The S&P 500 Has Broken Out To the Upside of an Accelerated Downtrend
Jason Lubin November 3, 2020 12:30 AM
Earnings this week include HUM, QCOM, BABA and EA.
On Tuesday, Humana (HUM) is awaited to post third quarter EPS of $2.80 compared to $5.03 a year ago on revenue of $18.6 billion vs $16.2 billion last year. Humana is one of the largest private health insurance companies in the U.S. and during October, the Co signed Medicare network agreements with multiple healthcare providers to extend its Medicare Advantage network across multiple states. Technically speaking, the RSI is below its neutrality area of 50. The MACD is below its signal line and negative. The stock price is below its 20 and 50 day MA. We are looking at the final target of $344.50 with a stop-loss set at $420.50.
On Wednesday, Qualcomm (QCOM) is likely to unveil fourth quarter EPS of $1.17 vs $0.78 last year on sales of $6.0 billion compared to 4.8 billion a year ago. The Co makes digital wireless communications equipment and traders are anticipating a move around 8.1%. The stock surged 15.2% after third quarter earnings were reported. From a chartist's point of view, the RSI is below its neutrality area at 50. The MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under its 20 day MA ($125.87) but above its 50 day MA ($119.51). We are looking at the final target of $110.30 with a stop-loss set at $130.50.
On Thursday, Alibaba (BABA) is expected to announce second quarter EPS of $14.28 compared to $13.10 a year ago on revenue of $155.8 billion vs $119.0 billion last year. Alibaba is the world's largest online and mobile commerce company, and on October 26th, BMW and the Co announced a plan to partner on digital operations, services and marketing for BMW vehicles in China. From a technical point of view, 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 MA (respectively at $304.44 and $289.51). We are looking at the final target of $338.00 with a stop-loss set at $289.00.
Additionally on Thursday, Electronic Arts (EA) is anticipated to release second quarter EPS of $0.05 vs $0.97 last year on revenue of $969.4 million compared to $1.3 billion a year ago. The Co is a global developer and publisher of video games, and on October 9th, the Co launched its newest video game FIFA 21. Looking at a daily chart, the RSI is trading below 30. This could mean that either the stock is in a lasting downtrend or just oversold and that therefore a rebound could shape (look for bullish divergence in this case). The MACD is negative and below its signal line. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at $127.73 and $130.57). We are looking at the final target of $108.90 with a stop-loss set at $128.60.
Looking at the S&P 500 CFD on a 30 minute chart, the index has broken to the upside of an accelerated short-term downtrend that began two weeks ago on October 12th. Traders and investors should beware of increased volatility this week as US elections take place on Tuesday, November 3rd. The index will likely continue to advance and breakout to the upside of the first resistance level at 3,342.00. After 3,342.00 the index will probably reach for 3,370.00. If price can get above 3,370 its third target is at 3,418.00. On the other hand, if the index slips it will probably find support at 3,276.00. If 3,276.00 fails to support price then the last level of support is 3,234.00. If price cannot hold above 3,234.00 it would be a very bearish signal that could send the index tumbling down.
Source: GAIN Capital, TradingView
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.