Equities report: Bulls pushing US equities markets higher

With the earnings season ongoing US stock markets rally with the major US stock market indexes reaching new record high levels. In this report, we are to discuss the earnings scheduled in the coming few days how the market seems to be decodifying the Fed’s intentions, Boeing’s continuous problems and for a rounder view conclude with a technical analysis of the S&P 500.

Earnings reports coming up

We make a start with high profile companies which are to release their earnings reports in the coming few days. Today we have IBM (#IBM) and Tesla (#TSLA), with the e-car auto maker generating substantial interest. It should be noted that Elon Musk requested more power by increasing his shareholding in Tesla and added an element of blackmail, by stating that otherwise he would feel uncomfortable to continue developing new technologies, within Tesla. It should also be noted that the company was reported to plan a new electric vehicle in mid-2025, describing the model as a compact crossover. The company is expected to report a higher revenue figure reaching 25.61B, while the Earnings per Share (EPS) figure is expected to slightly drop to 0.7261, implying some issues regarding the cost structure of the company. We also note that on Thursday we get the earnings reports of Starbucks (#SBUX), Xerox and Luis Vuitton (#LVMH). On Friday we get the earnings reports of American Express (#AXP), Caterpillar (#CAT) and Colgate Palmolive (#CL). Next Tuesday we note the release of the earnings reports of Pfizer (#PFE), General Motors (#GM), Microsoft (#MSFT), Google (#GOOG). We tend to focus on the releases of high tech giants Microsoft and Google. We note that Microsoft’s EPS and revenue figures are expected to drop which may ease the support enjoyed by the shares’ price. Also the recent hacking of Microsoft by Russians, seems to be dominating the headlines for Microsoft currently and may not bode well with investors. On the flip side Microsoft’s partial rival Google, is expected by the market to report a higher EPS figure as well as a higher revenue figure, which if realised, may intensify the market’s support for its share price.

Boeing’s ongoing issues

On Wednesday we get Boeing’s earnings report. We note that the market expects the plane maker, to report further losses, yet less on a per share level than last quarter, while the earnings figure is expected to rise. The market’s expectations if realised could provide some support for the share’s price, yet the fact that the company’s EPS figure is expect dot remain in the negatives may clip any gains for Boeing’s share price. At the same time we highlight the reputational problems the company faces and which intensified since an airplane of Alaska Airlines lost a door while flying. Yet the quality and reputational issues seem to be getting even more intense for Boeing. It was just reported Reuters, that a Boeing 757 nose heel popped off in Atlanta international airport, over the weekend. At the same time, we note that Alaska Air reports that it found even more loose bolts on its Boeings which tends to increase market worries even further. Also we note that United’s order of Boeing 737 10 came under doubt as the company’s CEO stated that United Airlines is weighing plans to expand tis fleet without the Max 10. He characteristically stated that “I think the Max 9 grounding is probably the straw that broke the camel’s back for us. We’re going to at least build a plan that doesn’t have the Max 10 in it”. Should the reputational issues intensify further, we may see investor’s confidence in Boeing being shaken and thus weighing on Boeing’s share price.

Fed’s intentions and the next test

Market’s tend to push US stockmarkets higher yet we may see the Fed pulling the carpet under the market’s feet. The market seems to continue to expect the bank to start cutting rates in the March meeting and deliver six rate cuts in the year. Yet Fed policymakers have stressed the possibility of the bank delaying any rate cuts for a later stage, which contradicts market expectations and may. We note that the bank is expected to deliver its next interest rate decision in seven days and will be included in our next report. For the time being we note the release of the US GDP advance rate for Q4 which is expected to slow down substantially and could shake US stockmarkets. A possible slowdown of the GDP rate would be signaling that the US economy grew at a slower pace and could weaken US stockmarkets, yet at the same time it may signal the need for fast and extensive rate cuts by the Fed.

تجزیه و تحلیل فنی

US 500 Daily Chart

Support: 4800 (S1), 4660 (S2), 4540 (S3)

Resistance: 4950 (R1), 5100 (R2), 5250 (R3)

S&P 500 continued its upward motion over the past few days, breaking the 4800 (S1) resistance line, now turned to support. We tend to maintain our bullish outlook for the index, as long as the upward trendline guiding in the index since the 2nd on November remains intact. Furthermore supporting our bullish outlook
are the 20, 50 and 100 moving averages, all tilted to the upside. Also, the RSI indicator has surpassed the reading of 70 implying a strong bullish sentiment in the market, yet at the same time it may also be a warning signal that the index is at overbought level and may correct lower. It’s characteristic how the price action is flirting with the upper Bollinger band, which may slow down the bulls. Please note that the index is running at record high levels, a fact that may cause the bulls to start hesitating. Should the bulls maintain control over the index we may see S&P 500 breaking the 4950 (R1) resistance level and we set the next possible target for the bulls at the 5100 (R2) resistance nest. In the case the bears take over control of the index’s
direction, we may see S&P 500 reversing course, breaking the prementioned upward trendline in a first signal that the upward movement has been interrupted, breaking the 4800 (S1) support line, marking the prior all time high of the index, and continue lower towards the 4660 (S2) support base.

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