NASDAQ Composite (.IXIC) Rise as Earnings Season Begins

NASDAQ Composite (.IXIC) Rise as Earnings Season Begins

NASDAQ Composite (.IXIC) Rise as Earnings Season Begins

Stocks whimpered into the close Monday with only 4.8 billion shares changing hands. To put that into perspective, that is the lightest full day of trading on the consolidated tape in 2019 and over 31% lower than the yearly average. The only slower day was July 3rd, which was a half day of trading (1pm close) ahead of Independence Day. The S&P 500 closed down 0.14% and only traded in a 10 handle range all-day.

Today stocks are higher following a number of blue chip earnings reports as well as a lack of meaningful trade rhetoric at this hour. A number of Healthcare and Banks names are shining today helping lift the markets. Johnson & Johnson (JNJ), UnitedHealth (UNH), Citi (C), JP Morgan (JPM) and Wells Fargo (WFC) are some of the names leading us higher.

FactSet released their Q3’19 earnings report which predicts a third straight quarter of negative earnings growth for the S&P 500. “For Q3 2019, the estimated earnings decline for the S&P 500 is -4.6%. If -4.6% is the actual decline for the quarter, it will mark the first time the index has reported three straight quarters of year-over-year earnings declines since Q4 2015 through Q2 2016.” At the start of the quarter, S&P 500 Q3 earnings were expected to decline by only -0.6%, much better than the now expected -4.6% decline. Revenue in now expected to only show an increase of +2.7%, well below the +3.5% expected growth rate previously. This would mark the lowest top-line growth in three years. Of the 22 S&P 500 members that reported prior to today, factors cited for the downward pressure include currency fluctuations, weather, European concerns, input costs increases and tariff/trade related issues.

The IMF cut its 2019 global GDP growth forecast to 3%, down from 3.2%. This is the 5th straight cut for its 2019 forecast and the weakest global growth outlook since 2009. Trade tensions are to blame. The IMF also lowered its 2020 estimate to 3.4% from 3.5%. IMF Chief Economist Gita Gopinath wrote, “With a synchronized slowdown and uncertain recovery, the global outlook remains precarious…there is no room for policy mistakes and an urgent need for policy makers to cooperatively de-escalate trade and geopolitical tensions.” 

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 8,437.65.

The projected lower bound is: 7,876.67.

The projected closing price is: 8,157.16.

Candlesticks

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 26 white candles and 24 black candles for a net of 2 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 9 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.6473. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 14 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 57.77. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 93 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 162.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 100.057 at 8,148.706. Volume was 19% below average (neutral) and Bollinger Bands were 15% narrower than normal.

Open     High      Low     Close     Volume___
8,074.8488,166.1808,071.8128,148.706 447,404,000
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,952.89 7,987.82 7,772.30
Volatility: 21 23 20
Volume: 476,830,720 536,564,224 560,282,944

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.

Summary

NASDAQ COMPOSITE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 4.8% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 9 periods.

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