The S&P 500 Has Broken To the Upside of a Short-Term Bearish Trendline
Jason Lubin September 28, 2020 11:00 PM
Companies reporting earnings this week include MU, MKC, PEP and STZ.
On Tuesday, Micron Technology (MU) is anticipated to release fourth quarter EPS of $0.96 vs $0.56 last year on sales of $5.9 billion compared to $4.9 billion a year ago. The Co manufactures memory chips and on September 1st, Dow Jones revealed that the Co launched its new form of dynamic random-access memory (DRAM), the GDDR6X, in Nvidia's new RTX 3080 and 3090 graphics processing units (GPU). Looking at a daily chart, 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 above its 20 and 50 day MA (respectively at $47.78 and $48). We are looking at the final target of $54.70 with a stop-loss set at $45.60.
Additionally on Tuesday, McCormick (MKC), a global supplier of seasonings and other flavorings, is expected to announce third quarter EPS of $1.52 compared to $1.46 a year ago on revenue of $1.4 billion vs 1.3 billion last year. The expected move based on front-month options is 7.2%, the last time the Co reported earnings the stock rose 3.6%. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $197.93 and $198.34). We are looking at the final target of $175.50 with a stop-loss set at $196.70.
On Thursday, PepsiCo (PEP) is likely to unveil third quarter EPS of $1.48 vs $1.56 last year on revenue of $17.2 billion, in line with the previous. PepsiCo is one of the largest international beverage and food companies, and on September 22nd, Vail Resorts and the Co announced the renewal and expansion of their product distribution partnership to a total of 33 Vail Resorts locations across North America. In addition, both companies pledged to achieve a zero net operating footprint by 2030. From a chartist's point of view, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $135.5 and $135.71). We are looking at the final target of $123.90 with a stop-loss set at $135.40.
Also on Thursday, Constellation Brands (STZ) is awaited to post second quarter EPS of $2.50 compared to $2.72 a year ago on sales of $2.2 billion vs $2.3 billion last year. The Co is the world's largest producer and marketer of branded alcoholic beverages, and its current analyst consensus rating is 15 buys, 5 holds and 1 sell, according to Bloomberg. Technically speaking, 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 trading under both its 20 and 50 day MA (respectively at $188.46 and $181.65). We are looking at the final target of $168.10 with a stop-loss set at $187.00.
Looking at the S&P 500 CFD
on a 30 minute chart, the index has broken out to the upside of a short-term bearish trendline that price has been holding below since mid-September. Price will likely continue its advance to its 3,375.00 resistance level. If price gets above 3,375.00 then it will probably reach for 3,429.00. If price gets above 3,429.00 it would a very bullish signal, because the 3,429.00 level acted as strong resistance in mid-September that price failed to get above. So if price breaks out to the upside traders could see a rally all the way up to 3,486.00. On the other hand, price could dip back to the 3,300.00 support level where a bounce could occur. If price cannot manage to bounce off of 3,300.00 then traders should look to 3,221.00 as support. If price cannot rebound off of the 3,221.00 support level, it would be a bearish signal.
Source: GAIN Capital, TradingView
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