“Trump Rally” Likely to Take Stocks to New Highs

Index Last Daily change R2 R1 PP S1 S2
DJX 0.94% 20,071 Up          
SPX 0.73% 2,297 Up 230.21 229.77 229.12 228.68 228.03
Nasdaq 0.54% 5,667 Up 126.09 125.88 125.61 125.40 125.13

By: Shlomo Cooper, Senior Analyst at Tradenet

Stocks on Wall Street rallied back to an all-time high on Friday, enjoying their strongest trading day since 2017. The catalyst for the positive movement came from Trump’s move to start scaling back the Dodd-Frank Wall Street Reform and Consumer Protection Act, imposed on banks in 2008 on the heels of the latest financial crisis. Likewise, investors drew encouragement from Friday’s employment report which showed just the right balance between the strength of new hires in January and moderate wage growth, making for the optimal combination of strong employment growth that didn’t translate into an uptick in inflation, a fact likely to neutralize the threat of a March rate hike.

The S&P 500 succeeded in ending last week lightly up. Stocks are likely to press on the gas this coming week and seek out new highs, as long as we don’t see a White House twit that like a stray bullet misses its mark.

Wall Street investors can at least put one concern at bay in regards to the upcoming earnings season: the strength of the dollar. The greenback, which rallied sharply after the November 8th elections, has seen a sharp reversal year-to-date. A brief glance at the dollar index (UUP) on January 31st 2017 would highlight the worst performance for the first month of the year in 3 decades. The greenback fell 2.6% in January, after having rallied 7.1% over the last quarter of 2016.

A strong dollar represents a concern for stock market investors, seeing that it lowers the revenues of American-based multinational companies which make most of their sales overseas, denting their top line revenue after foreign currencies are converted back into dollars. Almost half of the sales of S&P 500 firms come from international operations, many U.S. CEOs noting the strong dollar as having a negative effect on Q4 earnings results. Among them, Apple (AAPL), in its earnings report just a week ago, noted that its tepid forecast for the current quarter can be attributed primarily to the strength of the dollar.

“For a company like ours where we do about two-thirds of our business outside the United States, the strong dollar presents a headwind of more than 2 percent growth,” Apple Chief Financial Officer (CFO), Luca Maestri, commented.

Q4 2016 results, even with the strong dollar, have succeeded in trouncing analysts’ earnings, providing some measure of security in the face of the uncertainty investors are facing, including the new president’s policies, geopolitical and otherwise.

With over half of the S&P 500 companies already reporting, the year-over-year forecast for earnings growth now stands at 8%, a rise from the 6.1% growth forecast at the beginning of January. As of now, Q4 2016 stands to be the strongest quarter since Q3 2014. Analysts expect Q1 2017 earnings to grow by 11.5%.

This coming week, 75 of the companies on the S&P 500 are expected to report. Along with their numbers, be primed for this week’s economic releases, including international trade figures and the Consumer Confidence Index this Friday.

SPY Technical Perspective:

Friday’s movement was positive, paving the way for further gains and new highs on the indexes this coming week. Financial stocks, very important in their own right in regard to the trend’s lasting power, led the positive movement and are likely – this time around – to keep the Dow Jones above the 20,000 point level. The “Trump rally” is likely to continue to fire on all cylinders, injecting the market with renewed energies.

 

Weekly Summary: We saw mixed movement on the indexes, the Dow Jones recording light losses of 0.12%, losing ground and falling beneath the 20 thousand point level. The S&P 500 tacked on 0.16%, the NASDAQ ending marginally off by 0.1%.

Have a great trading week!

 

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Tuesday 8:30 Trade Balance -$45.0B Medium
Tuesday 10:00 JOLTS – Job Openings Medium
Wednesday 10:30 Crude Inventories Low
Thursday 8:30 Initial Claims 250K High
Thursday 10:00 Wholesale Inventories 1.0% Low
Friday 8:30 Export Prices ex-ag. High
Friday 10:00 Mich Sentiment – Prelim 97.9 High
Friday 14:00 Treasury Budget Low

  

Earning Calendar

 

Symbol Company AM/PM Day
HAS Hasbro, Inc. AM Monday
TSN Tyson Foods, Inc. AM Monday
CTSH Cognizant Technology Solutions Corporation AM Monday
NOV National Oilwell Varco, Inc. PM Monday
FOXA Twenty-First Century Fox, Inc. PM Monday
SNE Sony Corporation AM Tuesday
VMC Vulcan Materials Company AM Tuesday
MOS The Mosaic Company AM Tuesday
GRFS Grifols, S.A. AM Tuesday
CAH Cardinal Health, Inc. AM Tuesday
OMC Omnicom Group Inc. AM Tuesday
ORLY O’Reilly Automotive, Inc. PM Tuesday
AKAM Akamai Technologies, Inc. PM Tuesday
MCHP Microchip Technology Incorporated PM Tuesday
GILD Gilead Sciences Inc. PM Tuesday
DIS The Walt Disney Company PM Tuesday
PXD Pioneer Natural Resources Company PM Tuesday
SO The Southern Company AM Wednesday
TWX Time Warner Inc. AM Wednesday
ALK Alaska Air Group, Inc. AM Wednesday
CAJ Canon Inc. AM Wednesday
HUM Humana Inc. AM Wednesday
YUM Yum! Brands, Inc. PM Wednesday
MYL Mylan N.V. PM Wednesday
LVLT Level 3 Communications, Inc. PM Wednesday
FISV Fiserv, Inc. PM Wednesday
TSLA Tesla Motors, Inc. PM Wednesday
PRU Prudential Financial, Inc. PM Wednesday
OXY Occidental Petroleum Corporation AM Thursday
CVS CVS Health Corporation AM Thursday
RAI Reynolds American Inc. AM Thursday
KO The Coca-Cola Company AM Thursday
Q Quintiles IMS Holdings, Inc. AM Thursday
COTY Coty Inc. AM Thursday
CMI Cummins Inc. AM Thursday
K Kellogg Company AM Thursday
TWTR Twitter, Inc. AM Thursday
VIAB Viacom, Inc. AM Thursday
CCE Coca-Cola European Partners Plc AM Thursday
DTE DTE Energy Company AM Thursday
CERN Cerner Corporation PM Thursday
EXPE Expedia, Inc. PM Thursday
DVA DaVita Inc. PM Thursday
AAP Advance Auto Parts, Inc. PM Thursday
ATVI Activision Blizzard, Inc. PM Thursday
AGU Agrium Inc. PM Thursday
NVDA NVIDIA Corporation PM Thursday
VTR Ventas, Inc. AM Friday
XRAY DENTSPLY SIRONA Inc. AM Friday

 

6.2.2017

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
CHKP $99.74   MDCO  
TRGP $61.25   ESPR  
VOYA $41.58   NTNX  
VMW $89.50   DVMT  
STX $46.88      
KS $24.86      
EEP   $18.55    
TPX   $42.50    
         
         
         
         

  

New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 29.12.2016 JWN Short Close 6.1.2017 +3.45%
2 6.1.2017 TRGP Long Close 9.1.2017 +0.20%
3 9.1.2017 NVDA Long Close 17.1.2017 +1.02%
4 10.1.2017 TLRD Long Close 10.1.2017 -3.27%
5 13.1.2017 LW Long Close 26.1.2017 +0.09%
6 31.1.2017 ATI Long Open   +1.36%
7 1.2.2017 AKAO Long Open   +5.00%
8 2.2.2017 DATA Long Open   +13.71%
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