Morgan Stanley Raised Darden’s Price Target to $112 from $71

American multi-brand restaurant operator, Darden’s price target was raised to $112 from $71 with ‘Equal-weight’ stock rating, according to Morgan Stanley equity analyst John Glass, who also upgraded their EPS estimates to $4.68/$6.35 for the next two fiscal years.

On Thursday, Darden Restaurants reported total sales of $1.53 billion, a decrease of 28.4% driven by negative blended same-restaurant sales of 29.0% and partially offset by the addition of 14 net new restaurants. Reported diluted net earnings per share from continuing operations of $0.28 as compared to last year’s reported diluted net earnings per share of $1.38.

Darden reported adjusted diluted net earnings per share from continuing operations of $0.56, after excluding $0.28 related to corporate restructuring costs, as compared to reported diluted net earnings per share of $1.38.

The Company forecasts fiscal 2021 total sales of approximately 82% of prior year and EBITDA of $200 to $215 million.

“Best in class casual dining operator with a strong brand portfolio. As the largest CDR operator, DRI has substantial scale advantages in shared services which can be levered in a post-COVID environment by improving margins and gaining market share. Lead brand Olive Garden (50% of sales) garners top consumer scores, and its comp sales have historically outpaced the industry,” Morgan Stanley’s John Glass added.

“Acquisition of Cheddar’s has been more challenging than initially expected, though still provides longer-term growth potential. Industry uncertainty and relatively fairly valued shares, in our view, drive our EW rating weighed against DRI’s strong sales track record and operational leadership.”

At the time of writing, Darden stock traded 0.18% lower at $97.13 on Friday; however, the stock is down 10% so far this year.

Several other equity analysts have also updated their stock outlook. UBS raised their target price to $109 from $100; Wells Fargo upped their target price to $104 from $91; BofA Global Research upgraded their stock price forecast to $115 from $100; Truist Securities raised price target to $128 from $100; Stephens upped target price to $115 from $98; Guggenheim upgraded their stock price forecast to $133 from $119 and JP Morgan raised their target price to $105 from $82.

Twenty-four analysts forecast the average price in 12 months at $102.74 with a high forecast of $128.00 and a low forecast of $75.00. The average price target represents a 6.44% increase from the last price of $96.52. From those 24 equity analysts, 15 rated ‘Buy’, nine rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

“In the last fiscal year pre-COVID, EBITDA margins were 14%. If/when sales recover to 100% of pre-COVID levels, there is theoretically another 100-150 bp of margin opportunity, subject to reinvestment needs and competitive intensity at that time,” Morgan Stanley’s Adam Jonas said.

“For now, we are comfortable underwriting the 15.5% by FY22, leading us to raise FY21/22 EPS estimates as described below, and raising our price target to $112, based on our CY22 estimate of $6.60 in EPS (or $1.4B EBITDA), and restoring the multiple to pre-COVID averages given this increased visibility. Our bull case factors in the case where EBITDA margins could reach 17%.”

Upside risks: 1) Company is able to significantly gain share. 2) OG/LH comps benefit from higher off-premise sales vs pre-COVID. 3) Margins expand above expected without compromising investments, highlighted by Morgan Stanley.

Downside risks: 1) Regional lockdowns and new virus outbreaks keep consumers from visiting dining rooms (by choice or mandate). 2) Off-premise margins deteriorate. 3) Cheddar’s integration remains challenged in a tough macro backdrop.

Metal Traders Remain Wary on Strong U.S Dollar

Precious metal prices have been under attack lately as gold bears keeping hampering on amidst rising Covid-19 cases in Western Europe and the United States, bringing the price of gold futures below $1,900/ounce.

For now, the recent price movements in the yellow metal’s market shows the bulls are in a precarious situation in spite of its recent upside. It’s very likely that the selling pressure continue at least in the near term, as U.S dollar bulls seem to be awakened with enough gas to hit near a month high amid pending U.S stimulus packages.

The attack on gold bulls started on Monday when gold prices dropped momentarily to $1,909/ounce, losing about $41 in a single day. Thinking the worse was over became a joke, as shocked bullion traders watched the price of their safe haven assets drop arbitrarily to the $1853/ounce support level before the bulls got some healing and kept gold futures up to trade at $1875/ounce, at the time this report was drafted.

It should also be observed that the last time gold futures prices dropped below $1,900 support level was July ending, hinting gold prices might just have entered a bearish consolidation phase as its been seen oscillating in ranges of $1,850- $1,875/ounce.

Even though the U.S dollar dropped some gains at Friday’s trading session, the bullion assets upward moves have remained limited coupled with low market liquidity presently in play on the bias that the greenback will likely be in demand at least through the end of September.

Present price action, shows the precious metal still struggling and underperforming but if the riskier assets like global equity markets keep up their bearish run relatively, the bears could be kept in check, and gold prices hover above $1,900 price levels.

Having said that, the price correction in the gold market has come quite far now, and It doesn’t look there is enough bearish bias in the tank to test out the key $1,850 levels this week.

For a look at all of today’s economic events, check out our economic calendar.

 

AMC Entertainment Shares Plunge Over 4% as Company Eyes to Sell 15 Million Shares

Pandemic-hit AMC Entertainment Holdings’ shares fell more than 4% on Thursday after it said that it has reached an agreement with some banks to sell nearly 15 million shares as COVID-19 pandemic hurt business, sending its shares down over 4%.

The world’s largest movie theater operator said in a filing that postponement of major releases slated for the Thanksgiving and Christmas holidays until next year would significantly impact its liquidity in the fourth quarter, Reuters reported.

Following this announcement, AMC Entertainment shares fell over 4% to $4.57 on Thursday. However, the stock is still down over 30% so far this year.

AMC Entertainment stock forecast

Five analysts forecast the average price in 12 months at $4.63 with a high forecast of $7.00 and a low forecast of $2.00. The average price target represents a 0.33% increase from the last price of $4.62. From those five equity analysts, none rated “Buy”, four rated “Hold” and one rated “Sell”, according to Tipranks.

AMC Entertainment had its price target raised by B. Riley to $5.50 from $4. B. Riley currently has a neutral rating on the stock. Wedbush raised their price objective to $7 from $4 and gave the company a neutral rating. Credit Suisse Group downgraded AMC Entertainment from a neutral rating to an underperform rating and cut their target price for the stock to $2 from $4.

A number of other equities research analysts have also recently issued reports on the stock. Barrington Research reaffirmed a hold rating on shares of AMC Entertainment. Citigroup raised their target price to $4.00 and gave the stock a sell rating. At last, Zacks Investment Research cut their target price on to $3.50.

Analyst views

“With future capital returns forecasted to fall short of the cost of capital, AMC is expected to continue to be a major Value Eraser. With this rating, PTR’s two proprietary measures of a stock’s current attractiveness are providing very contradictory signals. AMC has a slightly positive Appreciation Score of 68 but a very low Power Rating of 4, triggering the Negative Value Trend Rating,” noted Price Target Research.

Check out FX Empire’s earnings calendar

Gold Declines Below $1,900 amid Stronger Corona and Dollar

The gold price dropped below $1,900 amidst Covid-19 cases increases in the West and the US dollar appreciation. So, what happens next with the yellow metal?

For the time being, things are not looking good, my bull friends. The bearish trend in the gold market continues. As the chart below shows, we saw a significant selloff on Monday with gold prices decreasing from above $1,950 to $1,909. To make matters worse, the decline continued on Tuesday and Wednesday, with the price of gold dropping below the critical level of $1,900, for the first time since the end of July.

So, what exactly happened here? Well, as we wrote in Tuesday’s Fundamental Gold Report, the coronavirus just came back with another wave. As pointed out in the chart below, the daily new confirmed Covid-19 cases are increasing again in several European countries, and the United States.

Yes, even the U.K. Prime Minister Boris Johnson has already introduced some new restrictions, including 10 p.m. curfews for pubs and restaurants in England. Can you imagine pubs in England opened only until 10 p.m. – that’s not just a crisis, it’s a disaster!

As a result, the recent Covid-19 cases resurgence renewed the global concerns about the reinstatement of lockdowns or other constraining measurements that can hamper the pace of the economic recovery (I warned you that there is no point in expecting a V-shaped rebound). This anxiety caused was the main reason behind the recent stock market declines, pushing down the S&P 500 and Dow Jones from 3319 and 27657 to 3281 and 27148, respectively (see the chart below).

Moreover, the negative market sentiment intensified U.S. dollar’s safe-haven demand, which rose to the two-months high. Consequently, the EUR/USD exchange rate dropped to a two-months low of $1.1671 on Wednesday morning.

Although the new cases are increasing in America, infections are spreading incredibly rapidly in Europe, strengthening the greenback‘s position against the euro. The recent cases resurgence across Europe have coincided with the weak economic Eurozone indicators: for example, the business growth ground to a halt in September.

Implications for Gold

So, what does the above mean for the gold market? Well, the renewed global concerns about the second Covid-19 wave of infections, primarily in Europe, along with its economic implications, pushed investors toward the US dollar. It is all normal – in every crisis, cash is always the king. But in a global or European crisis such as the current one, the greenback is the tsar.

Several other risks have accumulated recently. Let’s not forget that the U.S. presidential elections are quickly approaching. It is likely that the elections’ results will be disputed, as Trump already suggested that mail-in voting could be rigged. Moreover, the fight over Supreme Court Justice Ruth Bader Ginsburg’s successor adds up another volatile element, as it decreases the chances of a quick deal on the new stimulus measurements. You see, if Trump manages to install a conservative replacement in time, the new judge could help resolve any dispute in his favor. These risks supported the US dollar, which put downward pressure on the gold prices as a result.

Therefore, the market sentiment is clearly bearish right now, and it appears that the yellow metal needs a real spark to reenter a bullish trend. Indeed, it seems that both the stock and gold market await patiently for the upcoming fiscal and monetary stimuli. Unfortunately for the gold bulls, the market expectations for a new Congress or the Fed support have declined in recent days. That is why the fears about the second wave of infections and the renewed sanitary restrictions are so acute – there is no government or central bank’s help on the horizon that can protect and solidify the economy.

But still, gold bulls shouldn’t give up. Remember the first wave of the pandemic? Gold also plunged, only to soar afterward, resulting in a record high. The fundamental outlook for gold is still bullish: the real interest rates are negative, the public debt is ballooning, while the Fed’s monetary policy is very dovish. Although right now, both the Congress and the central bank could potentially disappoint investors, they will have no choice but to provide additional support as they always do indulge the Wall Street – and, although somewhat unintentionally, gold bulls.

If you enjoyed today’s free gold report, we invite you to check out our premium services for richer information. We provide much more comprehensive fundamental gold market analyses in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, but you are not on our gold mailing list yet, we urge you to sign up there as well for daily yellow metal updates. Sign up now!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

 

Gold Setting Up Just Like Before The COVID-19 Breakdown

RESEARCH HIGHLIGHTS:

  • Gold rebounded quickly and broke to higher prices after the COVID deep selling.
  • Our Fibonacci support levels for Gold are resting near $1,885, $1,815 & $1,790.
  • More downside pressure on price is possible, but if support is maintained at $1,885 then we could see a big upside recovery trend take Gold to $2,250.

Just before the COVID-19 collapse in the markets hit near February 25, 2020, Gold started a double-dip move after reaching $1,692 on February 24.  First, Gold dipped from $1,692 to $1,564, then recovered to new highs ($1,704.50) on March 10, 2020.  Then, as the deeper COVID-19 selling continued, Gold prices dipped again – this time targeting a low level of $1,450.90.

What we found interesting is how quickly Gold prices recovered and broke to even higher price levels after this deep selling.  Our belief is that when a crisis event first hits, which we sometimes call the “shock-wave”, all assets take a beating – including Gold and Silver.  This is the event where traders and investors pull everything to CASH (closing positions).  Then, as the shock-wave ends, traders re-evaluate the price levels of assets to determine how they want to deploy their capital.

GOLD BASING NEAR $1885 FOR A BIG RALLY

Our belief that this DIP or double-dip pattern in Gold because of crisis events presents a very solid opportunity for skilled traders to add-to existing positions or strategically target shorter-term upside price swings in precious metals.

This Daily Gold chart below highlights the first dip and the second dip in Gold prices as the COVID-19 price collapse took place.  Notice how Gold rotated lower, then recovered to new highs, then dipped even lower in early March 2020.  This last dip in price levels was the very deep selling before the March 21 bottom setup (US Fed induced).

Now, take a look at the current Gold Futures Daily chart. Notice the big price correction that started on August 7, 2020 – setting up the FLAG/Pennant formation in Gold.  Interestingly enough, this top in Gold also aligns with a moderately deep price correction in the NASDAQ – before continuing to rally even higher.  Silver also setup a price peak on August 7, 2020.  Now, as the Banking illegalities report has been released, the markets again fell into a shock-wave of selling on Monday, August 21.  This time Gold fell just over 3% throughout the day before starting to recover near the end of the day.

Currently, our Fibonacci support levels are resting near $1,885, $1,815 & $1,790 as you can see from the Gold Daily chart below. We believe more downside price pressure may continue in Gold and Silver over the next few days before a strong upside price move begins to take place.  The recent low price level in Gold, near $1,885, aligns perfectly with our Fibonacci projected price target (Support) level.  If Gold has already found support near this price level, then we may already be hammering out a bottom in Gold setting up a big upside recovery trend.

The question for gold traders right now is “does the $1,885 level hold as support or will gold break lower trying to fund support?”.  My researchers and I believe the current bottom in Gold is set up and the $1,885 price will hold as support.  We also believe the next move higher will prompt a rally targeting levels near $2,250.

Watch for the momentum base to continue to form near $1,885 before the breakout rally trend in Gold starts.  Once it breaks the $2,035 level, it should start to rally upward very quickly. If the price of Gold breaks down below $1,885 then we may experience a continuing bottom to the next support level of $1,815.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. Subscribers of my Active ETF Swing Trading Newsletter can ride my coattails as I navigate these financial markets and build wealth. My research and trading team are here to help you find better trades and navigate these incredibly crazy market trends.

While most of us have active trading accounts, our long-term investment and retirement accounts are equally at risk. We can also help you preserve and even grow your long term capital when things get ugly (likely now) with our Passive Long-Term ETF Investing Signals.  Don’t wait until it is too late – subscribe today!

For a look at all of today’s economic events, check out our economic calendar.

Stay safe and healthy!

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

NOTICE AND DISCLAIMER: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.

 

Coupa Software’s Price Target Raised to $330 with Overweight Rating, $466 in Best Case: Morgan Stanley

Coupa Software Inc’s price target was raised to $330 from $272 with ‘Overweight’ stock rating, according to Morgan Stanley equity analyst Stan Zlotsky, who also said sees a solid execution coupled with improving macro setting up the company well for a potential FY22 growth re-acceleration.

Early this month, the cloud-based expense management platform reported total revenue of $125.9 million, an increase of 32% compared to the same period last year. Subscription revenues were $111.6 million, an increase of 34% compared to the same period last year.

The company forecasts total revenues between $123.0 to $124.0 million for the third quarter and between $496.5 to $498.5 million for the full-year fiscal 2021.

“Most investors clearly see the impact COVID has had on Coupa’s growth in FY21, which we think creates an opportunity to own one of the premier SaaS assets ahead of a potential growth acceleration into FY22,” Morgan Stanley’s Adam Jonas said.

“We see a fairly clear runway for Coupa getting to mid-30% revenue growth in FY22 through: 1) organic growth of 25-30%; 2) Coupa Pay starting to hit revenue more materially – we estimate ~$60M potential; 3) $20-$25 million from Bellin acquisition; 4) $10-$15 million from Yapta acquisition as corporate travel resumes. Compared to current consensus FY22 growth of ~26%, we see the potential for Coupa to deliver the beat/raise cadence moving forward and outperform Street expectations through the year.”

At the time of writing, Coupa stock traded 1.5% higher at $272.15 on Wednesday; however, the stock is up over 80% so far this year.

Several other equity analysts have also updated their stock outlook. KeyCorp increased their price target on Coupa Software to $325 from $320 and gave the stock an “overweight” rating. Raymond James increased their price target to $300 from $235 and gave the stock an “outperform” rating. Truist increased their price target to $300 from $240.

Seventeen analysts forecast the average price in 12 months at $291.53 with a high forecast of $339.00 and a low forecast of $232.00. The average price target represents a 6.52% increase from the last price of $273.68. From those 17 equity analysts, 11 rated ‘Buy’, six rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

“In an uncertain macro environment, we expect relative outperformance in COUP due to  1) defensive nature of Coupa’s core business spend management (BSM) offering, 2) expanding TAM from entry into B2B payments (Coupa Pay) and 3) rapidly improving profitability – all of which drive durable LT growth, in our view,” Morgan Stanley’s Stan Zlotsky added.

“Our $330 price target is based on combining our $193 base case value for the core BSM business and our conservative Coupa Pay estimates, which imply $137 of incremental value. Our price target implies 33X CY21 EV/Sales and 0.94x growth adjusted vs. SaaS peers at 0.56x, a premium we think is appropriate given model conservatism, higher contribution margins from Coupa Pay and sustainability of long-term growth.”

Upside risk: Coupa Pay gains adoption faster than expected, opening a potentially large incremental TAM opportunity, highlighted by Morgan Stanley.

Downside risks: Increased competition from large, well established ERP vendors like Oracle and SAP Ariba. Prolonged macro slowdown limits new customer growth and share gains.

Stock Pick Update: September 23 – September 29, 2020

In the last five trading days (September 16 – September 22) the broad stock market extended its downtrend following two-week-long consolidation. The S&P 500 index set new record high of 3,588.11 on September 2. But then the market fell below February 19 high of 3,393.52. On Monday it set a local low of 3,229.10 before bouncing back above 3,300 mark again. So far, the recent decline still looks like a downward correction of a 63.7% rally from March 23 corona virus low at 2,191.86.

The S&P 500 index has lost 2.80% between September 16 and September 22. In the same period of time our five long and five short stock picks have lost 1.17%. So stock picks were relatively stronger than the broad stock market. Our long stock picks have lost 4.49%, but short stock picks have resulted in a gain of 2.15%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.

Below we include statistics and the details of our three recent updates:

  • September 22, 2020
    Long Picks (September 16 open – September 22 close % change): CF (-5.53%), ROST (-4.54%), SPG (-8.33%), XOM (-2.55%), CME (-1.50%)
    Short Picks (September 16 open – September 22 close % change): MPC (-0.86%), JPM (-5.19%), ETR (+1.03%), SHW (-3.12%), MCD (-2.59%)Average long result: -4.49%, average short result: +2.15%
    Total profit (average): -1.17%
  • September 15, 2020
    Long Picks (September 9 open – September 15 close % change): UAA (+7.37%), EFX (-3.77%), CF (+2.30%), SLB (-1.52%), INTC (+0.95%)
    Short Picks (September 9 open – September 15 close % change): PSX (+0.02%), GLW (+0.98%), EIX (-0.37%), MCD (+3.43%), RTX (+2.79%)Average long result: +1.07%, average short result: -1.37%
    Total profit (average): -0.15%
  • September 8, 2020
    Long Picks (September 2 open – September 8 close % change): CSCO (-4.85%), DIS (+0.43%), MAR (+0.68%), WEC (+2.00%), PXD (-8.20%)
    Short Picks (September 2 open – September 8 close % change): SO (+2.09%), PSX (-1.08%), PEAK (-0.47%), NVDA (-18.98%), FB (-9.27%)Average long result: -1.99%, average short result: +5.54%
    Total profit (average): +1.78%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, September 23 – Tuesday, September 29 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (September 23) and sold or bought back on the closing of the next Tuesday’s trading session (September 29).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s.

Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:

Trend-following approach:

  • buys: 1 x Materials, 1 x Industrials, 1 x Consumer Discretionary
  • sells: 1 x Energy, 1 x Health Care, 1 x Communication Services

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Health Care
  • sells: 1 x Materials, 1 x Industrials

Trend-following approach

Top 3 Buy Candidates

MLM Martin Marietta Materials – Materials

  • Stock trades within a possible medium-term bull flag pattern – uptrend continuation play
  • The resistance level is at $230, marked by previous highs

MAS Masco Corp. – Industrials

  • Possible bull flag pattern and uptrend continuation
  • The resistance level of $60
  • The support level is at $54

ROST Ross Stores, Inc. – Consumer Discretionary

  • Stock trades within a possible medium-term bull flag pattern
  • The resistance level of $97.5
  • The support level is at $87.5
  • Uptrend continuation play

Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Materials, Industrials and Consumer Discretionary sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today.

For a look at all of today’s economic events, check out our economic calendar.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Crude Oil Prices Jumpstart, but Rising COVID-19 Cases Curbs Gains

Crude oil prices recovered after falling for the most part at Asia’s trading period on Wednesday amid a reported build in U.S. crude oil stockpiles, renewing fears on energy demand that caused panic sell-offs last week.

At the time this report was written both crude oil benchmarks were trading higher than 0.3%.

Sequel to the recent stability in oil prices, it should be noted that both contracts plunged more than 4% on Monday, the highest in two weeks, though they gained yesterday surprisingly even though the dollar fired up on all cylinders.

Rising cases of COVID-19 infections in Western Europe along with renewed restriction in the world’s sixth-largest economy (United Kingdom) kept crude oil bulls at bay coupled with more crude oil supplies on its way from Libya.

The fears of the COVID-19 virus onslaught is prevailing on the price pattern, on the basis that oil bulls get burnt out as the world’s largest consumer of oil, death toll from COVID-19 onslaught surpasses 200,000, coupled with crude oil stockpiles gaining 691,000 barrels in the week to Sept. 18, compared with energy analysts anticipation for a draw of 2.3 million barrels.

However the bulls are riding on a valid case that gasoline stockpiles plunged by almost7.7 million barrels, suggesting that the U.S economy is definitely picking up, but the major reasons why the bulls falter after breaking higher is the jump in COVID-19 infections.

Although oil traders anticipate that resumption of a full lockdown scenario has seen in H1, 2020 in emerged economies doesn’t seem to be an option right now.

That said, the continual front and back remedies in solving the worst pandemic ever known in modern history is partly responsible for the price swings seen in the fragile energy market, and might keep on playing out this way until a COVID-19 vaccine becomes readily available.

For a look at all of today’s economic events, check out our economic calendar.

 

Global Markets Break Hard To The Downside – Watch Support Levels

RESEARCH HIGHLIGHTS:

  • New reports of widespread financial corruption likely triggered the current sell-off.
  • Watch out for market support levels to see if this is a short-term correction or the start of a downtrend.
  • Support for the DOW is just above 26,000.
  • Support for the SP500 is around 3,100.

US and global markets were already under pressure over the past few weeks related to COVID-19 issues and global economic expectations.  The technology sector had driven valuations to levels not seen since the DOT COM bubble near the end of August and many of the US Indexes has reached or breached all-time highs again.  My research team and I warned followers to “stay cautious” throughout much of the price rally as our proprietary price modeling systems suggests the rally was isolated and not organic.  The US Fed has spewed capital into the markets and speculative traders piled into the “excess phase” of the market to drive price levels higher.  Take a moment to review these recent research posts to learn more:

September 13, 2020: MAKE OR BREAK – BIG TRENDS AHEAD

September 1, 2020: ARE FANGS GOING TO BREAKDOWN SOON?

August 27, 2020: EXPANDING WEDGE MAY PROMPT BIG PRICE CORRECTION – COULD A BIG TOP BE SETTING UP RIGHT NOW?

MARKETS SELLING OFF ON NEWS

Before we get into the price charts, we want to highlight the news that is driving much of this selloff in the markets.  Early Monday reports (or late Sunday, depending on your location) were published highlighting illegal and nefarious activity by many global banks related to money laundering and supporting criminal rogue elements throughout the globe.  The names of the banks implicated include Deutsche Bank, Standard Chartered, Barklays, Commerzbank, Danske Bank and HSBC Holdings.  It appears the European and Asian banks had the largest exposure to this activity and risk.  There is some talk that Russian banks may have been involved as well (unconfirmed at this time by our research).

What this means for traders is that a broad, global financial crisis may be starting to unfold – this time vastly different than the 2008-09 credit crisis.  This event will be centered around illegal and corrupt actions at some of the world’s largest financial institutions and the far-reaching aspects of rogue government or private elements involved in this activity.  We believe the markets will attempt to find support after the shock of this news is digested.  Longer-term, I believe a broader market downtrend may continue – it’s just a matter of what happens next and how fast global authorities are able to engage in a proper form of legal resolution (indictments).

At this point in time, the news that global banks were acting illegally and improperly may prompt a much broader market downtrend over time.  Right now, we believe the initial “shock-wave” will be processed in price and support levels will be found fairly quickly.

SUPPORT LEVELS

This Daily YM chart below highlights the support level near 26,000 that we believe will become the first floor for price as this selloff continues.  Our proprietary Fibonacci price modeling system is also suggesting support levels just above the 26,000 are valid (see the RED and BLUE SQUARES on the right side of this chart).  My research team believe price will attempt to find support near the 26,000 level as this broad market selloff matures.

This ES Daily chart also highlights the support levels near 3,090 (the lower YELLOW line) and aligns with our proprietary Fibonacci price modeling suggested support levels just above 3,100.  We believe this will be the first level of support for the ES if the downtrend continues.

Yes, my team has been warning to stay cautious throughout much of the uptrend and we have highlighted a multi-year Head-and-Shoulders pattern that we believed could prompt a broader market decline.  But we were not aware of this illegal activity related to the global banking system.  Our research helps to confirm that technical analysis and our proprietary price modeling/research systems can act as clear forward-looking techniques for any skilled traders.  The theory that price always internalizes news before or as the news happens suggests that technical analysis will, in almost all cases, highlight the most probable outcome before the news is known.  Only in very rare “acts of God” is technical analysis sometimes delayed in reacting to the news.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders.

If you want to survive the trading over a long period of time, then you learn fairly quickly how important it is to protect against risk and to properly size your trades.  Subscribers of my Active ETF Swing Trading Newsletter can ride my coattails as I navigate these financial markets and build wealth. My research and trading team are here to help you find better trades and navigate these incredibly crazy market trends.

While most of us have active trading accounts, our long-term investment and retirement accounts are equally at risk. We can also help you preserve and even grow your long term capital when things get ugly (likely now) with our Passive Long-Term ETF Investing Signals.  Don’t wait until it is too late – subscribe today!

For a look at all of today’s economic events, check out our economic calendar.

Stay safe and healthy!

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

NOTICE AND DISCLAIMER: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.

Daily Gold News: Short-term Consolidation Following Monday’s Sell-off

The gold futures contract lost 2.62% on Monday, as it broke below its recent trading range. The precious metals’ market followed an advance in U.S. dollar and stocks’ sell-off. Recently gold retraced most of the decline from September 1 local high of $2,001.20. On Wednesday it has reached new short-term local high of $1,983.80 before coming back lower. Yesterday it got close to $1,900 price mark, as we can see on the daily chart:

Gold is 0.3% lower this morning, as it is fluctuating along yesterday’s closing price. What about the other precious metals? Silver lost 10.11% on Monday and today it is 1.3% lower. Platinum lost 6.65% and today it is 0.8% higher. Palladium lost 4.16% yesterday and today it’s 0.9% higher. So precious metals are fluctuating following yesterday’s sell-off this morning.

Today there will be a Testimony from the Fed Chair Powell at 10:30 a.m. We will also get the Existing Home Sales and Richmond Manufacturing Index releases at 10:00 a.m.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Tuesday, September 22

  • 10:00 a.m. U.S. – Existing Home Sales, Richmond Manufacturing Index
  • 10:00 a.m. Eurozone – Consumer Confidence
  • 10:30 a.m. U.S. – Fed Chair Powell Testimony

Wednesday, September 23

  • 3:15 a.m. Eurozone – French Flash Manufacturing PMI, French Flash Services PMI
  • 3:30 a.m. Eurozone – German Flash Manufacturing PMI, German Flash Services PMI
  • 9:00 a.m. U.S. – FOMC Member Mester Speech, HPI m/m
  • 9:45 a.m. U.S. – Flash Manufacturing PMI, Flash Services PMI
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • 2:00 p.m. U.S. – FOMC Member Quarles Speech

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Corona Strikes Back In Europe. Will It Boost Gold?

The number of new daily infections in Europe is rapidly increasing, even reaching new heights in several countries. That is just another reminder that the second wave in fall or winter is upon us.

Yes, I know. You are all fed up reading about the coronavirus. And yet, the coronavirus is not fed up with spreading around the globe. The number of new daily infections keeps going up, as the chart below shows.

Most significantly, the coronavirus cases are in a dramatic rise across Europe. The weekly cases have now exceeded the reported levels when the pandemic first peaked in Europe back in March. Furthermore, the number of new daily infections has also reached record highs in several countries, such as Spain or France, as shown in the chart below.

Without a doubt, the improved testing procedures justify a segment of the infections‘ rise – but only a part. The death toll is now significantly lower than it was in spring, as the virus started spreading among the younger part of the population, while the healthcare systems are now better armed to handle the epidemic. But still, the WHO warns us that changes will happen as the winter approaches.

Therefore, if the virus became the new “normal” and people somehow stopped fearing it, that does not mean that the new virus stopped infecting people and influencing economies. Targeted lockdowns and restrictions are already returning across the continent to contain the spread of the coronavirus.

Hence, even though the gloomiest projections are not yet materialized, and the Fed even revised its economic growth forecast for 2020, the resurgence in new COVID-19 cases across Europe is a harsh reminder that the pandemic is not over yet. With that being said, in the upcoming months ahead, if the case count continues to rise worldwide, the global economic recovery could slow down.

Of course, there are reasons to be optimistic as well, as better therapeutics, rapid tests, and vaccines are on the horizon. However, the hopes that a Covid-19 vaccine will soon be widely available and solve all the problems are way too optimistic. As Sarah Zhang explains in “The Atlantic”,

A vaccine, when it is available, will mark only the beginning of a long, slow ramp down. And how long that ramp down takes will depend on the efficacy of a vaccine, the success in delivering hundreds of millions of doses, and the willingness of people to get it at all.

Indeed, billions of vaccine production and distribution across the world will take months, if not years. Moreover, people may still refuse to get vaccinated, given the fact that 20 percent of Americans have already said that they will not take the vaccine, while another 30 percent is unsure, which indicates that the vaccine might not provide the society with the herd immunity.

Implications for Gold

So, how does the new coronavirus developments affect the gold market? Well, the coronavirus no longer generates fears and panicking of massive magnitudes as it did in spring. Therefore, the rising number of cases in Europe doesn’t significantly affect the price of gold. However, the resurgence of patients in Europe is a brutal reminder that the pandemic is not over yet and that the second wave is only a couple of months away.

We believe that such a second wave would be positive for gold prices. However, it should include the US as well, as the resurgence in cases limited to Europe could strengthen the greenback against the euro and gold, neutralizing the increased safe-haven demand for the yellow metal.

If the second wave occurs, it should be bullish for gold not only because of the resulting economic slowdown and increased uncertainty but also because of the new stimulus programs that would probably be announced by both by the central banks and the governments.

You see, just like drug addicts are desperate for the next dose, the markets are always after more liquidity. It’s enough to say that the recent dovish FOMC statement accompanied by fresh dot-plot and Powell’s press conference was considered as disappointing by investors and not dovish enough. Both equities and gold declined in response to the Fed’s announcement. This is because the central bank did not offer fresh policy measurements and did not expand its quantitative easing program.

But don’t worry – a new stimulus is just a matter of time. The Fed may not care about the gold, but it won’t leave Wall Street in need. Gold will benefit from such a noble heart of the American central bank.

If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

 

EUR/USD Price Forecast – Euro Get Hammered

The Euro has initially tried to rally during the trading session on Monday but gave back the gains as we cannot seem to get a bit of a lift. With that being the case, we are also paying attention to coronavirus figures, which of course are rising in the European Union. That of course is not good for the Euro, and at this point we are starting to see more of a run towards the US dollar in general, so this will be what the first place that most people trade.

EUR/USD Video 22.09.20

To the downside, we have the 50 day EMA coming into the picture just above the 1.17 level, so that of course is something worth paying attention to. Ultimately, the market does look very susceptible to selling pressure, and a bigger “risk off” type of situation. At this point, it is probably only a matter of time before the US dollar gains again, mainly because we are seeing the Euro refuse to break above the 1.19 level. As long as that is going to be the case, it is more likely than not we get a breakdown.

If we break below the 1.17 handle, then it is possible that the market goes looking towards the 1.15 handle. That is an area that will attract a lot of attention as well, especially if the 200 day EMA continues to reach towards it. Either way, this is a market that looks very pro-US dollar given enough time.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Gold Going Lower as US Dollar Gains

The gold futures contract gained 0.63% on Friday, as it continued to fluctuate within a short-term consolidation. Recently gold retraced most of the decline from September 1 local high of $2,001.20. On Wednesday it has reached new short-term local high of $1,983.80 before coming back lower. Gold is still trading within a consolidation along $1,950-2,000, as we can see on the daily chart:

Gold is 0.8% lower this morning, as it is retracing Friday’s advance following U.S. dollar advance. What about the other precious metals? Silver gained 0.1% on Friday and today it is 1.4% lower. Platinum gained 0.82% and today it is 1.3% lower. Palladium gained 1.95% on Friday and today it’s 1.9% lower. So precious metals are going down this morning.

Friday’s Consumer Sentiment release has been slightly better than expected. However, the markets went risk off and stocks reached new short-term lows.

Today we will get a speech from the Fed Chair Powell at 10:00 a.m. There will also be speeches from the FOMC Members later in the day. The markets will be also waiting for Tuesday’s-Wednesday’s Powell’s Testimony. Take a look at our economic news schedule below to find out more.

Where would the price of gold go following Wedneday’s Fed news release? We’ve compiled the data since January of 2017, a 43-month-long period of time that contains of thirty FOMC releases.

The following chart shows average gold price path before and after the FOMC. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.8% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, September 21

  • 10:00 a.m. U.S. – Fed Chair Powell Speech
  • 12:00 p.m. U.S. – FOMC Member Brainard Speech
  • 6:00 p.m. U.S. – FOMC Member Williams Speech
  • All Day, Japan – Bank Holiday

Tuesday, September 22

  • 10:00 a.m. U.S. – Existing Home Sales, Richmond Manufacturing Index
  • 10:00 a.m. Eurozone – Consumer Confidence
  • 10:30 a.m. U.S. – Fed Chair Powell Testimony

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Rolls-Royce to Raise 2.5 Billion Pounds to Strengthen Balance Sheet as COVID-19 Hurt

Rolls-Royce Holding Plc, one of the world’s leading producers of aero engines for large civil aircraft and business jets, said that it was exploring options to raise up to 2.5 billion pounds ($3.2 billion) to enhance balance sheet resilience and strength.

The second-largest provider of defence aero engines globally said it was considering a variety of structures including new debt issuance, a rights issue and potentially other forms of equity issuance.

No final decisions have been taken as to whether or when to proceed with any of these options or as to the precise amount that may be raised, the company said.

Rolls-Royce’s shares closed 5.13% lower at GBX 180.15 on Friday; the stock is down over 70% so far this year.

Rolls-Royce stock forecast

Ten analysts forecast the average price in 12 months at GBX 295.71 with a high forecast of GBX 498.66 and a low forecast of GBX 80.92. The average price target represents a 64.15% increase from the last price of GBX 180.15. All those ten equity analysts, three rated “Buy”, four rated “Hold” and three rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of GBX 336 with a high of GBX 677 under a bull-case scenario and GBX 130 under the worst-case scenario. Berenberg raised the stock rating to “Buy” from “Hold” but lowered their target price forecast to GBX 270 from GBX 890.

Other equity analysts also recently updated their stock outlook. Credit Suisse cut their target price to GBX 200 from GBX 210; JP Morgan cuts the target price to GBX 80 from GBX 90; Jefferies cuts price target to GBX 500 from GBX 700; Citigroup cuts price target to GBX 564 from GBX 960 and UBS cuts target price to GBX 265 from GBX 328.

Analyst views

“Rolls-Royce has underperformed the peer group YTD and appears to trade on a single-digit P/E multiple in 2022 – much lower than major peers. There are fundamental reasons for this: high exposure to long-haul traffic and high operating leverage mean there is greater earnings and cash flow volatility in the near term,” said Andrew Humphrey, equity analyst at Morgan Stanley.

“Cash outflows of £4 billion in 2020 and around £500 million in 2021 will lead to higher leverage, and we, therefore, believe Rolls-Royce will need to address balance sheet structure to regain an investment-grade credit rating,” Humphrey added.

Upside and Downside Risks

Upside: 1) Faster recovery in widebody traffic. 2) Trent 1000 in-service issues have been demonstrably resolved. 3) Cash targets are met and cash flow quality improved. 4) Additional orders restore the market’s confidence in widebody prospects, highlighted by Morgan Stanley.

Downside: 1) Accelerated retirements of mid-life Trent-powered widebody aircraft. 2) Further cost overruns on Trent 1000. 3) Change to mid-term cash guidance.

Oil Traders Remain Wary Amid Crude Oil Prices Bouncing Up

Crude oil prices rallied higher w/w, as the new oil sheriff in town warned over producers and energy speculators, has he specifically targeted short-sellers betting on a drop in crude oil prices.

Brent crude rebounded 8.3% last week, to settle at $43.15 a barrel at its most recent trading session.

Leading energy experts are now anticipating, Brent crude prices could finish around $49/barrel, as major economics start printing impressive economic data, coupled with the recent development of the Covid-19 vaccine, soothing the nerves of oil traders on the fragile demand of gasoline globally, as the major parts of the global economy is still operating at reduced capacity.

It should be noted that over the past week, Brent Crude prices recovered to trade at $43/barrel, after hitting as low as $39/barrel, as recent economic data printed the largest economy stockpiles dropping arbitrarily.

Taking a closer look at Brent crude price pattern, a vital breakout from the wedge pattern is currently seen around the $45/barrel price level.

If the bulls in the coming days keep the price of Brent crude above $42.50/barrel continually, it most likely the bulls will push the price within the $45/barrel resistance level a very important technical test in breaking out from its recent highs.

However, the bulls would definitely have a lot to chew if additional supplies coming from Africa’s largest crude oil reserves (Libya) comes to play, as recent reports reveal its leader plans to pump more oil into an energy market that has become fragile, disrupted by the ravaging COVID-19 virus, coupled with a significant prevalence of low volatility would probably make it challenging for the bulls to breach above $45.50/barrel price level in the near term as traders remained highly worried about crude oil demand/supply rebalancing.

In addition, reports released on Friday showed that the second-largest economy oil imports have been trending much lower this month than in the past four months, while the larger part of Asia have to reduce oil imports in September with energy demand still under pressure.

For a look at all of today’s economic events, check out our economic calendar.

 

Aptiv’s Price Target Raised to $150 with Overweight Rating, $225 in Best Case: Morgan Stanley

Aptiv PLC‘s price target was raised to $150 from $63 with ‘Overweight’ stock rating, according to Morgan Stanley equity analyst Adam Jonas, who said that after coming out of the COVID-19 era, Aptiv’s portfolio is on the verge of a transformation that will alter the stock’s narrative, driving a multiple re-rating.

In July, the Jersey-registered auto parts company reported a second-quarter 2020 U.S. GAAP loss of $1.43 per diluted share. Excluding special items, the second-quarter loss totalled $1.10 per diluted share.

These results include the adverse impacts of global vehicle production declines of 45% in the second quarter, largely resulting from the ongoing impacts of the novel coronavirus pandemic.

“We think the rapidly changing mix of key revenue drivers of Aptiv lends itself to a change of divisional reporting structure. We believe the way Aptiv currently reports via two segments does not sufficiently capture the specific drivers of secular growth. Our bull case valuation of $225 assumes that the ADAS business is valued similar to the Mobileye acquisition multiple, Other User Experience segment is valued at 20x EBITDA and the BEV Power & Signal business and Mobility & Services are valued at strategic multiples,” Morgan Stanley’s Adam Jonas said.

“We argue investors will need to think out three to five or even five to 10 years in their DCF models to fully capture the compounding growth opportunity embedded in Aptiv.”

Aptiv stock rose about 4% to $86.30 in pre-market trading on Friday; however, the stock is down over 12% so far this year.

Several other equity analysts have also updated their stock outlook. Evercore ISI raised price target to $110 from $85; UBS upped their target price to $100 from $86; Citigroup increased their price target to $95 from $84 and Credit Suisse raised target price to $91 from $88. Oppenheimer raised price target to $95 from $83; Deutsche Bank lowered their target price to $91 from $93; RBC cuts target price to $92 from $94; Jefferies raised target price to $96 from $79 and JP Morgan upped their target price to $89 from $73.

Nine analysts forecast the average price in 12 months at $89.11 with a high forecast of $110.00 and a low forecast of $63.00. The average price target represents a 6.99% increase from the last price of $83.29. From those nine equity analysts, seven rated ‘Buy’, two rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

“+6% to +8% growth over market is best in class, with exposure to secular narratives around electric & autonomous vehicles. For electric vehicles, the Signal & Power Solutions business is growing +4% to +6% growth over market, with a favorable mix of Electrical Distribution Systems vs. Engineered Components,” Morgan Stanley’s Adam Jonas added.

“For active safety, based on the bookings, Aptiv is on track to be the industry leader in Active Safety. For autonomous vehicles, Aptiv has the world’s largest autonomous commercial mobility service in Las Vegas, with operations in Boston, Pittsburgh, Shanghai, and Singapore.”

Morgan Stanley highlighted electric vehicle penetration, active safety penetration and spin of signal & power or user experience as major upside risks to the stock.

However, Morgan Stanley’s gave a stock price forecast of $60 under the worst-case scenario.

“Where could we be wrong? the market may be reluctant to re-rate Aptiv higher as it may still view Aptiv through the lens of an auto supplier and may not rate its potential future recurring revenues, or ascribe premium valuations to its electric vehicle/automated vehicle (EV/AV) expertise and IP until further progress is demonstrated,” Jonas said.

“Further, Aptiv may not realize its targeted above-market growth and its backlog may not materialize into revenues. Ultimately the company is exposed to auto industry production and could be affected by a myriad of manufacturing issues as well as a loss of market share in AV/EV leadership to other competitors.”

Check out FX Empire’s earnings calendar

Daily Gold News: Precious Metals Fluctuate After Yesterday’s Declines

The gold futures contract lost 1.05% on Thursday, as it retraced its recent advances. The market has reacted to Wednesday’s FOMC Statement release. Recently gold retraced most of the decline from September 1 local high of $2,001.20. On Wednesday it has reached new short-term local high of $1,983.80 before coming back lower. Gold is still trading within a consolidation along $1,950-2,000, as we can see on the daily chart:

Gold is 0.4% higher this morning, as it continues to trade within a consolidation. What about the other precious metals? Silver lost 1.37% on Thursday and today it is unchanged. Platinum lost 4.38% and today it is 0.6% higher. Palladium lost 3.40% yesterday and today it’s 0.4% lower. So precious metals are fluctuating following their yesterday’s sell-off this morning.

Yesterday’s Unemployment Claims release has been slightly worse than expected at 860,000. The Philly Fed Manufacturing Index, Building Permits and Housing Starts releases have also been slightly worse than expected. Today we will get the Consumer Sentiment number at 10:00 a.m.

Where would the price of gold go following Wedneday’s Fed news release? We’ve compiled the data since January of 2017, a 43-month-long period of time that contains of thirty FOMC releases.

The following chart shows average gold price path before and after the FOMC. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.8% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, September 18

  • 8:30 a.m. U.S. – Current Account
  • 10:00 a.m. U.S. – Preliminary UoM Consumer Sentiment, CB Leading Index m/m

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Crude Oil Prices Bounce Up as Oil Sherriff Issues Stern Warning

Crude oil prices bounced higher at the last trading session of the week. The impressive gain recorded in the energy market is partly attributed to the better than anticipated plunge in U.S crude oil inventories released recently.

In addition the hawkish statement by, Saudi Arabia’s Prince Abdulaziz bin Salam after the just conclude OPEC+ meeting, sent strong signals to over producing members and most especially targeting crude oil speculators, reminding them there is a new OPEC cop in town.

Abdulaziz bin Salam resolves to keep OPEC in line with the oil cartel’s set agenda can’t be underrated, as he had earlier threatened to deal with oil speculators, and wreck their means of livelihood. These types of statements from major oil powers like the Saudis are rarely witnessed, much more targeting the energy trading world.

Crude oil prices in the past few days recovered from its recent lows, amid impressive economic data seen in the United States and China, as both benchmarks surged past $40/barrel.

However, its present price levels, reveals the black liquid derivative is sensitive to the pace of the global economic recovery and crude oil demand/supply rebalancing in the mid-term.

The rally began, few days ago when data reports coming from the second-largest economy in the world printed it’s on track for recovery, giving the bulls the need gas to breach above the $40/ barrel.

However it’s most unlikely that crude oil prices in the case for Brent crude breakout above the $44/barrel this week, as there is still a massive concerns on crude oil oversupply. Even with its recent surge, traders anticipate that the energy market will struggle to make a new high, at least without some type of significant catalyst like the COVID-19 vaccine.

Oil prices in the mid- term remain fragile to the speed of economic recovery and fundamentals on global supply.

For a look at all of today’s economic events, check out our economic calendar.

 

Delta Air Lines to Raise $9 billion Against SkyMiles Loyalty Program

Delta Air Lines, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, said on Thursday that it will upsize SkyMiles financing to $9 billion, $2.5 billion higher than previously anticipated deal size.

The Atlanta-based company said on Thursday the total proceeds are being raised at a blended average annual rate of 4.75%. Delta said on Monday that it is pledging its loyalty program to raise $6.5 billion, comprising of $4 billion bonds and $2.5 billion loans, as it burns through $27 million a day, Reuters reported.

Delta Air Lines’s shares closed 1.76% lower at $33.96 on Thursday; the stock is down over 40% so far this year.

Delta Air Lines stock forecast

Nine analysts forecast the average price in 12 months at $39.17 with a high forecast of $50.00 and a low forecast of $32.00. The average price target represents a 15.34% increase from the last price of $33.96. From those nine equity analysts, six rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $50 with a high of $80 under a bull-case scenario and $22 under the worst-case scenario. BofA Global Research raised their price objective to $36 from $31.

Other equity analysts also recently updated their stock outlook. Stifel cuts price target to $44 from $45; Cowen and Company lowered their stock price forecast to $32 from $33; Berenberg cuts target price to $32 from $35, while JP Morgan and Citigroup raised their target price to $45 from $41 and $38 from $30, respectively.

Analyst views

“DAL has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. With ample liquidity we see limited liquidity risk here. Additionally, we continue to see DAL’s international alliances and partnerships as strategic assets, despite recent writedowns,” said Ravi Shanker, equity analyst at Morgan Stanley.

Forward Outlook

2021 planning is expected to be one of the toughest on record. DAL sees 2021 being anywhere from 25-40% down vs. 2019 levels. Longer-term, they ultimately don’t expect the environment to look much different than pre-COVID with similar network patterns once things have returned to normal, according to Morgan Stanley.

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Daily Gold News – Gold Lower Following FOMC Release, Still Within a Consolidation

The gold futures contract gained 0.22% on Wednesday, as it slightly extended its small Tuesday’s advance of 0.13%. The market remained relatively calm despite the FOMC Statement release. Recently gold retraced most of the decline from September 1 local high of $2,001.20. Yesterday it has reached new short-term local high of $1,983.80 before coming back closer to the opening price. Gold is still trading within a consolidation along $1,950-2,000, as we can see on the daily chart:

Gold is 0.8% lower this morning, as it is trading along yesterday’s daily low. What about the other precious metals? Silver gained 0.04% on Wednesday and today it is 1.3% lower. Platinum lost 0.89% and today it is 2.4% lower. Palladium gained 0.13% yesterday and today it’s 0.4% lower. So precious metals are generally lower this morning.

Yesterday’s Retail Sales release has been worse than expected. And today we will get the Unemployment Claims along with the Philly Fed Manufacturing Index, Building Permits and Housing Starts releases at 8:30 a.m.

Where would the price of gold go following yesterday’s Fed news release? We’ve compiled the data since January of 2017, a 43-month-long period of time that contains of thirty FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. We can see that the biggest 10-day advance after the NFP day was +10.5% after March 15, 2020 release and the biggest decline was -7.2% after March 3, 2020 release. However, we’ve had an increased volatility following coronavirus fear then.

The following chart shows average gold price path before and after the FOMC releases for the past 43 months and 30 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.8% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, September 17

  • 8:30 a.m. U.S. – Philly Fed Manufacturing Index, Unemployment Claims, Building Permits, Housing Starts

Friday, September 18

  • 8:30 a.m. U.S. – Current Account
  • 10:00 a.m. U.S. – Preliminary UoM Consumer Sentiment, CB Leading Index m/m

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For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.