The S&P 500 Has Broken Out To the Upside of an Accelerated Downtrend
Jason Lubin November 2, 2020 11:30 AM
Earnings this week include HUM, QCOM, BABA and EA.
On Tuesday, Humana (HUM) is awaited to post third quarter EPS of $2.80 compared to $5.03 a year ago on revenue of $18.6 billion vs $16.2 billion last year. Humana is one of the largest private health insurance companies in the U.S. and during October, the Co signed Medicare network agreements with multiple healthcare providers to extend its Medicare Advantage network across multiple states. Technically speaking, the RSI is below its neutrality area of 50. The MACD is below its signal line and negative. The stock price is below its 20 and 50 day MA. We are looking at the final target of $344.50 with a stop-loss set at $420.50.
On Wednesday, Qualcomm (QCOM) is likely to unveil fourth quarter EPS of $1.17 vs $0.78 last year on sales of $6.0 billion compared to 4.8 billion a year ago. The Co makes digital wireless communications equipment and traders are anticipating a move around 8.1%. The stock surged 15.2% after third quarter earnings were reported. From a chartist's point of view, the RSI is below its neutrality area at 50. The MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under its 20 day MA ($125.87) but above its 50 day MA ($119.51). We are looking at the final target of $110.30 with a stop-loss set at $130.50.
On Thursday, Alibaba (BABA) is expected to announce second quarter EPS of $14.28 compared to $13.10 a year ago on revenue of $155.8 billion vs $119.0 billion last year. Alibaba is the world's largest online and mobile commerce company, and on October 26th, BMW and the Co announced a plan to partner on digital operations, services and marketing for BMW vehicles in China. From a technical point of view, the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The stock could retrace in the short term. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at $304.44 and $289.51). We are looking at the final target of $338.00 with a stop-loss set at $289.00.
Additionally on Thursday, Electronic Arts (EA) is anticipated to release second quarter EPS of $0.05 vs $0.97 last year on revenue of $969.4 million compared to $1.3 billion a year ago. The Co is a global developer and publisher of video games, and on October 9th, the Co launched its newest video game FIFA 21. Looking at a daily chart, the RSI is trading below 30. This could mean that either the stock is in a lasting downtrend or just oversold and that therefore a rebound could shape (look for bullish divergence in this case). The MACD is negative and below its signal line. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at $127.73 and $130.57). We are looking at the final target of $108.90 with a stop-loss set at $128.60.
Looking at the S&P 500 CFD on a 30 minute chart, the index has broken to the upside of an accelerated short-term downtrend that began two weeks ago on October 12th. Traders and investors should beware of increased volatility this week as US elections take place on Tuesday, November 3rd. The index will likely continue to advance and breakout to the upside of the first resistance level at 3,342.00. After 3,342.00 the index will probably reach for 3,370.00. If price can get above 3,370 its third target is at 3,418.00. On the other hand, if the index slips it will probably find support at 3,276.00. If 3,276.00 fails to support price then the last level of support is 3,234.00. If price cannot hold above 3,234.00 it would be a very bearish signal that could send the index tumbling down.
Source: GAIN Capital, TradingView
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