Wall Street Week Ahead for the trading week beginning October 12th, 2020 : smallstreetbets

Wall Street Week Ahead for the trading week beginning October 12th, 2020 : smallstreetbets

Good Saturday morning to all of you here on r/smallstreetbets. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead.

Here is everything you need to know to get you ready for the trading week beginning October 12th, 2020.

Earnings could be a positive force for stocks as Washington continues to wrangle over stimulus – (Source)

Stock market optimism for a stimulus package has been rising, but the focus swings to earnings and that could be a positive for stocks in the week ahead.


JPMorgan, Citigroup, Goldman Sachs, Bank of America and Morgan Stanley all release earnings in the first big wave of corporate reports. There is also some important data, including CPI inflation data Tuesday and retail sales for September on Friday.


“It looks like earnings season might turn out better than expected, based on early reports,” said Ed Keon, chief investment strategist at QMA. “The guidance looks pretty good. So, we have earnings season upon us, the stimulus talks go back and forth, and it looks like maybe there’s a will to get something done.”


On Friday afternoon, the White House raised its offer for at stimulus package to $1.8 trillion but was still below the $2.2 trillion sought by Democrats. “It’s really hard to read,” said Keon.


But he said even if there’s no agreement on stimulus now, there should be a package after the election, regardless of who wins.


“I actually put some money to work in small caps on the belief if we get further stimulus either soon or a few months from now, you do want to own economically sensitive stocks,” said Keon.“We’re reasonably constructive on the market and valuations are not cheap, but compared to the 10-year [Treasury yield] at less than 80 basis points, stocks don’t look that bad.”


Stocks in the past week had their best performance since early July, with the S&P 500 up 3.8% at 3,477. The small cap Russell 2000 was up 6.4%. The 10-year Treasury yield had a big move during the week from about 0.70% to as high as 0.79% Friday. Yields move opposite price, and the 10-year yield has now broken out of a range its been stuck in below 0.70%.


Earnings could provide positive momentum for stocks, if companies continue to beat estimates at a healthy pace, like last quarter.


“Q2 reporting season saw S&P 500 earnings beat at an unprecedented rate, both in terms of breadth (85%) and size (+20%), prompting historically rare, strong upgrades to forward estimates, especially for the cyclicals, and one of the strongest earnings season rallies on record,” wrote Deutsche Bank strategists.


The summer earnings rally came before the big September decline, which took the S&P 500 down about 10%. The S&P 500 is up more than 8% since Sept. 24.


“While the bottom-up consensus for Q3 is for a sharp rebound in headline earnings, the bulk of it is being driven by reductions in loan loss provisions and Energy sector losses. Excluding these, underlying earnings growth is forecast to barely move up (-15% to -13%), despite rising Q3 GDP growth estimates pointing to a strong macro rebound,” they noted.


The Deutsche strategists said the question remains, however, whether the market will respond to earnings beats or election uncertainty.


Keon said the market has been moving up as former vice president Joe Biden extended his lead in the polls because there’s less chance of an uncertain outlook the more one candidate leads. According to RealClearPolitics, he was leading President Donald Trump by 9.7 percentage points, from just about 6 points at the beginning of the prior week.


“I think from the market’s perspective, it doesn’t really matter who wins, as long as we have a clear winner,” said Keon. “I think the direction of the polls are suggesting that we’re going to have a clear winner either on election night or a few days after that. The risk of a messy contested election is going down, and the market is relieved by that.”


Tom Block, Washington analyst at Fundstrat, said Trump appears to be hoping for a stimulus bill signing before the election to help his re-election effort.


“There are many moving parts here, and they’re all moving in different directions,” said Block. “It’s not impossible a deal comes together but the pathway to a deal is not clear on Friday afternoon because of the mixed signals that have come out over the last seven days from the White House.”


Senate Majority Leader Mitch McConnell has opposed a large package, and the two sides have been stalemated. “I think the president believes that he will be helped by having a signed ceremony at the White House approving the bill, that the optics of signing the bill that’s going to send relief to people is an optic he desperately wants, and it can’t hurt,” he said.


The economic recovery is going on in the background, and some parts of the economy have shown real improvement, like housing.


Retail sales on Friday is a good look at how the consumer has been faring, now that enhanced unemployment benefits have been gone for the past two months. Economists expect 0.6% gain in retail sales, the same as August.


Keon said it is important to get some more help for the economy through stimulus. There is expected to be one-time payments to individuals and enhanced employment benefits.


“That would be good news for the market, if we could get more help where it is needed. We really just need to get a bridge for a more normal circumstances next year,” said Keon.


This past week saw the following moves in the S&P:

Major Indices for this past week:

Major Futures Markets as of Friday’s close:

Economic Calendar for the Week Ahead:

Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday’s close:

S&P Sectors for the Past Week:

Major Indices Pullback/Correction Levels as of Friday’s close:

Major Indices Rally Levels as of Friday’s close:

Most Anticipated Earnings Releases for this week:

Here are the upcoming IPO’s for this week:

Friday’s Stock Analyst Upgrades & Downgrades:


Ten-Baggers Under Trump

In our prior post we looked at the best and worst performing S&P 500 stocks since Election Day 2016. In this post we’ve broadened our filter and looked at the Russell 3,000, which is an index that covers more than 98% of all publicly traded market cap in the US. Within the Russell 3,000, there are 32 stocks that are up more than 1,000% since Trump was elected. These 32 “ten-baggers” — as Peter Lynch liked to call them — are listed in the table below.

At the top of the list is Enphase Energy (ENPH), which is up 8,892% since Election Day 2016. While Enphase has “Energy” in its company name, it’s actually a Technology sector stock that “manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.” Next up is Zynex (ZYXI) with a gain of 7,211%, followed by Digital Turbine (APPS) up 5,320%. ZYXI markets itself as a “better and safer way to manage pain” than opiods using electrotherapy devices. APPS is an app marketing company that helps app developers get their product on as many devices as possible.

Of the 16 best performing Russell 3,000 stocks since Election Day 2016, 15 come from either the Technology or Health Care sectors. XPEL is the only stock in the top ten that’s not in either the Tech or Health Care sectors. Up 2,341% since Trump was elected, XPEL is a Consumer Discretionary stock whose main product is to provide auto-paint protection.

Along with the names mentioned already, other notables on the list of ten-baggers under Trump include Jack Dorsey’s Square (SQ), pet-food maker Freshpet (FRPT), digital health company Teladoc (TDOC), the arts and crafts social media company Etsy (ETSY), and of course, Tesla (TSLA). With a gain of 1,002% since November 8th, 2016, Tesla just barely makes the cut!


Best Performing Stocks Since Election Day 2016

On Monday we published our asset class performance matrix showing total returns for key ETFs since Election Day 2016 (11/8/16). Today we wanted to highlight the individual stocks traded on US exchanges that have performed the best and the worst since President Trump surprised the world with a victory over Democratic candidate Hillary Clinton. First off, below is a chart showing the average performance of stocks in each S&P 500 sector since Election Day 2016. (These are based on stocks currently in the index and not as the index stood on 11/8/16.)

As shown, the average stock in the broad S&P 500 is up 67.3% since Trump was elected. Four sectors have posted stronger average returns than that — Technology (+160.4%), Health Care (+100.3%), Consumer Discretionary (+74.6%), and Industrials (+69.9%).

The Energy sector stands out like a sore thumb in the chart below. While every other sector has at least averaged double-digit percentage gains, the stocks in the Energy sector are down an average of 52.3% since Trump was elected! Other sectors that have been weaker than the broad market include Real Estate, Consumer Staples, and Financials.

If you were to ask most people back in November 2016 which areas of the market should outperform under Trump and which should underperform, you’d likely see results that are the exact opposite of what has actually happened. Sectors like Energy, Real Estate, and Financials would have been expected to benefit from Trump since those are the industries he’s most associated with, while Tech is a sector that’s usually expected to benefit more when the Democratic party is in control.

Looking at individual stocks, below we show the 46 stocks currently in the S&P 500 that are up at least 200% since Election Day 2016. Two stocks — Etsy (ETSY) and Advanced Micro (AMD) — have been “10-baggers” with gains of more than 1,000%, while another three — Paycom (PAYC), NVIDIA (NVDA) and DexCom (DXCM) — are up more than 500%. Other names on the list are a who’s who of the most popular stocks over the past few years, including Adobe (ADBE), Netflix (NFLX), Apple (AAPL), Amazon.com (AMZN), Microsoft (MSFT), salesforce.com (CRM), and PayPal (PYPL).

While there are 46 stocks in the S&P 500 up more than 200% since Election Day 2016, there are 32 stocks that are down more than 50% over the same time frame. The Energy sector is the most represented on this list by far with 14 stocks overall and 10 of the worst 11! The only non-Energy stock in the top ten is General Electric (GE), which is down 76% since Trump was elected. Other notable losers include airlines and cruiselines like AAL, CCL, and NCLH, and consumer stocks like TAP, KHC, UAA, WBA, and LB.

General Electric (GE) and Exxon Mobil (XOM) are the two names that stand out the most. Each of these stocks were at one point in time the largest company in the world, but they’re both now shells of their former selves with huge losses over the last four years. Remember these two examples when you’re looking at the largest companies in the world right now. Chances are a few of them will experience similar fates as GE and XOM over the next ten to twenty years.


News High for Net New Highs

Yesterday, the S&P 500 closed at its highest level since only a few days after the early September high. While the index has yet to reach a new high, many individual stocks in the index have. As shown in the charts below, 11.71% of S&P 500 stocks closed at a new 52-week high yesterday while no stocks closed at a new 52-week low. That makes for the second-highest net new highs reading of the pandemic with the only higher reading (17.62%) occurring just over a month ago at the last all-time high on September 2nd. Before that, the last time net new highs were as high as now was on February 19th: the last all-time high before the bear market began.

As for the individual sectors, there has also been a significant pickup in the net percentage of new 52-week highs. Industrials currently has the highest reading of net new highs among the 11 sectors at 26%. Just like the broader S&P 500, that is the highest since September 2nd when the net percentage of new highs rose above 30%. Consumer Discretionary is the runner up in being the sector with the highest percentage of net new highs. One distinguishing factor, though, is whereas every other sector has seen higher readings at some point since the bear market in the spring, Consumer Discretionary’s current reading of 18% is tied with the reading from August 24th. On the other end of the spectrum, both Communication Services and the Energy sector have seen no new highs over the past few days. Granted, there have not been any new 52-week lows either. Meanwhile, Financials and Real Estate have both seen an uptick in net new highs, but it has been much more modest than other sectors.


Breadth Booming

One of the most notable aspects of the rally off the late September lows has been broad participation. As shown below, breadth is very strong as the 10-day advance-decline lines for several sectors are at some of their highest levels of the past year. For the S&P 500, the 10-day advance-decline line is at its highest level since June 8th. The same can be said for Communication Services, Consumer Discretionary, Financials, and Real Estate. For Consumer Staples, the sector’s 10-day A/D line is at its highest level since June of 2019 and for Health Care it is at its highest level since May of 2019. In the case of Technology, it has been even longer as that sector’s line is at its highest level since last April.

While broad participation is healthy for the long-term prospects of a rally, these 10-Day A/D lines have gotten extremely overbought in the near term, suggesting a cool-down period is likely in the days ahead.

With short term breadth running very hot, the cumulative A/D lines of several sectors are breaking out to new highs as well. Utilities and Materials are the only sectors to have seen prices reach a new high in the past few days alongside their cumulative A/D lines. As for the other sectors, Consumer Discretionary, Consumer Staples, Health Care, Materials, and Tech have also all seen new highs for cumulative breadth. The same applies to the S&P 500, but again, none of these have yet to see price do the same.


Election-Year October Market Performance Volatile since 1950

October’s history of volatility was recapped in the October Almanac as well as it being the worst performing month of election years since 1950. In the following chart we have plotted election-year October performance for DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 since 1950 (NASDAQ since 1972 and Russell indexes since 1980) alongside their historical performance excluding gruesome election-year October 2008.

With or without October 2008, historical performance has been uninspiring in election years. Excluding 2008, October has generally started off on a positive note, but by around the fourth trading day, strength has tended to fade with weakness persisting until around the eighth trading day. Then a modest rally ensued through mid-month followed by more weakness and finally a rally to end the month. Grey shading highlights the two historical windows of weakness that could setup our Seasonal MACD indicators.


STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending October 9th, 2020

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STOCK MARKET VIDEO: ShadowTrader Video Weekly 10.11.20

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Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-




Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:


Monday 10.12.20 Before Market Open:

(CLICK HERE FOR MONDAY’S PRE-MARKET EARNINGS TIME & ESTIMATES!)

(NONE.)

Monday 10.12.20 After Market Close:

(CLICK HERE FOR MONDAY’S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

(NONE.)


Tuesday 10.13.20 Before Market Open:

Tuesday 10.13.20 After Market Close:


Wednesday 10.14.20 Before Market Open:

Wednesday 10.14.20 After Market Close:


Thursday 10.15.20 Before Market Open:

Thursday 10.15.20 After Market Close:


Friday 10.16.20 Before Market Open:


Friday 10.16.20 After Market Close:


JPMorgan Chase & Co. $101.20

JPMorgan Chase & Co. (JPM) is confirmed to report earnings at approximately 6:55 AM ET on Tuesday, October 13, 2020. The consensus earnings estimate is $2.35 per share on revenue of $28.25 billion and the Earnings Whisper ® number is $2.47 per share. Investor sentiment going into the company’s earnings release has 47% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 12.31% with revenue decreasing by 22.03%. Short interest has increased by 1.8% since the company’s last earnings release while the stock has drifted higher by 2.9% from its open following the earnings release to be 3.4% below its 200 day moving average of $104.75. Overall earnings estimates have been revised lower since the company’s last earnings release. On Friday, October 9, 2020 there was some notable buying of 8,290 contracts of the $102.00 call expiring on Friday, October 16, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 2.2% move in recent quarters.


Johnson & Johnson $150.97

Johnson & Johnson (JNJ) is confirmed to report earnings at approximately 6:40 AM ET on Tuesday, October 13, 2020. The consensus earnings estimate is $1.99 per share on revenue of $20.40 billion and the Earnings Whisper ® number is $2.10 per share. Investor sentiment going into the company’s earnings release has 72% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 6.13% with revenue decreasing by 1.59%. Short interest has decreased by 19.5% since the company’s last earnings release while the stock has drifted higher by 1.5% from its open following the earnings release to be 4.4% above its 200 day moving average of $144.63. Overall earnings estimates have been revised lower since the company’s last earnings release. On Wednesday, September 23, 2020 there was some notable buying of 5,050 contracts of the $160.00 call expiring on Friday, December 18, 2020. Option traders are pricing in a 2.7% move on earnings and the stock has averaged a 1.7% move in recent quarters.


Citigroup, Inc. $44.93

Citigroup, Inc. (C) is confirmed to report earnings at approximately 8:00 AM ET on Tuesday, October 13, 2020. The consensus earnings estimate is $1.01 per share on revenue of $17.12 billion and the Earnings Whisper ® number is $1.02 per share. Investor sentiment going into the company’s earnings release has 42% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 48.99% with revenue decreasing by 34.43%. Short interest has decreased by 23.6% since the company’s last earnings release while the stock has drifted lower by 12.4% from its open following the earnings release to be 17.9% below its 200 day moving average of $54.74. Overall earnings estimates have been revised lower since the company’s last earnings release. On Friday, October 9, 2020 there was some notable buying of 18,737 contracts of the $50.00 call and 18,010 contracts of the $50.00 put expiring on Friday, November 20, 2020. Option traders are pricing in a 5.0% move on earnings and the stock has averaged a 2.1% move in recent quarters.


Bank of America Corp. $25.36

Bank of America Corp. (BAC) is confirmed to report earnings at approximately 6:45 AM ET on Wednesday, October 14, 2020. The consensus earnings estimate is $0.53 per share on revenue of $20.59 billion and the Earnings Whisper ® number is $0.55 per share. Investor sentiment going into the company’s earnings release has 55% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 29.33% with revenue decreasing by 27.85%. The stock has drifted higher by 6.8% from its open following the earnings release to be 3.1% below its 200 day moving average of $26.18. Overall earnings estimates have been revised lower since the company’s last earnings release. On Monday, September 28, 2020 there was some notable buying of 33,467 contracts of the $25.00 call expiring on Friday, October 16, 2020. Option traders are pricing in a 4.7% move on earnings and the stock has averaged a 2.2% move in recent quarters.


Progressive Corp. $99.88

Progressive Corp. (PGR) is confirmed to report earnings at approximately 8:30 AM ET on Wednesday, October 14, 2020. The consensus earnings estimate is $1.71 per share on revenue of $10.56 billion and the Earnings Whisper ® number is $1.87 per share. Investor sentiment going into the company’s earnings release has 51% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 20.42% with revenue increasing by 10.80%. Short interest has increased by 8.5% since the company’s last earnings release while the stock has drifted higher by 17.5% from its open following the earnings release to be 22.1% above its 200 day moving average of $81.77. Overall earnings estimates have been revised higher since the company’s last earnings release. On Wednesday, October 7, 2020 there was some notable buying of 728 contracts of the $95.00 call and 710 contracts of the $95.00 put expiring on Friday, October 16, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 3.9% move in recent quarters.


Delta Air Lines, Inc. $32.81

Delta Air Lines, Inc. (DAL) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, October 13, 2020. The consensus estimate is for a loss of $3.10 per share on revenue of $3.09 billion and the Earnings Whisper ® number is ($3.21) per share. Investor sentiment going into the company’s earnings release has 11% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 233.62% with revenue decreasing by 75.40%. Short interest has decreased by 24.5% since the company’s last earnings release while the stock has drifted higher by 28.0% from its open following the earnings release to be 5.6% below its 200 day moving average of $34.75. Overall earnings estimates have been revised lower since the company’s last earnings release. On Friday, October 9, 2020 there was some notable buying of 4,729 contracts of the $34.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 7.3% move on earnings and the stock has averaged a 2.2% move in recent quarters.


BlackRock, Inc. $611.57

BlackRock, Inc. (BLK) is confirmed to report earnings at approximately 6:20 AM ET on Tuesday, October 13, 2020. The consensus earnings estimate is $7.46 per share on revenue of $3.92 billion and the Earnings Whisper ® number is $7.81 per share. Investor sentiment going into the company’s earnings release has 65% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 4.34% with revenue increasing by 6.18%. Short interest has decreased by 36.4% since the company’s last earnings release while the stock has drifted higher by 5.7% from its open following the earnings release to be 17.1% above its 200 day moving average of $522.35. Overall earnings estimates have been revised higher since the company’s last earnings release. Option traders are pricing in a 6.9% move on earnings and the stock has averaged a 2.6% move in recent quarters.


UnitedHealth Group, Inc. $327.84

UnitedHealth Group, Inc. (UNH) is confirmed to report earnings at approximately 5:55 AM ET on Wednesday, October 14, 2020. The consensus earnings estimate is $2.98 per share on revenue of $63.73 billion and the Earnings Whisper ® number is $3.10 per share. Investor sentiment going into the company’s earnings release has 69% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 23.20% with revenue increasing by 5.60%. Short interest has decreased by 6.7% since the company’s last earnings release while the stock has drifted higher by 8.9% from its open following the earnings release to be 13.3% above its 200 day moving average of $289.47. Overall earnings estimates have been revised higher since the company’s last earnings release. On Monday, September 21, 2020 there was some notable buying of 2,031 contracts of the $260.00 put expiring on Friday, November 20, 2020. Option traders are pricing in a 4.1% move on earnings and the stock has averaged a 3.8% move in recent quarters.


Wells Fargo & Co. $25.30

Wells Fargo & Co. (WFC) is confirmed to report earnings at approximately 7:50 AM ET on Wednesday, October 14, 2020. The consensus earnings estimate is $0.46 per share on revenue of $17.79 billion and the Earnings Whisper ® number is $0.46 per share. Investor sentiment going into the company’s earnings release has 34% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 50.00% with revenue decreasing by 33.83%. Short interest has decreased by 15.5% since the company’s last earnings release while the stock has drifted higher by 5.8% from its open following the earnings release to be 21.6% below its 200 day moving average of $32.26. Overall earnings estimates have been revised lower since the company’s last earnings release. On Monday, September 28, 2020 there was some notable buying of 29,138 contracts of the $27.50 call expiring on Friday, December 18, 2020. Option traders are pricing in a 5.3% move on earnings and the stock has averaged a 3.6% move in recent quarters.


Goldman Sachs Group, Inc. $207.54

Goldman Sachs Group, Inc. (GS) is confirmed to report earnings at approximately 7:30 AM ET on Wednesday, October 14, 2020. The consensus earnings estimate is $5.37 per share on revenue of $9.20 billion and the Earnings Whisper ® number is $5.81 per share. Investor sentiment going into the company’s earnings release has 54% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 12.11% with revenue decreasing by 27.98%. Short interest has decreased by 5.4% since the company’s last earnings release while the stock has drifted lower by 7.5% from its open following the earnings release to be 3.4% above its 200 day moving average of $200.79. Overall earnings estimates have been revised higher since the company’s last earnings release. On Thursday, September 24, 2020 there was some notable buying of 3,311 contracts of the $200.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 4.6% move on earnings and the stock has averaged a 1.3% move in recent quarters.


DISCUSS!

What are you all watching for in this upcoming trading week?


I hope you all have a wonderful weekend and a great trading week ahead r/smallstreetbets.

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