHB Housing Market Index Medium
Wednesday 14:00 Fed’s Beige Book Medium
Thursday 8:30 Initial Claims 252K High
Thursday 8:30 Housing Starts 1193K Medium
Thursday 8:30 Building Permits 1217K Medium
Thursday 8:30 Philadelphia Fed 15.3 Medium
Thursday 11:00 Crude Inventories Low

 

Earnings Calendar
Symbol Company AM/PM Day  
EDU New Oriental Education & Technology Group Inc. AM Tuesday  
CMA Comerica Incorporated AM Tuesday  
INFO IHS Markit Ltd. AM Tuesday  
MS Morgan Stanley AM Tuesday  
UNH UnitedHealth Group Incorporated AM Tuesday  
UAL United Continental Holdings, Inc. PM Tuesday  
CSX CSX Corporation PM Tuesday  
FAST Fastenal Company AM Wednesday  
GS The Goldman Sachs Group, Inc. AM Wednesday  
C Citigroup Inc. AM Wednesday  
KMI Kinder Morgan, Inc. PM Wednesday  
NFLX Netflix, Inc. PM Wednesday  
CP Canadian Pacific Railway Limited PM Wednesday  
SLM SLM Corporation PM Wednesday  
CHKP Check Point Software Technologies Ltd. AM Thursday  
UNP Union Pacific Corporation AM Thursday  
PPG PPG Industries, Inc. AM Thursday  
BBT BB&T Corporation AM Thursday  
IBM International Business Machines Corporation PM Thursday  
AXP American Express Company PM Thursday  
TEAM Atlassian Corporation Plc PM Thursday

18.1.2017

Today’s Picks – Day Trading

Symbol Breakout Breakdown Momentum Momentum
NNN 46.34   SLB MS
TRGP 58   PM JPM
PM 92.63   CL ANET
O 60.32   SN ZEN
ZBH 116.16   AAOI PRGS
TEVA   33.56   ETRM
MNK   48.61    
NVDA   99.38    
         
         

New York Strategy Swing

# Date Stock Long\

Short

Statues Date Close Profit \ Loss # Date Stock Long \Short Statues Date Close Profit \ Loss
1 5.12.2016 CSC Long Close 6.12.2016 -1.62% 17            
2 6.12.2016 YY Short Close 7.12.2016 +0.72% 18            
3 7.12.2016 ROST Long Close 14.12.2016 +0.42% 19            
4 9.12.016 TWLO Short Close 13.12.2016 +2.01% 20            
5 12.12.2016 PDCO Long Close 14.12.2016 +0.48% 21            
6 13.12.2016 TLRD Long Open 22.12.2016 +1.87% 22            
7 13.12.2016 IGT Short Close 14.12.2016 -0.19% 23            
8 14.12.2016 CC Long Close 21.12.2016 +0.52% 24            
9 29.12.2016 JWN Short Close 6.1.2017 +3.45% 25            
10 6.1.2017 TRGP Long Close 9.1.2017 +0.20% 26            
11 9.1.2017 NVDA Long Close 17.1.2017 +1.02% 27            
12 10.1.2017 TLRD Long Close 10.1.2017 -3.27% 28            
13 13.1.2017 LW Long Open   -0.83% 29            
14             30            
15             31            
16             32          

 

Today’s Picks – Swing “New-York Strategy”

No.1 – TRGP

Company Name Targa Resources
Entry Point 60
Stop Area 58.10
1st Target 60.90
Swing Target
Avg. Volume 2.04M
Sector Basic Materials | Oil & Gas Pipelines
Earnings Date
Risk Rate High
Risk\Reward Ratio 1.38:1

No.2 – TEVA

Company Name Teva Pharmaceutical
Entry Point 33.50
Stop Area 34.55
1st Target 33.05
Swing Target
Avg. Volume 10.34M
Sector Financial | REIT – Retail
Earnings Date 14 Feb
Risk Rate Normal
Risk\Reward Ratio