Home 2020 Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street


#WallStreet #PaulEbeling #BigTech #earnings #NFPs #employment #interest #Bulls #money #FAANG


Last Week’s Action

US Stocks Finished Friday and July on High Notes.

The tech stocks held the line kept the NAS Comp, SOX and NAS 100 in the Green. The big names in the NAS drove earnings .

The Big Q: Will the move lead to a new breakout after this last month’s consolidation, or, will stocks gap up and then the profit takers move in and reverse the move?

The Big A: Chips are Key for this market because it tends to follow their lead. If chips hold the break, that will auger well for the rest of the market.

The NAS Comp outperforming after of better than expected corporate earnings results from big tech firms like Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL), which both marked record closing highs.

Friday’s session saw each of the major US indexes closing out a 4th straight month of gainers.

The S&P 500 rose about 5%, the DJIA increased 2% and the NAS Comp outperformed, rising more than 6.5% on the month.

Amazon (NASDAQ:AMZN) stood out reporting net income that 2X’d over last year to $5.2-B, and net sales that grew 40% during the Quarter, with virus chaos-related spending on e-Commerce platforms strongly benefiting the company.

Apple (NASDAQ:AAPL)brought in revenue of $59.7-B in Q-2 to Top estimates by $7-B, as both hardware product and services revenue surged over last year. Apple announced a 4-1 stock split in a move that would make shares more accessible to retail investors.

The estimates-topping results from Big Tech companies stood in contrast to US economic data earlier Thursday, which affirmed the worst Quarterly drop in US economic activity on record during Q-2 and showed a 2nd straight increase in weekly unemployment insurance claims. The reports suggest that the recovery from the C-19 Coronavirus chaos will likely be drawn out.

Friday, the major US stock market indexes finished the month at: DJIA+114.67 at 26428.32, NAS Comp +157.46 at 10745.35, S&P 500 +24.90 at 3271.12

Volume: Trade on the NYSE was heavy with 1.3-B/shares exchanged

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias for the wk and month ending 31 July 2020.

The major asset classes YTD below:

What to look for this week.

  • Earning season winds down with reports from Disney, Activision Blizzard, Square, and Uber.
  • Several central banks announce interest rates.
  • US employment numbers are released.

With the FAANG earnings blowout at the end of July marked, earnings season is winding down, but there are some big names left to report.

The biggest is Walt Disney (NYSE:DIS) whose earnings analysts expect to dive due to a sharp drop in theme park and cruise revenue.

Despite how high profile its film and television businesses are, Disney is largely a travel-based business, and is therefore extremely vulnerable to the C-19 Coronavirus chaos.

This Friday, the Bureau of Labor Statistics will release a lot of data on the US labor market. Most notably, the July unemployment rate, which economists expect may decline a bit to 10.3%. Just as the number of weekly initial unemployment claim has not continued to fall, this relatively small estimated drop in unemployment does not point to quick recovery of the job market. For more detail on how different sectors of the economy have been affect, stay tuned the NFPs (non farm payrolls) released Friday.

After the Fed announced rates last week, this week we have 4 more central banks announcing interest rate decisions. Tuesday, Australia’s central bank announces rates, Wednesday, Brazil, and then Thursday, both the UK’s and India’s central banks both announce rates. The India, the UK, and Brazil are 3 of the Top 10 economies in the world, so their decisions will be important to the global economy.

All of the above data is reported daily on HeffX-LTN, tune in.

Remember, these are the Dog Days of Summer, nevertheless, pay attention, this market is fooling a lot of participants, it is your money and so, your responsibility.

There is still a whole lot of money on the sidelines looking for entry points.

This market’s ability to shrug off the economic destruction and gloomy virus headlines continues to enrich the Bulls and baffle the savviest Wall Street pros.

Have a healthy week, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.