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Will Earnings Take The S&P To All Time Highs?

Posted on by George Mahfouz

Now that earnings reporting season is upon us, will Q1 corporate earnings take the S&P 500 (see chart here) to all time highs? We are about to find out. For the first time in months the S&P 500 (see chart here) closed above the 2900 mark and is now within striking distance of its record close of 2940 set back in September. Once again the markets feel like they are in melt up mode. The Dow Jones Industrial Average (see chart below) closed on Friday at 26412 just 500 points away from its record high, the Nasdaq Composite (see chart here) is approaching the 8000 level a level it hasn’t seen in months, and last but not least the small-cap Russell 2000 (see chart here) is approaching the 1600 level and trading above its 200-day moving average.

The technical shape of the markets also appear to be healthy heading into Q1 earnings reporting season. All of the aforementioned indexes are trading above their 20-day, 100-day and 200-day moving averages. A good sign. Furthermore, none of these averages are in overbought territory this according the the relative strength index. Yet, another good sign.

Back to Q1 earnings reporting season. Although analysts and market pundits expect corporate earnings to have declined this quarter, I will be paying attention to the guidance that companies give. It’s no secret there has bee a global slowdown lately due to a variety of factors. However, if companies give better than expected guidance, then most likely we should indeed see new record highs.

Companies to look out for this week that are reporting are, Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), Johnson & Johnson (NYSE: JNJ), Netflix (NasdaqGS: NFLX), United Continental Holdings (NasdaqGS: UAL), Abbott Labs (NYSE: ABT), Alcoa (NYSE:AA), Las Vegas Sands, Corp. (NYSE: LVS), PepsiCo, Inc. (NasdaqGS: PEP), American Express (NYSE: AXP) and Honeywell International (NYSE: HON) just to name a few. Let’s see if Q1 earnings reporting season becomes the catalyst for new record highs. Good luck to all 🙂

~George

Dow Jones Industrial Average - Paula Mahfouz

 

 

 

 

Triple Top Or Breakout?

Posted on by George Mahfouz

After chopping between the 2700 and 2800 zone for the past couple of months, is the S&P 500 (chart) at a triple top, or is it ready to breakout? I think we are going to find out this week in which second quarter earnings reporting season kicks into high gear. Although volatility has reared its head in first half of 2018, vol now has come back to what the markets have been accustomed to over the past few years (see chart below). Whether we breakout and test all time highs is a head scratcher. Of course earnings will play a key role in which way the markets will go, but there are other market moving factors in the mix. Any minute President Trump could put out a tweet on trade which could kill the most recent rally in stocks or propel it to new highs. On Tuesday and Wednesday, Federal Reserve Chairman Jerome Powell will speak in front of the Senate Banking Committee and the House Financial Services Committee. Without a doubt investors will be paying close attention to the tone and context of Chairman Powell’s testimony in front of both committees. Oh yes, we must not forget the Trump/Putin summit and I can’t even guess what comes out of that meeting and how the markets will react. So as you can see, chance are we will breakout of the triple top we are in or pullback within the trading range as mentioned above.

This week kicks off with high flying Netflix (NasdaqGS:NFLX) which reports their quarterly results tomorrow after the close, followed by Goldman Sachs (NYSE: GS) on Tuesday along with Johnson & Johnson (NYSE: JNJ), T-Mobile (NYSE: TMUS) and rounding the week out we will hear from the likes of Alcoa Corp (NYSE: AA), American Express (NYSE: AXP), eBay Inc. (NasdaqGS: EBAY), International Business Machines (NYSE: IBM), Etrade Financial Corp. (NasdaqGS: ETFC), Intuitive Surgical (NasdaqGS: ISRG), Microsoft Corp. (NasdaqGS: MSFT), General Electric (NYSE: GE) and Honeywell International Inc. (NYSE: HON) just to name a few. Good luck to all 🙂

~George

VIX - George Mahfouz Jr.

Stocks Go On A Wild Ride!

Posted on by George Mahfouz

As the new year begins to unfold, volatility has taken command! Yesterday, the Dow Jones Industrial Average (chart) had a 424 point intraday swing, an intraday move not seen in quite sometime. Volatility continued to surge this morning as stocks opened down sharply by weaker than expected retail sales for the month of December, and JP Morgan (NYSE: JPM) announcing weaker than expected quarterly results. So is this the new norm? Investors and especially traders have been waiting a long time to see volatility come back into the market and they may have just gotten what they have been expecting. For years, stocks have been in a low vol environment thanks in part to the Federal Reserve’s easy monetary policies. Now that those policies have and are winding down, it’s no surprise to me that volatility has picked up. Furthermore, now that we are have entered into Q4 earnings reporting season, I expect that volatility will remain elevated and possibly increase.

Companies that are scheduled to report their earnings results are over the next week are; Citigroup (NYSE: C), Intel (NasdaqGS: INTC), Goldman Sachs (NYSE: GS), Delta Airlines (NYSE: DAL), International Business Machines (NYSE: IBM), Morgan Stanley (NYSE: MS), Netflix (NasdaqGS: NFLX), American Express (NYSE: AXP), eBay Inc. (NasdaqGS: EBAY), Starbucks (NasdaqGS: SBUX), Verizon Communications (NYSE: VZ), General Electric (NYSE: GE), Honeywell International ( NYSE: HON) and McDonald’s Corp (NYSE: MCD) just to name a few.

More now than ever I will be focusing on “top-line” growth of corporate America to see if this most recent sell-off poses a buying opportunity. If the top-line of companies do not begin to grow in a meaningful way, I would expect the selling pressure to continue. Good luck to all 🙂

~George

First Half Of The Year In The Books, And The Bull Keeps Running…

Posted on by George Mahfouz

After gaining 30% or so in 2013, the markets continue to be on one of the most impressive bull runs in modern history. Here is how the four key indices closed out the first half of 2014: The Dow Jones Industrial Average (chart) finished up 1.5%, the Nasdaq (chart) gained 5.5%, the S&P 500 (chart) advanced 6.1% and the small-cap Russell 2000 (chart) closed out the first half of 2014 up 2.6%. Looking back to the market lows of early 2009, these aforementioned indices have tripled or better in price, which is simply stunning.

I think now is as good a time than any to begin to take a look at how the major averages can continue to rise in spite of almost tripling over the past 5 1/2 years. What could be the catalyst(s) going forward? It’s no secret that the Federal Reserve is scaling back its asset purchases and are scheduled to be finished by year-end, so no surprise there. This in fact is where the bear camp is growling that the end of the Fed stimulus program could be the catalyst to end this historic bull run. What about corporate earnings? In my humble opinion, herein lies the single most important catalyst that will either add fuel to this incessant bull run or put the brakes on it. If it’s the latter, this could also create the first real correction in stocks, something that hasn’t occurred in years.

Investors will not have to wait too much longer for Q2 earnings reporting season is upon us. The first key earnings release that has economic implications will be Alcoa (NYSE: AA) which is due to report next Tuesday after the close. I will be very interested to see the top-line growth of Alcoa which will certainly shed some light as to the health of the global economy. Investors have been bidding up Alcoa most of the year in anticipation of an expanding global backdrop. Another economically sensitive stock at least as it pertains to the consumer is Family Dollar Stores (NSYE: FDO). Family Dollar is scheduled to report their quarterly results next Thursday before the market opens. Then by mid-July we will be in high gear to hear how corporate america fared in Q2. The week of July 14th, earnings are scheduled to come out of American Airlines (NYSE: AAL), American Express (NYSE: AXP), Blackrock ( NYSE: BLK), Citigroup (NYSE: C), Whirlpool Corp (NYSE: WHR), JPMorgan Chase (NYSE: JPM) Goldman Sachs (NYSE: GS), Johnson & Johnson (NYSE: JNJ), Intel (NasdaqGS: INTC), Yahoo (NasdaqGS: YHOO), Bank of America Corp (NYSE: BAC), Ebay (NasdaqGS: EBAY), U.S. Bancorp (NYSE: USB), Yum Brands (NYSE: YUM), Baker Hughes Inc (NYSE: BHI), UnitedHealth Group (NYSE: UNH),  Blackstone Group LP (NYSE: BX), International Business Machine (NYSE: IBM), Google (NasdaqGS: GOOGL), Bank of New York Mellon Corp (NYSE: BK) and General Electric (NYSE: GE) just to name a few. As you can see, I think it is safe to say that by the middle of July or so we will have a pretty good idea of how corporate America is faring.

Please note that in recognition of the 4th of July holiday, the markets will be closing at 1pm E.S.T. on Thursday and is closed on Friday the 4th. Both Paula and I wish everyone a very safe and happy 4th of July 🙂

~George

 

Back on track…

Posted on by George Mahfouz

Despite some market jitters and a pullback in June, stocks are right back in bull mode with the Dow and S&P closing at new highs. For the week, the Dow Jones Industrial Average (chart) closed up 2.17%, the S&P 500 (chart) +2.96%, the Nasdaq (chart) +3.47% and the small-cap Russell 2000 (chart) closed the week out up 3.10% also closing at an all time high. These impressive weekly gains were spurred on by Ben Bernanke’s reassurance that the fed’s easy monetary policies will continue for the foreseeable future.

Once again the mettle of the market will be tested this week with Q2 earnings reporting season kicking into high gear. Here are some of the companies that will report their second quarter results: Citigroup (NYSE: C), Coca-Cola (NYSE: KO), Goldman Sachs (NYSE: GS), Johnson & Johnson (NYSE: JNJ), The Charles Schwab Corporation (NYSE: SCHW), Yahoo (NasdaqGS: YHOO), Bank of America (NYSE: BAC), American Express (NYSE: AXP) and Ebay (NasdaqGS: EBAY), International Business Machines, (NYSE: IBM), Intel (NasdaqGS: INTC), United Health (NYSE: UNH), Google (NasdaqGS: GOOG) Blackrock (NYSE: BLK), Microsoft (NasdaqGS: MSFT) and Morgan Stanley (NYSE: MS).

So as you can see, next week’s earnings reports will take center stage and should guide our markets as we continue to go through the summer months. I look for volatility to increase which is typical with earnings reporting season. Good luck to all.

Have a great week 🙂

~George

Gold gets pummeled!

Posted on by George Mahfouz

The price of gold fell below $1,400 an ounce for the first time in over two years. In fact, gold and silver both have lost over 10% of its value in the past two trading sessions. Panic selling has set in with not only key technical support levels being shattered, but fears that Cypress and other European countries may have to sell their gold reserves in order to generate liquidity. In addition, slower than expected Q1 growth out of China also added to the panic selling. This capitulation type selling has spilled over to the majority of the gold miners with the gold miners ETF (Symbol: GDX) chart losing over 20% of its value over the past couple of trading sessions. Folks this type of panic selling is what can happen once technicals and fundamentals breakdown and fear takes over. In looking at the most popular ETF that tracks the price of gold (Symbol: GLD) chart, it appears that a multi-year support zone could be found in the $128.00 area which is now only a few dollars away. However, when you have panic selling, margin call selling, institutional and hedge fund selling, all bets are off pertaining to technicals until the smoke clears and cooler heads prevail.

As far as the equities markets are concerned, this is a big week for Q1 earnings reports. We will hear from the likes of Coca-Cola (NYSE: KO), Goldman Sachs (NYSE: GS), Johnson & Johnson (NYSE: JNJ), Intel (NasdaqGS: INTC) Yahoo (NasdaqGS: YHOO), Bank of America (NYSE: BAC), American Express (NYSE: AXP) and Ebay (NasdaqGS: EBAY) just to name a few.

Good luck to all and have a great week 🙂

~George

Chalk one up for the bears…

Posted on by George Mahfouz

Stocks notched their worst performing week since the beginning of the summer. For the week, the Dow Jones Industrial Average (chart) closed down 2.07%, the Nasdaq (chart) -2.94%, the S&P 500 (chart) -2.21% and the small-cap Russell 2000 (chart) closed out the week down 2.35%.

This upcoming week promises to be a doozy with Q3 earnings reporting season kicking into high gear. The following is a list of some of the high profile companies that are scheduled to report; Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) Coca-Cola ( NYSE: KO), International Business Machines (NYSE: IBM) , Intel (NasdaqGS: INTC), CSX Corp. (NYSE: CSX), Bank of America (NYSE: BAC), US Bancorp (NYSE: USB), American Express (NYSE: AXP) and tech titans Ebay (NasdaqGS: EBAY) and Google (NasdaqGS: GOOG).

With last week’s market performance and lack thereof, the question I am now pondering is whether or not this earnings reporting season will be the catalyst to take the markets down further? Even with last week’s 2% pullback, the bellwether indexes are still up double digits on the year. There indeed could still be more room to the downside, however, I would expect that key technical levels would support any meaningful pullback. Let’s take a look at the S&P 500 (chart). The first level of support appears to be in the 1400 zone and then the 1370 area which happens to be the 200-day moving day average for the S&P. By no means am I suggesting that these levels will be reached, all I am saying is if Q3 earnings reporting season comes in weaker than expected, we could see a continuation of last week’s pullback.

Good luck to all.

Have a great week 🙂

~George