Trading Blog

The Markets This Week  October 22, 2017 - 3:15pm

The markets remain extended and we are coming into the meat of earnings season. The only way to make sense of the move in the SPY is from the weekly chart which shows room to 259.00. The QQQ is still hovering at the 127.2 extension at 149.00 and if it makes a move could go to 152.00. The IWM is still hanging near 150.00. The reports coming up will have an impact on where these markets go next.

PayPal (PYPL)  October 22, 2017 - 3:10pm

PayPal shares are up 4.85% in the extended session Thursday after the company beat revenue and earnings expectations. PayPal shares rose to $70.50 after hours. The company reported third-quarter net income of $380 million, or 31 cents a share, compared to $323 million, or 27 cents a share, in the year-ago period. Adjusted earnings were 46 cents a share. Revenue rose to $3.24 billion from $2.67 billion in the year-ago period. Analysts surveyed by FactSet had estimated 32 cents a share on revenue of $3.178 billion. Analysts modeled adjusted earnings of 43 cents a share. For the fourth quarter, analysts model earnings of 39 cents a share on revenue of $3.565 billion. There is still room to 74.00 on the chart but after Friday's move you are chasing.

McDonald's Corp. (MCD)  October 22, 2017 - 3:04pm

McDonald’s Corp. is expected to announce third-quarter earnings on Oct. 24 before the opening bell. RBC Capital Markets analysts believe the fast-food giant is capturing share, benefiting from things like premium burgers, delivery, the new Buttermilk Chicken Tenders and warm weather. “We expect the chain to continue to recapture lost share as the system consolidates its franchisee base, secures commitments to a new national value platform (early 2018), and unifies behind asset/technology investments, enhanced restaurant grading, and food renovation,” RBC analysts led by David Palmer wrote in a recent note. “We believe these changes will restore McDonald’s advantages in value and convenience and continue to close the customer satisfaction gap with fast casual.” And McDonald’s efforts won’t just yield short-term results, but long-term growth and free cash flow. The company’s aforementioned initiatives should also drive same-store sales growth. MCD is a little extended going into this report after running up from 155.00 over the last few weeks.

Advanced Micro Devices (AMD)  October 22, 2017 - 3:02pm

Advanced Micro Devices Inc.’s earnings will be judged by how the chipmaker’s new products are selling and cryptocurrency-influenced sales, but trying to predict the volatile stock’s reaction is much more difficult. AMD is scheduled to report third-quarter earnings after the closing bell on Tuesday. For the past seven quarters, AMD has either met or exceeded bottom-line consensus estimates, but hasn’t experienced a consistent rise in the stock’s price after those events, part of the stock’s uneven history that has included a near-doubling in the past year.  The stock did rise after last quarter’s earnings, as results showed strong gains from cards used to mine cryptocurrency and early sales of new products. Analysts and investors are expecting more of the same this quarter, and will be looking for any results and color that give clues on those two issues. The stock needs to push through and hold 14.20 to make the next move up.

The Markets This Week  October 15, 2017 - 3:24pm

The indexes really have not moved much in the last week or so and they continue to bang against resistance levels. It is going to be hard for them to go much higher from here without a little pull back or minimally some continued consolidation.

Netflix Inc. (NFLX)  October 15, 2017 - 3:18pm

Netflix Inc. shares were up 1.85% on Friday after analysts at J.P. Morgan raised their 12-month price target on Netflix to $225 from $210 on Friday, just ahead of the streaming giant's third-quarter earnings report after the bell on Monday. Lead analyst Doug Anmuth's increase was driven by Netflix recent price increases and a promotion the company has with T-Mobile to sign up new subscribers. A common theme from analysts ahead of earnings is the view that Netflix added more subscribers in the quarter than previously thought. Anmuth said he expects the streamer to report net adds of 800,000; up from his previous 765,000 expectation and above the company's 750,000 guidance. The price increase is expected to have a minor impact on Netflix's fourth quarter subscriber numbers though. "We think there will only be modest negative impact on churn and overall gross adds given the price increase is happening around a very strong content and favorable seasonal period," Anmuth wrote in a note to investors. "Overall, the impact to Netflix Financials is a clear positive." The upper target here is 220.00 at the 161.8 extension.

Apple Inc. (AAPL)  October 15, 2017 - 3:14pm

Apple Inc. may not ramp up production volume on its flagship iPhone X until December, according to a Friday research note from Cascend Securities. Apple shares are up less than 1% to $156.89 in late-session trading. Though iPhone X sales are set to kick off with pre-orders on Oct. 27 and availability Nov. 3, the manufacturing and supply chain partners Apple uses are privately saying that volumes will not be ready in November. Cascend analyst Eric Ross told MarketWatch that normally device manufacturers build up inventory and ensure it's in the hands of retail outlets and carriers so gadgets are available to consumers on launch day. "But they don't seem to be doing it this year," he said. As for the iPhone 8, consumer interest is "OK but not tremendous" and customers are not buying as much as Cascend expected, the note says. While iPhone 8 supply is good, the discounts have not yet been enough give wireless carriers incentives to attract more customers to two-year contracts. As long as price holds 156.00 ten 165.00 is the target.

HP Inc (HPQ)  October 15, 2017 - 3:11pm

HP Inc. expects 2018 to be another good year, with profit projections beating Wall Street expectations, and it's pledging to continue to return most of its cash to shareholders. The high return rate, in the form of dividends and share buybacks, has driven the company's shares through leaner times. On Thursday, HP said it expects to generate at least $3 billion in free cash flow, the amount remaining after capital expenditures, and pledged to continue passing on to shareholders 50% to 75% of that money. The board also approved a 5% increase in the quarterly dividend. Over all, HP expects profit to reach $1.69 to $1.79 a share next year, or $1.74 to $1.84 on an adjusted basis, compared with analysts' projected $1.66 a share, or $1.76 a share on an adjusted basis. With the move Friday the chart is a little extended and any entry here would be a chase.

The Markets This Week  October 8, 2017 - 12:42pm

This week I feel the markets could take a rest as the IWM and SPY are banging against their 161.8 Fib extensions with the QQQ being the only index that has room to run on the chart. Stocks, however, could move as earnings season begins.

Amazon.com (AMZN)  October 8, 2017 - 12:35pm

Whether online retailer Amazon plans to enter the pharmacy-services space has been the subject of speculation for months, and Leerink analyst David Larsen is now going public with his position on the will-it-or-won’t-it question. “It’s a matter of when, not if,” Larsen said, adding that he expects an announcement in the next year or two. “While AMZN AMZN, +0.89% is likely still researching what its ultimate strategy should look like, with [approximately 75 million] Amazon Prime lives, seemingly unlimited resources, and highly advanced technology capabilities, we believe [Amazon] can create disruption to the existing market.” As such, Larsen said he’s more cautious about pharmacy-benefit managers and retail pharmacies, both major players in the pharmaceutical supply chain. Pharmacy retailers such as Walgreens Boots Alliance and RiteAid Corp. face the biggest threat for now, he said, while companies like CVS Health Corp. may be able to leverage pharmacy-benefit-manager services to reduce risk. AMZN will have resistance between 1009 -1027.

Apple Inc. (AAPL)  October 8, 2017 - 12:26pm

Shares of Apple Inc. recovered Friday after opening lower after another report of a problem with an iPhone 8 Plus. Chinese state media reported that a device delivered there had split open,9to5Mac reported, reigniting concerns about the battery. Earlier this week, a customer from Taiwan and another from Japan reportedly sent pictures to Apple showing their phones split open, which was thought to be caused by the battery swelling due to gases inside the device. "We are aware and are looking into it," an Apple spokeswoman was quoted as having told MacRumors. The key level here is still 156.00.

Costco Wholesale Corp. (COST)  October 8, 2017 - 12:21pm

Shares of Costco Wholesale Corp. dropped almost 6% Friday, extending their late-session losses from Thursday after posting earnings for its fiscal fourth quarter. J.P. Morgan analysts said the report provided fodder for bulls and bears, "with progress on the e-commerce front but pricing, membership growth, and tough compares ahead all remaining battleground issues. " The bear case rests on uncertain membership growth and heightened competition in the wake of Amazon.com Inc.'s takeover of Whole Foods. "Management tackled the membership growth concern head-on noting that excluding cannibalization from new openings, the average number of members in remaining locations grew by ~4% in 2017," said the note. "However, bears will point to 'comp' membership income growth decelerating again this quarter after stripping out the 53rd week, fee hike, square footage growth, FX translation impact, and the living social deal." Where the company did make progress was on e-commerce, unveiling two new delivery options and an early effort to leverage customer knowledge from its customer base, said the note. COST now has to hold the lows at 150.00.

The Markets This Week  October 1, 2017 - 5:35pm

The markets are on the move and this move could just be getting started. The SPY has room to 254.00 and if the QQQ can push through 146.13 it could run to 148.94. The IWM is closest to resistance at 150.

Tesla Inc. (TSLA)  October 1, 2017 - 5:28pm

Tesla Inc. shares are nearing their second straight week of losses, down nearly 4% on the heels of a recent record close and a few negative analyst views. Tesla stock ended at a record $385 on Sept. 18, and in the days since is down more than 14%. Shares have underperformed the broader market in recent months, although they are still outpacing the market so far this year. There was “a lot of good news for Tesla” in past months, including meeting important deadlines with the Model 3, but the shares have been overvalued for a while, said Efraim Levy, an analyst with CFRA, who has a sell rating on the stock. In recent weeks, negative news flow included Elon Musk’s announcement that the Tesla semi truck would be unveiled in October, rather than September, and a few negative analyst opinions, he said. TSLA is trading below the trend line.

Microsoft Corp. (MSFT)  October 1, 2017 - 5:23pm

Microsoft said its upcoming Surface Pro flagship tablet PC will have 4G LTE cellular connectivity, a clear message that it sees the future of mobile computing as what’s called “always connected.” That’s a big shift for an industry in which, until recently, only enterprise and low-volume notebooks from Lenovo and other business-centric manufacturers offered cellular connectivity. But modern consumers are expecting computing environments that are more like their smartphones than traditional PCs. That means instant wake-up, all-day battery life, and connectivity that doesn’t require hunting for hotspots and passwords. This shift to integrated cellular connectivity will bring Microsoft’s Surface Pro the same capabilities as the LTE-enabled Apple iPads, eliminating one of the best-selling tablet’s advantages. MSFT appears to be headed back to highs 75.87.