NASDAQ Composite (.IXIC) Rally Expected Ahead of First Quarter Bank Earnings
The first quarter earnings season is finally here. And one way or another, all of the concerns investors and analysts have had regarding a slowing global economy have all by disappeared — with the caveat being “for now.”
Driven by a solid March jobs report, which showed that the U.S. economy added 196,000 new jobs, topping consensus expectations of 177,000, stocks rose again Friday, helping the S&P 500 index to log its longest winning streak in eighteen months. Investors were pleased with the fact that the U.S. unemployment rate held steady at 3.8%, according the Labor Department. Combined with positive comments on prospects for a U.S.-China trade deal, stocks ended the week on a strong note.
The Dow Jones Industrial Average on Friday gained 40 points to close at 26,425. The blue chip index ended strongly after dipping into negative territory in early trading and now stands roughly just 1.5% shy of its Oct. 3 record close at 26,828.39. The S&P 500 index edged up 13.35 points, or 0.46%, to 2,892.74, netting its seventh consecutive session of gains, while the Nasdaq Composite Index added 46.91 points, or 0.59%, to close at 7,938.69.
While the new tone allayed fears about an economic disruption, it could be problematic for banks, diversified financials and insurance companies, which are due to report earnings results this coming week and next. Here are names to keep an eye on.
JPMorgan Chase (JPM) – Reports before the open, Friday, April 12
Wall Street expects JPMorgan to earn $2.37 per share on revenue of $28.54 billion. This compares to the year-ago quarter when earnings came to $2.37 per share on revenue of $28.52 billion.
What to watch: Commercial bank stocks have not performed as well as prior estimates suggested, given that the Fed has opted to keep interest rates steady for the rest of 2019. JPM stock, meanwhile, has been one of the better performers, rising 8% year to date. The bank’s consistent execution, along with its plans to take on the discount brokers with its new commission-free arrangement has been applauded. On Friday analyst will focus on the bank’s guidance in light of “lower for longer” scenario and gauge how well the bank plans to deliver growth this year and beyond.
Wells Fargo (WFC) – Reports before the open, Friday, April 12
Wall Street expects Wells Fargo to earn $1.10 per share on revenue of $21 billion. This compares to the year-ago quarter when earnings came to 96 cents per share on revenue of $21.93 billion.
What to watch: In the wake of CEO Tim Sloan’s departure, Wells Fargo has decided to appoint an outsider as his successor. Wells Fargo stock popped a little bit after the news was announced, but not by much. It remains to be seen who that person will be. This topic is of most importance to Warren Buffett. With over 440 million shares of WFC stock, the Berkshire Hathaway (BRK.A, BRK.B) CEO is currently the bank’s largest shareholder. Reports suggest the beleaguered bank is scouring talent at rival firms such as Bank of America (BAC), Citigroup (C) and JPMorgan. Wells Fargo still has a long way to go to earn Wall Street’s trust, but the troubled bank, which still has a strong underlying business, could be a solid holding for the next 12 to 18 months.
PNC Financial (PNC) – Reports before the open, Friday, April 12
Wall Street expects PNC to earn $1.10 per share on revenue of $21 billion. This compares to the year-ago quarter when earnings came to 96 cents per share on revenue of $21.93 billion.
What to watch: PNC shares have fallen almost 8% in six months as worries about the bank’s growth strategy continue to mount. While the bank has done a solid job in the earnings department in recent quarters, the earnings beats were largely driven by a combination of lower tax rates and credit quality — not the kind driven by, say, loan growth, investors would like to applaud. And with the impact of higher interest rates now off the table, analysts will want to see the extent to which PNC — which has a reputation as a high-quality bank — can come up with a disciplined growth strategy that it can execute.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 8,144.72.
The projected lower bound is: 7,767.28.
The projected closing price is: 7,956.00.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 87.5676. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 12 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 70.45. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 10 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 132.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 46.908 at 7,938.692. Volume was 13% below average (neutral) and Bollinger Bands were 35% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 7,777.46 7,530.71 7,493.78
Volatility: 10 16 25
Volume: 543,709,888 588,942,336 579,638,976
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE is currently 5.9% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .IXIC (mildly bullish). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 60 periods. Our momentum oscillator is currently indicating that .IXIC is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.