After Dow Breaks Up 20,000, What’s Next?!

Index Last Daily change R2 R1 PP S1 S2
     DJX 20,094 (-0.04%) Down          
     SPX 2,295 (-0.09%) Down 229.94 229.45 229.11 228.62 228.28
Nasdaq 5,661 0.10% Up 126.23 126.02 125.70 125.49 125.17

By: Shlomo Cooper, Senior Analyst at Tradenet

Wall Street saw a jam-packed week, replete with drama, sagas and hairpin turns. When push came to shove, the major market indexes ended the first week into the new president’s term in the green; likewise, the Dow Jones finally succeeded in scaling past the most talked about psychological level in financial media, cutting up past the 20,000 point level as leading tech companies, Google (GOOGL), Microsoft )MSFT) and Intel (INTC) releasing their Q4 2016 reports. With that said, investors’ response to the earnings reports of the tech giants was mixed.

In a world where our heads were screwed on straight, in a week featuring a Federal Reserve meeting, employment figures and a continual flow of Q4 earnings results, investors’ attention would be re-directing itself from the start of a new president’s first 100 days to focus on economic developments. But in our world, with “The Donald” on center-stage around the clock, what we’ll be getting is anything but normal, with all eyes being peeled on what Trump will say or do next, his warnings, admonitions and threats overshadowing economic numbers and whatever the Chairwoman of the Fed has to say about inflation and economic growth.

Wall Street had already grasped the fact that the economic recovery is in place and therefore placed its bets on solid economic figures and strong earnings reports – simultaneously steeling itself for Yellen’s rate hikes; investors. are still at odds, though, about the new president who seems to shoot in all directions, leaving investors riddled with confusion.

While stocks have rallied since the November 8th elections on the background of hopes for rate cuts as well as loosened regulation and a generous fiscal stimulus package, investors are still waiting for solid proof that Trump has not only the will but also the ability to put into motion his business friendly campaign promises.

On the background of these concerns, another factor adding to the uncertainty is anxiety about Trump’s threats to impose high import taxes on commodities, as well as his claims of Chinese currency devaluation.

Future contracts on the Fed rate show that there’s a 96% chance that the Fed will leave interest rates unchanged upon concluding its 2-day meeting this Wednesday. Investors will have their eyes peeled for any hint from makers of monetary policy about the trajectory for 2017 rate hikes. If their language hints at a faster than expected clip for hiking rates, the stock market rally could come to a halt as investors recalibrate their going assumptions. Investors, though, don’t expect the Fed to rock the boat this coming week, at least not until we get more clarity about Trump’s policy platform. Like many of us, the Fed, presumably is also waiting to see how things develop in the Oval Office vis a vis policy changes from the new administration.

All-in-all, earnings reports for Q4 2016 and full-year forecasts for 2017 were two catalysts for the 10% surge on the S&P that started off in November, with many more companies expected to continue reporting this coming week. Two weeks now into the earnings season and analysts are expecting Q4 earnings reports to record growth of 6.8%, a rise from earlier expectations on January 1st of 6.1% growth. This growth pace would be the fastest over the last 2 years.

On Friday, the U.S. Dept. of Labor is expected to report that 171 thousand new positions were produced in January, a rise from the 156 thousand added in December. As long as the number isn’t beneath 100 thousand or above 300 thousand, stocks are not expected to react drastically.

Besides the search for clarity about Trump’s business friendly policies, the market will continue to seek out signs as to whether Trump, at the end of the day, will wind up benefiting or hurting trade. Take for example, the U.S. administration’s declaration that it plans on imposing a high 20% import tariff on Mexican imports in an attempt to help fund the building of a wall on the U.S.- Mexico border. A tax of this magnitude is likely to push up inflation and push the Fed to adopting a stricter monetary policy.

Investors are also on pins and needles, anxiously waiting to see whether Trump will officially announce that China is a currency manipulator, something he vowed to do on his first day in the White House. The best thing for the market would be if Trump were to simply sit down and negotiate a trade agreement with the world’s second largest economy. In our view, what Trump says should be taken seriously with the presumption that he plans on executing what he’s promised, yet at the same time, he needs to take into account that even as the head of the world’s #1 superpower, he needs to collaborate with others.

On a technical level, investors need to maintain a certain level of caution and alertness. Indexes are traded at significantly oversold level, and stocks are vulnerable to profit-taking, which would drag down market prices.

Weekly Summary: The main indexes ended in the green, led higher by NASDAQ. The Dow Jones ended up 1.35%, the S&P 500 tacking on 0.98% and the NASDAQ taking the lead with gains of 2.07%.

 

 

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Monday 8:30 Personal Income 0.4% Medium
Monday 8:30 Personal Spending 0.4% Medium
Monday 10:00 Pending Home Sales 1.3% Medium
Tuesday 9:00 S&P Case Shiller Home Price Index 5.0% Medium
Tuesday 9:45 Chicago PMI 55.0 Medium
Tuesday 10:00 Consumer Confidence 112.5 High
Wednesday 8:15 ADP Employment Change 165K High
Wednesday 10:00 ISM Index 55.0 High
Wednesday 10:00 Construction Spending 0.2% Medium
Wednesday 10:30 Crude Inventories Low
Wednesday 14:00 FOMC Rate Decision 0.625% High
Wednesday 14:00 Auto Sales Low
Thursday 8:30 Initial Claims 250K High
Thursday 8:30 Unit Labor Costs 1.9% Medium
Friday 8:30 Nonfarm Payrolls 170K High
Friday 8:30 Unemployment Rate 4.7% High
Friday 10:00 Factory Orders 1.4% Medium
Friday 10:00 ISM Services 57.0 Medium

 

 

Earning Calendar

 

Symbol Company AM/PM Day
ZBH Zimmer Biomet Holdings, Inc. AM Tuesday
NUE Nucor Corporation AM Tuesday
PCAR PACCAR Inc AM Tuesday
VLO Valero Energy Corporation AM Tuesday
ABC AmerisourceBergen Corporation AM Tuesday
HOG Harley-Davidson, Inc. AM Tuesday
PNR Pentair plc AM Tuesday
NDAQ Nasdaq, Inc. AM Tuesday
TMO Thermo Fisher Scientific Inc. AM Tuesday
DHR Danaher Corporation AM Tuesday
AET Aetna Inc. AM Tuesday
MA Mastercard Incorporated AM Tuesday
LLY Eli Lilly and Company AM Tuesday
UPS United Parcel Service, Inc. AM Tuesday
PFE Pfizer Inc. AM Tuesday
XOM Exxon Mobil Corporation AM Tuesday
AAPL Apple Inc. PM Tuesday
CB Chubb Limited PM Tuesday
APC Anadarko Petroleum Corporation PM Tuesday
CHRW C.H. Robinson Worldwide, Inc. PM Tuesday
OKS ONEOK Partners, L.P. PM Tuesday
AFL Aflac Incorporated PM Tuesday
EA Electronic Arts Inc. PM Tuesday
ILMN Illumina, Inc. PM Tuesday
PPL PPL Corporation AM Wednesday
IR Ingersoll-Rand Plc AM Wednesday
BAX Baxter International Inc. AM Wednesday
MPC Marathon Petroleum Corporation AM Wednesday
MPLX MPLX LP AM Wednesday
JCI Johnson Controls International plc AM Wednesday
ADP Automatic Data Processing, Inc. AM Wednesday
MO Altria Group, Inc. AM Wednesday
FB Facebook, Inc. PM Wednesday
MET MetLife, Inc. PM Wednesday
LNC Lincoln National Corporation PM Wednesday
SYMC Symantec Corporation PM Wednesday
ALL The Allstate Corporation PM Wednesday
NXPI NXP Semiconductors N.V. PM Wednesday
EW Edwards Lifesciences Corporation PM Wednesday
IP International Paper Company AM Thursday
CI Cigna Corporation AM Thursday
BSX Boston Scientific Corporation AM Thursday
EL The Estee Lauder Companies Inc. AM Thursday
COP ConocoPhillips AM Thursday
CME CME Group Inc. AM Thursday
PM Philip Morris International Inc. AM Thursday
MRK Merck & Co., Inc. AM Thursday
AMZN Amazon.com, Inc. PM Thursday
V Visa Inc. PM Thursday
AMGN Amgen Inc. PM Thursday
MSI Motorola Solutions, Inc. PM Thursday
WY Weyerhaeuser Co. AM Friday
HSY The Hershey Company AM Friday
LYB LyondellBasell Industries N.V. AM Friday
CLX The Clorox Company AM Friday
PSX Phillips 66 AM Friday

 

 

 

 


 

30.1.2017

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
CHKP $99.74 CHKP DG
FTV $56.24 GD AAL
WAL $50.72 CHRW EEP
DIS $109.50 ADI CLR
NFLX $143.50   GPS
DG $70.00    
URBN $25.76    
TDG $217.35    

 

New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 5.12.2016 CSC Long Close 6.12.2016 -1.62%
2 6.12.2016 YY Short Close 7.12.2016 +0.72%
3 7.12.2016 ROST Long Close 14.12.2016 +0.42%
4 9.12.016 TWLO Short Close 13.12.2016 +2.01%
5 12.12.2016 PDCO Long Close 14.12.2016 +0.48%
6 13.12.2016 TLRD Long Open 22.12.2016 +1.87%
7 13.12.2016 IGT Short Close 14.12.2016 -0.19%
8 14.12.2016 CC Long Close 21.12.2016 +0.52%
9 29.12.2016 JWN Short Close 6.1.2017 +3.45%
10 6.1.2017 TRGP Long Close 9.1.2017 +0.20%
11 9.1.2017 NVDA Long Close 17.1.2017 +1.02%
12 10.1.2017 TLRD Long Close 10.1.2017 -3.27%
13 13.1.2017 LW Long Close 26.1.2017 +0.09%
14  
15  
16  

 

Today’s Picks – Swing “New-York Strategy

 No.1 – FAST

Company Name Fastenal Company
Entry Point 50.41
Stop Area 49.89
1st Target 50.95
Swing Target 51.51
Avg. Volume 2.76M
Sector Services | Industrial Equipment Wholesale
Earning Date
Risk Rate Normal
Risk\Reward Ratio 2.12:1

 

No.2 – HZO

Company Name MarineMax,
Entry Point 20.25
Stop Area 19.88
1st Target 20.60
Swing Target 22.05
Avg. Volume 343K
Sector Services | Specialty Retail, Other |
Earning Date
Risk Rate Low
Risk\Reward Ratio