Equities report: US stock market bulls seem to hesitate

All three major US stockmarket indexes, namely the Dow Jones, S&P 500 and NASDAQ ended the past week in the reds to some degree or another, in an indication of some hesitation on behalf of the bulls. Furthermore, the earnings season seems to be slowly driven to a close yet we still have a couple of interesting companies left that could shake the markets with their reports, like NVIDIA later today. On a deeper fundamental level, we highlight how the Fed’s intentions continue to puzzle US stock markets. In this report, we intend to have a look at these issues and also discuss the latest buzz and for a rounder view, conclude our report with a technical analysis of the S&P 500.   

NVIDIA’s earnings report

The focus of stock market participants today falls on NVIDIA’s earnings report. Both the Earnings Per Share (EPS) as well as the revenue figure are expected to increase if compared to last quarter, which may provide some support for the company’s share, especially if the actual figures are better than expected. It should be noted that NVIDIA’s share price has already risen by 40% since the start of the year and despite a small correction lower in the past few days remains promising. In today’s after-trading hours release, besides the actual rates and figures we intend to keep a close eye on the comments that are to be made by Nvidia CEO Jensen Huang, regarding how these growth rates are to be maintained and the GPU and AI business segments of the company, which may be the key for the market’s expectations for the company in the future. It should be noted that the company is reported to have taken out TESLA as the most traded company, while it also has surpassed Alphabet in valuation. The company is considered a barometer for high-tech companies and the 6% drop in its share price yesterday may have partially set under pressure also US stockmarket indexes.  

Fed’s meeting minutes

The FOMC’s last meeting minutes are due to be released later on today and could rattle the markets. The recent difficulty of inflation slowing down and the resilience of the US employment market in January seem to have eased the market’s expectations for early and extensive rate cuts by the bank. Should the minutes indicate that the Fed may maintain current interest rates at their current levels for a longer time period, thus cutting down market expectations of a rate cut by the Fed in June, it could weigh on US stockmarkets. Whereas should the minutes indicate that the Fed may have prepared a rate cut roadmap for the rest of the year, it could be perceived as dovish by market participants, which in turn could provide support for US stock markets. We do not expect any other high-impact financial data releases that may shake US stock markets until our next report, hence we tend to focus on fundamentals and the recent buzz for US companies.

Tesla’s Cybertruck rusts?

We focus on Tesla and the recent complaints about rust on the Cybertruck. Despite claims that it’s not the carrosserie rusting as such, seeing spots of rust on a brand new 100k truck does not bode well for the reliability of Tesla and in our opinion it may have a negative impact on sales of the Cybertruck. Even some possible remedies suggested on the net for the issue cannot rectify the damage done to the image of the Cybertruck, as the contrast to the market’s high expectations is still there. It should be noted that also some not-as-great reviews of the Cybertruck emerged in various media, which tend to intensify hesitation from potential customers. If seen in conjunction with other issues of Tesla, it may weigh on the share’s price.    

기술적 분석

US500 Cash Daily Chart

Support: 4975 (S1), 4840 (S2), 4660 (S3)

Resistance: 5100 (R1), 5250 (R2), 5400 (R3)

S&P 500 peaked and seems about to correct lower in the past few days, testing the 4975 (S1) support line. The index’s price action seems to have broken albeit not clearly yet, the upward trendline that has been guiding it since the 27  of October. The index is still near record-high levels and may be posing some difficulties for the bulls to advance further. We also note that the RSI indicator has corrected lower, aiming for the reading of 50, implying that the bullish sentiment of the market for S&P 500, has faded away at the current stage and is looking for a new direction. Hence we lean towards a switch from our bullish outlook in favour of a sideways motion initially. For a bearish outlook, we would require the index to clearly break not only the prementioned upward trendline, signaling the end of the upward movement, but also the 4975 (S1) support line and start actively aiming for the 4840 (S2) support base, while even lower we note the 4660 (S3) support barrier. Should the bulls regain the initiative over the index’s direction, we would expect its price action to restart aiming of the 5100 (R1) resistance line and should that be broken the gates would be open for the 5250 (R2) resistance hurdle. For an extremely bullish outlook of the index, we note the 5400 (R3) resistance level. 

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