The S&P 500 dropped off after a new strain of Covid-19 was discovered in the U.K.
Jason Lubin December 22, 2020 12:15 AM
Big earnings this week include: CTAS, KMX and PAYX.
On Tuesday, Cintas (CTAS) is anticipated to release second quarter EPS of $2.17 vs $2.27 last year on revenue of $1.8 billion, in line with the year before. The Co designs and manufactures corporate uniforms, and its price is expected to move up or down by 8.5% based on options volatility. The stock fell 2.3% after the Co last reported earnings. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is below its 20 day moving average ($356.12) but above its 50 day moving average ($347.25). We are looking at the final target of $319.00 with a stop-loss set at $369.00.
On Tuesday, CarMax (KMX) is likely to unveil third quarter EPS of $1.14 vs $1.04 last year on revenue of $5.0 billion vs $4.8 billion a year ago. The Co operates a car and light truck retail chain, and its current analyst consensus rating is 13 buys, 4 holds and 1 sell, according to Bloomberg. From a chartist's point of view, the RSI is above its neutrality area at 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day moving average (respectively at $95.61 and $93.53). We are looking at the final target of $107.80 with a stop-loss set at $93.60.
On Wednesday, Paychex (PAYX) is awaited to post second quarter EPS of $0.66 compared to $0.70 a year ago on revenue of $954.0 million vs $990.7 million last year. The Co provides payroll services and on December 9th, the Co revealed that it is among the first to introduce, sponsor and maintain a Pooled Employer Plan, a new cost-effective retirement plan for businesses and their employees. Technically speaking, the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The stock could retrace in the short term. Moreover, the stock is trading above both its 20 and 50 day moving average (respectively at $93.25 and $88.71). We are looking at the final target of $102.30 with a stop-loss set at $93.50.
As of December 18th, Chipotle Mexican Grill's (CMG) year-to-date performance was roughly 64%, making it one of the stronger relative performing stocks in the S&P 500 over 2020 (top 20%). Looking at a daily chart, one can see that in mid-March the Co's stock price sharply reversed from a downtrend caused by the coronavirus pandemic into an uptrend, which decelerated and formed a bearish channel. On December 16th, the Co's stock price gapped up, above the upper trendline of the bearish channel, forming a breakaway gap and making a new record high. In the long term, this could be a signal that the primary uptrend may continue. If price can manage to hold above the upper trendline of the channel around 1,350.00, it could potentially grind its way up 1,650.00 and even 1,790.00.
Looking at the S&P 500 CFD on a 1 hour chart, the index tumbled after NBC News reported that a new strain of Covid-19 was discovered in the United Kingdom. The price of oil also dropped sharply on the news, as dozens of countries suspended flights from the United Kingdom. The S&P will likely continue to sell-off towards the 3,594.00 level. If price can find support at 3,594.00, it could be hinting at consolidation. If price falls below 3,594.00, it would be a bearish signal that could send price down to 3,545.00. If price is able to hold above 3,594.00, it could attempt a test of the 3,695.00 resistance level. If price can get above 3,695.00, it would be a bullish signal that could lead to a retest the record high of roughly 3,733.00.
Source: GAIN Capital, TradingView
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