Alphabet Rallies After Great Q4 Report

Alphabet Video 03.02.21.

Alphabet Shares Get To All-Time High Levels

Shares of Google’s parent company Alphabet are gaining about 7% in today’s trading session after the release of the fourth-quarter earnings report.

Alphabet reported revenue of $56.89 billion and GAAP earnings of $22.30 per share, easily beating analyst estimates on both earnings and revenue.

The rebound in the advertsing spending provided a boost for Alphabet’s revenue as the activity of businesses and consumers continue to increase. The growth in YouTube ads was especially strong.

Not surprisingly, many analysts rushed to update their price targets for Alphabet shares. The market agrees with the analyst community as Alphabet stock managed to settle above the psychologically important $2000 level and made an attempt to get to the test of the $2100 level.

What’s Next For Alphabet?

The economic recovery will continue in 2021 so the company’s ad business will likely benefit from the improved performance of the world economy as businesses will have more money to spend on ads.

In addition, certain segments of the ad market have the potential for a rapid growth of ad spending once the situation with coronavirus improves. Travel-related spending will surely grow once countries fully open their borders and tourists are able to safely enjoy their trips.

While skeptics may point to the company’s rich valuation at a forward P/E of more than 30, such valuation looks normal for a leading tech company in the current market environment, and Alphabet shares may have more room to run while analysts adjust their earnings estimates to the upside.

There was a lot of talk about the regulatory challenges faced by Big Tech in recent months, but Alphabet’s strong financial performance and solid outlook will likely offset such worries in the near term. Increased regulation is surely a risk for the longer-term, but it remains to be seen whether regulators will be able to move fast enough to have any notable impact on Big Tech stocks, including Alphabet.

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

Sector Market Overview – Communications are Breaking Out and Poised to Trend Higher

The communication sector is heavily weighted by market titans like Alphabet and Facebook, which reported better than expected financial results in January and early February. Alphabet’s earnings showed that ads continue to drive market share. Historically, the communications sector has experienced mixed returns in February, following earnings results. Technically the index looks terrific, as it is breaking out and poised to test higher levels.

Key Earnings Drive Price Action

Alphabet helped drive the sector following better than expected Q4 earnings that surpassed analysts’ expectations. The company reported payments of $22.30 per share, versus expectations that the company would earn $15.90. Revenue came in at $56.90 billion, versus expectations of $53.13 billion. Ads drove revenue. YouTube ads came in at $6.89 billion, versus expectations of $6.11 billion.

Alphabet’s revenue grew 23% annually in the quarter compared to 17%, growth in the same period the prior year. The fourth quarter’s advertising revenue came out to $46.20 billion, up 22% from $37.93 billion in the same quarter last year.

The Seasonals are Mixed

Historically, the communication sector experienced mixed results in February. Over the past 10-years, the sector has increased 60% of the time for an average gain of 1.6%. During the past 5-years, the communications sector has declined 80% of the time for an average loss of 1.9%.

Technical Analysis

The SIXC tests the all-time highs forming a cup and handle pattern, which is a pause that refreshes higher. A close above 368, would signal that the index has broken out. Target resistance is seen near 378, which his the most extensive stretch between the 50-day moving average and the most recent high before the breakout. Support is seen near the 5-day moving average at 358 and then the 50-day moving average at 353.

Short-term momentum is positive as the fast stochastic has generated a crossover buy signal and is racing higher. The fast stochastic is fast approaching overbought territory, printing a reading of 79, just shy of the overbought trigger level of 80. Medium-term momentum is positive as the MACD (moving average convergence divergence) index has recently generated a crossover buy signal. The MACD histogram has also generated a crossover buy signal. The MACD histogram is printing in positive territory with an upward sloping trajectory, which points to higher prices. The relative strength index (RSI) has also rebounded sharply from lower levels, reflecting accelerating positive momentum.

The Bottom Line

The upshot is that the communication sector is poised to breakout. It has formed a cup and handle pattern, which is a pause that refreshes higher. A close above crucial resistance will lead to higher levels. While the seasonality of the returns on the index is mixed during February, Facebook and Alphabet’s strong earnings results point to robust returns in the communication space. Alphabet reported better than expected financial results on February 2 following the closing bell and buoyed the index.  Momentum is positive, and the technical outlook points to higher prices, especially on a breakout. Look for the price of the SIXC to continue to trend higher if it can close above the $368 level.

GameStocks – Fun While It Lasted…

I don’t want to lecture anyone or say that I told you so. During one of my newsletters last week, I even said that I tip my hat to anyone who profited from this—all the respect in the world.

Me personally, though, I would never trade like this. Monday (Feb. 1) and Tuesday’s market (Feb. 2) was nothing more than a reality check. GameStop’s stock has lost nearly half of its value, and other Reddit darlings like AMC, Blackberry (BB), Koss (KOSS), and Silver (SLV) tanked.

Stocks don’t go up forever.

Stonks especially don’t.

Who knows, maybe the party’s not over. But I think the plummet in the Reddit stocks was bound to happen. Bubbles always eventually pop.

The market seems happy that the earth is back on its axis in stockland. The indices have recovered nearly all of last week’s losses already.

I didn’t call the GameStop short-squeeze, but I had called last week’s downturn for a while. The recovery so far this week wasn’t entirely surprising either.

Be that as it may, I remain concerned about complacency in the markets and overstretched valuations, plus the potential return of inflation. But the breather last week was needed and brought the indices to less overbought levels.

Generally, investors and analysts are bullish these days. According to a recent Bank of America survey of 194 money managers, bullishness on stocks is at a three-year high, and the average share of cash in portfolios, which is usually a sign of protection from market turmoil, is at the lowest level since May 2013.

We have still not declined 10% from the record highs- the minimum needed for a correction. Although the market needed last week’s downturn, we’re once again mostly right where we were several days ago.

I know what you’re thinking. Amazon (AMZN) and Alphabet (GOOGL) are the latest companies to crush their earnings estimates, how could we possibly have a correction?

For one, there are still things to be concerned about from a public health and economic perspective.

We are also long overdue for one. We haven’t seen one since last March. Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

A correction could also be an excellent buying opportunity for what should be a great second half of the year.

We’re no longer as close to those same BUY levels as we were after market close on Friday. But we’re not quite at SELL again, and I still think we’re a few pullbacks away from making more BUY calls with conviction. In other words, welcome to no man’s land.

In my last newsletter, I cautioned against making manic moves and trading with emotions. We saw our worst week since October last week and declined in two of the previous three. Much of that was due to the GameStops and AMCs freaking out Wall Streeters. But I reminded you then, and I’ll remind you again. Shares of Eastman Kodak surged by 1,481% in three days last July, and the broader market seems to have done just fine since then.

Do not let the noise deter you from your goals. My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

We’re all in this together!

Is It Safe to Buy Tech Again?

Figure 1- Nasdaq Composite Index $COMP

Earnings season for tech stocks hit record numbers last week, and is set to continue this week with Amazon and Alphabet clobbering estimates. Usually, when investors get what they expect, it’s more of a reason to sell rather than buy.

But the Nasdaq so far this week has already recovered almost all of last week’s losses, and then some.

I’m not ready to call this a BUY though, or recommend buying into momentum. There are still concerns. Tech valuations, especially the tech IPO market, terrify me. SPACs don’t help either. The Nasdaq last week declined to a more “normal” level, and in the span of two days, hit an RSI approaching 63 again.

Last week’s decline was needed, but there are still echoes of the dot-com bubble 20-years ago. I remain bullish on earnings and tech sectors such as cloud computing, e-commerce, and fintech for 2021, but please monitor the RSI.

The RSI is how I have called the Nasdaq since December. While an overbought or oversold RSI does not automatically mean a trend reversal, it has with the Nasdaq.

The Nasdaq pulled back on December 9 after exceeding an RSI of 70 and briefly pulled back again after passing 70 again around Christmas time. We also exceeded a 70 RSI just before the new year, and what happened on the first trading day of 2021? A decline of 1.47%.

When I changed my Nasdaq call from a HOLD to a SELL on January 11 after the RSI exceeded 70, the Nasdaq declined again by 1.45%.

Before the Nasdaq exceeded an RSI over 73 prior to January 25th, I switched my call back to SELL, and the QQQ promptly declined 4.13% for the week.

The Nasdaq is trading in a precise pattern.

I still like tech and am bullish for 2021. But for now, I’m going to stay conservative and say HOLD.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be 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, Matthew Levy, CFA, 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. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’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. Matthew Levy, CFA, 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.

 

Amazon, Alphabet Top Earning Estimates; Jeff Bezos Steps Down as Amazon CEO

U.S. stock index futures rose after the cash market close on Tuesday on the back of strong earnings from Amazon and Alphabet.

Amazon reported earnings nearly double Wall Street estimates; however, the stock move was tempered by news that Jeff Bezos would step down as CEO.

Shares of Alphabet gained 6% in afterhours trading after the technology giant reported 23% revenue growth and topped estimates for earnings.

Amazon’s Cloud Division Reports 28% Revenue Growth

Amazon’s cloud-computing business reported 28% revenue growth in the fourth quarter, falling short of analysts’ expectations.

Amazon Web Services remains the market leader for cloud computing and storage that companies, governments and schools use to run websites and applications. While Microsoft and Google grew faster in the fourth quarter, they’re still well behind Amazon in serving businesses that are rapidly offloading their data.

Revenue at AWS climbed to $12.7 billion from $9.95 billion a year earlier, below the $12.83 billion consensus estimate among analysts polled by FactSet. AWS revenue represented 10% of Amazon’s total sales.

AWS continued to drive much of Amazon’s profit. Operating income increased 37% from a year earlier to $3.56 billion, but trailing the $3.75 billion FactSet consensus estimate. That means 52% of the company’s operating income can be attributed to AWS, compared with about two-thirds in the same period a year ago.

In other news, Amazon said Andy Jassy, who runs the cloud division, will succeed Jeff Bezos as CEO of Amazon in the third quarter of this year.

Alphabet Revenue up 23% as Core Advertising Business Shows Strong Growth

Shares of Alphabet, the parent of company of Google, rose nearly 8% in extended trading on Tuesday after the company reported fourth-quarter earnings that surpassed analysts’ expectations and showed a strong return to growth in its core advertising business.

Alphabet’s revenue grew 23% on an annualized basis in the quarter, according to a statement. That’s stronger growth than last year’s Q4, which came in at 17%, and shows Google’s advertising business is recovering well after a big showdown in Q2 of last year.

Alphabet also broke out operating income from its cloud business for the first time:  the company lost $5.61 billion during the full year, and $1.24 billion during Q4, showing that the business is still in investment mode. By way of contrast, Amazon’s cloud business earned an operating profit of $13.53 billion last year and $3.56 billion last quarter.

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

U.S. Market Wrap and Forecast for Wednesday

SP-500 Volatility Index (VIX) imploded on Tuesday, dropping more than 14% as Reddit favorites reverted toward historic means. The return to sanity improved risk appetites, lifting major index benchmarks toward January highs.  Broad-based buying interest characterized the constructive session, with big tech, blue chips, and small caps all gaining more than 1%. Bond yields hit two-week highs, putting pressure on gold and silver while Bitcoin gained ground.

Tuesday Wrap-Up

Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG) got bought aggressively ahead of their post-market earnings reports. Dow component Visa Inc. (V) bounced strongly at 50-week EMA support a few days after meeting Q4 top and bottom line estimates. Gamestop Inc. (GME) got halted several times after downside and upside stretched past circuit breakers. That stock hit the lowest low since Jan. 25 during the heavy session.

Silver plunged after reversing at August 2020 resistance, closing back at late January levels. The clueless financial media overplayed the ‘new bubble’ theme earlier this week, which doesn’t jive with very routine price action in the last 12 months. Older traders observed a moment of silence after Harley – Davidson Inc. (HOG) reported a $0.44 loss per-share on a staggering 32.4% year-over-year revenue decline. That stock fell 16% during the regular session.

Looking Ahead to Wednesday

Alphabet and Amazon Q4 earnings will move Wednesday’s market, with both mega-caps expected to report record quarterly profits. Lofty expectations place a high bar into mid-week, especially with elevated U.S. unemployment and the pandemic wearing on everyone’s nerves.  Other FAANG stocks look rangebound for now, suggesting ‘buy-the-news’ reactions’ will run into selling pressure at range resistance levels.

The January ADP employment report will also impact Wednesday’s session. This monthly data release was reformulated a few years ago after posting a long string of stinkers and has been remarkably reliable since that time. In any case, no one expects improvement in U.S. employment numbers at the moment, with the local pandemic coming off ridiculously high numbers, compared to the rest of the world. However, the reaction might offer a clue to Friday’s more important Non-Farm Payrolls release.

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

Stocks Move Higher Ahead Of Big Tech Earnings

Stocks Are Ready To Continue Yesterday’s Upside Move

S&P 500 futures are gaining ground in premarket trading as traders bet on tech stocks ahead of earnings reports from Amazon and Alphabet. Both companies will provide their quarterly reports today after the market close. If the reports are encouraging, the market will get another boost.

Meanwhile, U.S. President Joe Biden stated that he was not ready to settle for a package that did not meet the needs of the current situation during the talks with Republican senators who pushed for a limited coronavirus aid bill.

If Democrats manage to pass a full $1.9 trillion coronavirus aid package bill, stocks will get additional support. In this scenario, some speculative stocks may experience additional volatility as some of the stimulus money will likely move to the stock market.

Oil Tries To Settle Above The $55 Level

WTI oil gained strong upside momentum and managed to get above the recent highs at $53.90. Currently, oil is trying to settle above the psychologically important $55 level.

The number of new coronavirus cases in the world continues to trend down which is bullish for oil. In addition, Saudi Arabia will cut its oil production by 1 million barrels per day (bpd) in February and March in order to provide support to the market.

While Saudi Arabia’s decision was made public a month ago, it has just began to impact the physical market. Not surprisingly, oil-related stocks will have a strong start of today’s trading session.

Short Squeeze Plays Are Under Strong Pressure

Shares of GameStop are down by more than 40% in premarket trading after losing about 30% of value in yesterday’s trading session. Other short squeeze plays like AMC Entertainment Holdings or Koss Corp. are also under major pressure in premarket action.

Retail traders failed to push silver above the $30 level, and silver is currently trying to settle below $27.50. Shares of silver miners like First Majestic Silver or Pan American Silver are also moving lower.

The trading in short squeeze plays will be very active today, and traders should be prepared for very fast moves.

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

Can Alphabet’s Q4 Earnings Boost its Share Price to a New Record High?

Tech megacaps have enjoyed a robust start to the week as fears subsided about the potential contagion effects from the GameStop saga. The Nasdaq 100 closed up 2.5 percent higher on Monday.

From a technical perspective, with Alphabet’s 14-day relative strength index having pulled away from overbought levels, while its MACD remains in bullish territory.

Based on such indicators, it’s entirely plausible to assume that this stock has more room to run to the upside.

What are the market expectations for Alphabet’s Q4 results?

Alphabet’s Q4 bottom line (net income adjusted) is forecasted to come in at $12.3 billion, which would mark a 28 percent expansion compared to the same period in 2019. Meanwhile, its adjusted earnings per share is expected to have grown 21 percent year-on-year to $17.37.

However, its top line is projected to post a 4.2 percent y/y decline for its Q4 revenue to $44.1 billion. This despite the expected ramp up in advertising spend and subscriptions for YouTube and its estimated 1.9 billion monthly active users who are craving more digital entertainment amid the persisting lockdowns.

Investors have their heads in the Cloud

One of the most keenly awaited items in the earnings announcement will pertain to Google Cloud, which will be reported as a separate segment for the first time ever. The Google parent company will be unveiling the revenues and operating income for this segment, stretching back to fiscal year 2018. This way, investors can assess how much the investments into this segment are paying off, especially since the pandemic tailwinds have hastened the adoption of cloud services.

Google Cloud certainly harbours tremendous growth potential, with the company announcing just on Monday a six-year deal with Ford. The deal seeks to incorporate Android technology into Ford’s vehicles beginning 2023, while rolling out its cloud services across the automaker’s factories as they adopt more AI and data-analytics. Such a notable deal would not only boost its revenue streams, but could also help Google gain ground on the top two players in the cloud market, Amazon and Microsoft.

How does Alphabet’s share price tend to move around earnings day?

Over the past 16 earnings announcements, Alphabet’s stock has only gained 7 times, which suggests that such events are often seen as opportune times for profit-taking. On average, the stock tends to see an absolute move of 5 percent the day after its financial figures are released.

Markets are already pricing in a 1-day move of 5.25 percent, either way, for Alphabet shares come Wednesday, 3 February.

Earnings vs. Yearnings

Should Monday’s momentum extend over the coming sessions, then Big Tech should be able to enjoy more gains in the immediate term. Although the volatility in US equities is subsiding, judging by the moderating VIX index which has dropped back to the psychologically-important 30 mark, it remains to be seen whether investors can remain focused on the current earnings season, less they be distracted by more wild swings in other corners of the market, perhaps also triggered by the WallStreetBets legion of day traders.

Despite the potential upside, investors are likely to remain wary about the threat of antitrust lawsuits as well as threats to break up Google’s online-search monopoly further down the line. Such concerns are expected to weigh on the stock’s upside, even as it continues carving out fresh record highs.

Written on 02/02/2021 02:00 GMT by Han Tan, Market Analyst at FXTM

For more information, please visit: FXTM


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Three Big Tech Stocks Report Earnings This Week

Tech mega-caps highlight the last big reporting week of the fourth quarter earnings season, with Amazon.com Inc. (AMZN), Alphabet, Inc. (GOOG), and Alibaba Group Holding Ltd. (BABA) stepping to the plate. It’s a dangerous time for shareholders of these equity superstars, with market sentiment deteriorating at a rapid pace, following mind-boggling short squeezes on some of the U.S. market’s most downtrodden public companies.

FAANG members Apple Inc. (AAPL), Facebook Inc. (FB), and Netflix Inc. (NFLX) have all turned lower despite beating fourth quarter top and bottom line estimates, substantially increasing risk for GOOG and AMZN shareholders. Big investors getting margin calls could be driving this downturn, with losses incurred on high short interest small caps forcing involuntary liquidation. Main Street investors are also hitting the exits, worried that last week’s bizarre events will mark a major top.

Amazon

Amazon is expected to report a Q4 2020 profit of $7.00 per-share on $119.6 billion in revenue. The stock posted an all-time high at 3,552 in September and eased into a symmetrical triangle, with support near 2,870. It’s traded within this classic pattern for more than four months now, wobbling back and forth across the 50-day moving average. Unfortunately, monthly relative strength readings are still forecasting lower prices, raising odds for an eventual breakdown.

Alphabet

Analysts are looking for Alphabet to post a Q4 2020 profit of $15.99 per-share on $52.9 billion in revenue. The stock broke out above the September high at 1,733 in November and tested new support into January, when it broke out once again and posted an all-time high at 1,934. It’s now pulled back to support near 1,800, raising odds that a strong quarterly report will generate a fresh trend advance to new highs.

Alibaba

Finally, look for Alibaba to report a fiscal Q3 2021 profit of $20.94 per-share on $214.4 billion in revenue. The stock failed a rally above the 2018 high at 211 in February 2020 and recouped those losses into a July breakout that hit an all-time high at 319.32 in October. Many shareholders have jumped ship since that time, dropping accumulation to 18-month lows. It’s now hovering at the 200-day moving average and could roll over after this week’s confessional.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Earnings to Watch Next Week: Pfizer, Alibaba, Amazon, Alphabet and Qualcomm in Focus

Earnings Calendar For The Week Of February 1

Monday (February 1)

IN THE SPOTLIGHT: VERTEX PHARMACEUTICALS, NXP SEMICONDUCTORS, ON SEMICONDUCTOR

VERTEX PHARMACEUTICALS: The biopharmaceutical company is expected to report a profit of $2.55 in the fourth quarter, which represents year-over-year growth of 50% from the same quarter a year ago when the company reported $1.70 cents per share.

However, Wall Street forecasts the company’s revenue to grow about 12% to $1.58 billion.

“Q4 estimates for Vertex‘s CF franchise appear achievable based on recent trends. With industry-leading growth and its fundamentals largely intact despite COVID-19, we expect the current dislocation between Vertex Pharmaceuticals’ (VRTX) trading price and the value of its CF franchise to be only temporary. We would use the recent stock weakness to build a position,” said equity analysts at Cowen and Company, who also gave a price target of $300.

NXP SEMICONDUCTORS: Eindhoven, Netherlands-based semiconductor manufacturer will post earnings of $2.11 per share in the December quarter on revenue of $2.46 billion, up from $1.98 per share on revenue of $2.30 billion same quarter last year. For the December quarter, the forecasts revenue in the range of $2.375-$2.525 billion which, at the midpoint, represents growth of 8% sequentially and 6% year-over-year.

“Management remains upbeat about near-term demand, including 2021, especially regarding its mobile chip business as the firm’s ultra-wideband connectivity solutions are rapidly gaining adoption within newer smartphones. We raise our fair value estimate to $150 from $130, and with shares trading around $134, we view shares as slightly undervalued,” said equity analysts at Cowen and Company.

ON SEMICONDUCTOR: Phoenix, Arizona-based semiconductors supplier company will post earnings of $0.28 per share for last quarter of 2020. The revenue is expected to slump 3.0% on a year-over-year basis.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 1

Ticker Company EPS Forecast
TMO Thermo Fisher Scientific $6.52
OTIS Otis Worldwide Corp $0.59
RYAAY Ryanair -$1.11
ON ON Semiconductor $0.28
AEIS Advanced Energy Industries $1.34
ITUB Itau Unibanco $0.10
CACC Credit Acceptance $7.22
WWD Woodward $0.68
NXPI NXP Semiconductors $2.11
RMBS Rambus $0.25
ARE Alexandria Real Estate Equities $0.48
KRC Kilroy Realty $0.36
CRUS Cirrus Logic $1.86
OMCL Omnicell $0.80
KMPR Kemper $1.55
PCH Potlatch $1.37
KMT Kennametal $0.09
FN Fabrinet $1.04
IBTX Independent Bank $1.33
CBT Cabot $0.87
VRTX Vertex Pharmaceuticals $2.55
BKRKY Bank Rakyat $0.17
BECN Beacon Roofing Supply $0.63
LBRDK Liberty Broadband Lbrdk $1.06
IX Orix $1.95
RBC Regal Beloit Corporation $1.57
MFG Mizuho Financial $0.08

 

Tuesday (February 2)

IN THE SPOTLIGHT: PFIZER, ALIBABA, AMAZON, ALPHABET

PFIZER: The world’s largest pharmaceutical giant is expected to report a profit of $0.52 in the fourth quarter, which represents a year-over-year decline of about 5.4% from the same quarter last year when the company reported $0.55 per share.

The pharmaceutical company, which ranked 64th on the 2020 Fortune 500 list of the largest U.S. corporations by total revenue, will report revenue of $12.85 billion, up 1.3% from the year-ago quarter. According to chief executive officer Albert Bourla, Pfizer is likely to post this year’s earnings in the range of $3 to $3.10 per share.

“We lowered our 4Qe revenue by 5% from $11.6B to $11.0B and EPS by 6% from $0.40 to $0.38 to reflect lower doses delivered in 4Q. We lowered our 4Q COVID vaccine revenues from $683M to $150M (assuming $19.50/dose). Our prior model assumed 35M doses, which we lowered to 7.7M doses based upon CDC distribution allocations,” said David Risinger, equity analyst at Morgan Stanley.

“Our 4Q projections are well below consensus, but we do not see 4Q results as a stock driver given all of the confounding factors. We are instead focused on management’s 2021 targets.”

ALIBABA: The largest online and mobile e-commerce company in the world is expected to earn $2.65 per share for the third quarter, according to equities analysts at Oppenheimer. Oppenheimer also set EPS estimates for FY2021 at $7.48 and FY2022 at $9.33.

The Chinese multinational technology company has surpassed consensus estimates with an average of about 25% in all four previous quarters.

“We expect healthy GMV growth of 16% to drive core of core revenue growth of 18% on better monetization, but slower adjusted EBITA growth of 11% due to continued investment in new initiatives. Stay Overweight on F2022e non-GAAP P/E of 19x; lower price target to $320,” said Gary Yu, equity analyst at Morgan Stanley.

“We forecast total revenue of Rmb216bn (+33.8% YoY, +39.3% QoQ), non-GAAP EBITA of Rmb61.5bn (+21.4% YoY, +49.2% QoQ) with margin at 28.5% and non-GAAP net profit of Rmb57.2bn (+17.7% YoY, +16.1% QoQ) with margin at 26.5%.”

AMAZON: The eCommerce leader for physical and digital merchandise is expected to report a profit of $7.16 in the fourth quarter, which represents a year-over-year decline of over 10% from the same quarter last year when the company reported $6.47 per share.

The Seattle, Washington-based multinational technology giant will report revenue of $120.4 billion, up over 37% from the year-ago quarter. The company expects net sales between $112- $121 billion during the quarter.

Amazon‘s high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest (last-mile delivery, fulfilment, Prime Now, Fresh, Prime digital content, Alexa/Echo, India, AWS, etc),” noted Brian Nowak, equity analyst at Morgan Stanley.

Amazon Prime membership growth drives recurring revenue and a positive mix shift. Cloud adoption hitting an inflection point. Advertising serves as a key area for both further growth potential and profitability flow-through.”

ALPHABET: The parent of Google and the world’s largest search engine, which dominates Internet search activity globally will post earnings of $15.68 per share for last quarter of 2020. The consensus mark for revenues is pegged at $44.09 billion, implying growth of 17.3% from the year-ago reported figure, according to ZACKS Research.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 2

Ticker Company EPS Forecast
HOG Harley Davidson $0.21
WAT Waters $2.87
ST Sensata Technologies $0.78
HUBB Hubbell $1.76
LITE Lumentum Holdings Inc $1.89
AMG Affiliated Managers $3.68
HAE Haemonetics $0.65
MAN ManpowerGroup $1.14
GPK Graphic Packaging $0.27
ABG Asbury Automotive $4.11
ATHM Autohome $9.54
MDC MDC $1.73
PFE Pfizer $0.52
XOM Exxon Mobil $0.01
UPS United Parcel Service $2.14
BP BP $0.08
HCA HCA $3.57
RACE Ferrari $1.24
EMR Emerson Electric $0.68
ETN Eaton $1.21
COP ConocoPhillips -$0.25
IDXX Idexx Laboratories $1.39
SYY Sysco $0.34
MCK McKesson $4.14
MPC Marathon Petroleum -$1.27
SIRI Sirius XM $0.06
MPLX MPLX $0.63
CTLT Catalent $0.55
BR Broadridge Financial Solutions $0.71
ENTG Entegris $0.66
TECH Bio Techne $1.37
BEN Franklin Resources $0.72
LII Lennox International $2.65
MMP Magellan Midstream Partners $0.85
BABA Alibaba $20.59
SANM Sanmina $0.81
MTCH Match Group $0.50
DOX Amdocs $1.14
MANH Manhattan Associates $0.32
POWI Power Integrations $0.44
MKL Markel $9.04
TENB Tenable Holdings Inc $0.05
FEYE FireEye $0.10
EPAY Bottomline Technologies $0.28
ATGE Adtalem Global Education Inc $0.67
MRCY Mercury Systems $0.51
BRKS Brooks Automation USA $0.42
GL Globe Life Inc $1.72
APAM Artisan Partners Asset Management $1.02
AMGN Amgen $3.39
CB Chubb $2.82
EA Electronic Arts EA $2.94
CMG Chipotle Mexican Grill $3.73
PKI PerkinElmer $2.95
STE Steris $1.52
AMCR Amcor PLC $0.17
FBHS Fortune Brands Home Security $1.16
ATO Atmos Energy $1.57
BCH Banco De Chile $0.31
AMZN Amazon $7.16
GOOG Alphabet $15.70
GOOGL Alphabet $15.68
SMFG Sumitomo Mitsui Financial $0.19
ASEKY Aisin Seiki Co $1.19
SNE Sony $0.80
RCL Royal Caribbean Cruises -$5.04
TDG TransDigm $2.09
IT Gartner $0.82
QGEN Qiagen $0.66
NPSKY NSK ADR $0.19
JKHY Jack Henry Associates $0.88
IPHI Inphi $0.88
SWI Solarwinds $0.25
BDC Belden $0.75
ILMN Illumina $1.10
BP BP £0.01

 

Wednesday (February 3)

IN THE SPOTLIGHT: QUALCOMM

QUALCOMM: San Diego, California-based multinational corporation that creates an intellectual property, semiconductors, software, and services related to wireless technology is expected to report a profit of $2.10 in the fiscal first quarter, which represents year-over-year growth of over 110% from the same quarter last year when the company reported $0.99 per share.

The semiconductor company will report revenue of $80.3 billion, up over 60% from the year-ago quarter.

“We see an improvement in smartphone demand in 2021 after declining 5% in 2020 due to COVID-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. Qualcomm’s (QCOM) leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” wrote Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 3

Ticker Company EPS Forecast
ABBV AbbVie $2.85
LAD Lithia Motors $5.23
APTV Aptiv PLC $1.01
HUM Humana -$2.37
BIP Brookfield Infrastructure $0.10
HWM Howmet Aerospace Inc $0.17
GWW Grainger $3.84
SC Santander Consumer USA $1.10
BIIB Biogen $4.75
CHKP Check Point Software Technologies $2.11
LFUS Littelfuse $1.58
BSX Boston Scientific $0.31
DT Dynatrace Holdings $0.13
SPOT Spotify -$0.53
APO Apollo Global Management $0.50
INGR Ingredion $1.46
SMG Scotts Miracle-Gro -$0.77
CPRI Capri Holdings Ltd $0.97
MSGS Madison Square Garden Sports -$1.67
EVR Evercore Partners $1.93
EPD Enterprise Products Partners $0.50
SLAB Silicon Laboratories $0.74
ASH Ashland $0.69
MUSA Murphy USA $2.14
ALGT Allegiant Travel -$2.27
BSMX Santander Mexico Fincl Gp Sab Decv $0.14
CENTA Central Garden Pet -$0.01
RGLD Royal Gold Usa) $0.86
ALGN Align Technology $2.14
AXTA Axalta Coating Systems $0.43
THG Hanover $2.34
AFL Aflac $1.05
KLAC KLA-Tencor $3.18
MAA Mid-America Apartment Communities $0.59
GRUB GrubHub $0.07
AVB AvalonBay Communities $0.85
CTSH Cognizant Technology Solutions $0.90
VVV Valvoline Inc $0.37
RYN Rayonier $0.05
QCOM Qualcomm $2.10
LNC Lincoln National $1.92
MET MetLife $1.52
CTVA Corteva Inc -$0.05
UHAL Amerco $0.12
QRVO Qorvo $2.66
MXL MaxLinear $0.36
ANGI Angie’s List -$0.02
HI Hillenbrand $0.73
CCMP Cabot Microelectronics $1.73
UGI UGI $1.13
KLIC Kulicke And Soffa Industries $0.71
AFG American Financial $2.13
IEX IDEX $1.31
FORM FormFactor $0.39
EBAY eBay $0.83
MITSY Mitsui & Company $7.96
LGND Ligand Pharmaceuticals $0.99
RAMP Liveramp Holdings Inc $0.06
NVO Novo Nordisk A Fs $0.60
TMHC Taylor Morrison Home $0.82
AVY Avery Dennison $2.08
SAVE Spirit Airlines -$1.40
GSK Glaxosmithkline $0.62
IRBT Irobot $0.21
COTY Coty $0.09
PAG Penske Automotive $2.11
COHR Coherent $0.78
DTE DTE Energy $1.33
ENSG Ensign $0.79
FLO Flowers Foods $0.24
SKM Sk Telecom $0.22
IBA Industrias Bachoco Sab De Cv $0.63
NEU NewMarket $5.60
BBD Banco Bradesco $0.11
PYPL PayPal $1.00
NMR Nomura $0.18
BSBR Banco Santander Brasil $0.17
SAN Banco Santander $0.06

 

Thursday (February 4)

Ticker Company EPS Forecast
GPI Group 1 Automotive $5.94
ALXN Alexion Pharmaceuticals $2.58
NYT New York Times $0.34
BCE BCE (USA) $0.59
BMY Bristol-Myers Squibb $1.41
NJR New Jersey Resources $0.46
PM Philip Morris International $1.21
CMI Cummins $2.80
TPR Tapestry Inc $0.99
ARW Arrow Electronics $2.67
CMS CMS Energy Corporation $0.55
BAX Baxter International $0.75
YUM Yum Brands $1.01
CG Carlyle $0.44
CLX Clorox $1.77
AGCO AGCO $1.12
MPW Medical Properties $0.27
ABB ABB $0.18
JHG Janus Henderson Group PLC $0.73
CI Cigna $3.66
MMS Maximus $0.91
MRK Merck & Co $1.38
WEC Wisconsin Energy $0.73
XYL Xylem $0.68
TW Towers Watson $0.33
PENN Penn National Gaming $0.26
HSY Hershey $1.43
PH Parker-Hannifin $2.60
ICE Intercontinental Exchange $1.08
BSAC Banco Santander Chile $0.34
RL Ralph Lauren $1.64
SNA Snap-On $2.94
DGX Quest Diagnostics $3.98
ODFL Old Dominion Freight Line $1.57
COR CoreSite Realty $0.45
WD Walker & Dunlop $1.47
TKR Timken $0.92
IP International Paper $0.81
AME Ametek $1.03
BLL Ball $0.78
PBH Prestige Brands $0.77
ABC AmerisourceBergen $1.94
APD Air Products & Chemicals $2.18
LEA Lear $3.43
LANC Lancaster Colony $1.48
PTON Peloton Interactive, Inc. $0.08
SU Suncor Energy USA -$0.17
SKX Skechers USA $0.32
MTD Mettler Toledo International $8.72
PCTY Paylocity $0.25
ARWR Arrowhead Research -$0.22
SNAP Snap -$0.07
FTV Fortive Corp $0.62
NWSA News Corp $0.09
DECK Deckers Outdoor $7.06
EXPO Exponent $0.28
FTNT Fortinet $0.97
ALL Allstate $3.83
MDU MDU Resources $0.54
SYNA Synaptics $2.13
TDC Teradata $0.25
FLT Fleetcor Technologies $2.82
NBIX Neurocrine Biosciences $0.59
POST Post $0.71
CSL Carlisle Companies $1.16
NOV National Oilwell Varco -$0.14
GILD Gilead Sciences $2.01
WERN Werner $0.78
ESS Essex Property $1.02
CPT Camden Property $0.35
MPWR Monolithic Power Systems $1.24
WWE World Wrestling Entertainment $0.29
LPLA LPL Financial $1.33
OFC Orate Office Properties $0.38
ZEN Zendesk $0.15
MTX Minerals Technologies $0.91
PFPT Proofpoint $0.42
MSI Motorola Solutions Msi $2.74
COLM Columbia Sportswear $1.24
ATVI Activision Blizzard $1.17
F Ford Motor -$0.08
UNM Unum $1.19
HIG Hartford Financial Services $1.33
PRU Prudential Financial $2.57
DXC DXC Technology Co $0.54
KB Kb Financial $1.50
CHT Chunghwa Telecom $0.36
MCHP Microchip Technology $1.58
NWS News $0.09
AIV Apartment $0.67
SSUMY Sumitomo ADR $0.26
DB Deutsche Bank -$0.03
OHI Omega Healthcare Investors $0.41
KWHIY Kawasaki Heavy Industries ADR -$0.18
PFSI Pennymac Financial Services $5.90
TRNO Terreno Realty $0.37
BCO Brinks $1.04
VSAT Viasat $0.02
YAMCY Yamaha DRC $0.47
RDSA Royal Dutch Shell £0.17
NRZ New Residential Investment $0.33
RICOY Ricoh Company -$0.06
WYNN Wynn Resorts -$2.29
ITOCY Itochu ADR $1.87
TOT Total $0.46
MYGN Myriad Genetics -$0.12
BDX Becton, Dickinson and Co. $3.07
ARNC Arconic Inc $0.32
TM Toyota Motor $3.65
RHHBY Roche Holding ADR $1.28
CDW CDW $1.53
ARRY Array Biopharma $0.05
HL Hecla Mining $0.02
TWOU 2U -$0.10
ALNY Alnylam Pharmaceuticals -$1.88
DD DuPont $0.85
CARR Carrier Global Corp $0.37
OMVJF OMV $0.74
TPL Texas Pacific Land $4.54
AUOTY AU Optronics $0.27

 

Friday (February 5)

Ticker Company EPS Forecast
HRC Hill-Rom $1.05
ADNT Adient PLC $0.87
TT Trane Technologies PLC $0.92
LAZ Lazard $0.97
SNY Sanofi $0.69
EL Estée Lauder $1.68
LIN Linde PLC $2.16
AON AON $2.46
ZBH ZIMMER BIOMET HDG. $2.07
ITW Illinois Tool Works $1.79
REGN Regeneron Pharmaceuticals $8.23
CAH Cardinal Health $1.44
SPB Spectrum Brands $0.75
BERY Berry Plastics $0.94
HMC Honda Motor $0.75
NFG National Fuel Gas $0.99
CHBAY Chiba Bank ADR $0.77
SOMLY Secom ADR $0.26
ASX Advanced Semiconductor Engineering $0.12
BNPQY BNP Paribas ADR $0.55
FE FirstEnergy $0.50

 

GOOG Stock Could Offer 10% Discount After Pullback

The Alphabet Inc (Goog) is building a bearish retracement within a strong uptrend. Our article reviews the key bull and bear lines.

This will determine whether a deeper pullback against the trend will take place. Or will the bulls manage to continue higher in the trend.

Price Charts and Technical Analysis

Google 18.01.2021 daily chart

The GOOG stock is showing a head and shoulders reversal chart pattern (red boxes). The support line (green) is the main decision zone for a potential reversal.

  • A bearish breakout (orange arrows) confirms the deeper bearish retracement towards the long-term moving averages and Fibonacci levels.
  • It also confirms the deeper wave 4 (pink) development rather than the shallower wave 4 (grey).
  • An immediate breakout (green arrows) above the resistance (orange) indicates a potential uptrend continuation.
  • The Fibs are expected to act as a bouncing spot (blue arrows).
  • Only a deeper retracement places the uptrend in question (yellow & red circles).

On the 4 hour chart, the sideways price action is an ABC (orange) pattern. The main question is whether the ABC pattern is complete OR will price action expand it.

  • The end of the ABC is confirmed by a bullish breakout.
  • The continuation of the ABC pattern can take place with 2 variants:
    • ABCDE triangle chart pattern
    • Deeper ABC retracement after bearish breakout

In all cases, an uptrend is expected eventually. Unless price pushes below the $1,500 round level.

Google 18.01.2021 4 hour chart

Good trading,

Chris Svorcik

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

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

 

Alphabet’s Target Price Raised to $2,050 at Morgan Stanley; $2,450 in Best Case

Morgan Stanley raised their stock price forecast on Alphabet Inc to $2,050 from $1,880, assigning an “Overweight” rating and said it expects 20% online advertisement growth in 2021.

Internet giant’s advertising revenues rebounded in the third quarter of last year, with YouTube advertising revenues growing more than 30% to $5 billion from the same period a year ago. The California-based multinational conglomerate also benefited from the strong momentum in Play Store as sales surged during the COVID-19 pandemic lockdown.

“We are also bullish GOOGL ($2,050 price target, 20% upside) on the travel recovery (12-15% of paid search) and strong YouTube trends from an improved direct response offering/more stable branded ad market. We are also optimistic about the sum of the parts narrative as we see Google Cloud disclosure in 1Q:21 shining better light on this potential $375 billion asset,” noted Brian Nowak, equity analyst at Morgan Stanley.

“For perspective, this would imply GOOGL (ex-Cloud) is currently trading at 8x core EBITDA for 11% CAGR ’21-’24 EBITDA growth. Sum of the parts would bring our $2,450 bull case (40% upside) into play.”

Morgan Stanley gave a target price of $2,450 under a bull-case scenario and $1,465 under the worst-case scenario. Other equity analysts also recently updated their stock outlook. Alphabet had its price target upped by Robert W. Baird to $2,000. Argus increased their price target to $1,850 from $1,620 and gave the company a buy rating. Credit Suisse Group raised their target price to $1,950 from $1,850 and gave the stock an outperform rating. JP Morgan raised the stock price forecast to $2,050 from $1,870 and gave the stock an overweight rating.

Twenty-eight analysts who offered stock ratings for Alphabet in the last three months forecast the average price in 12 months at $1,944.04 with a high forecast of $2,250.00 and a low forecast of $1,700.00. The average price target represents a 12.62% increase from the last price of $1,726.13. From those 28 equity analysts, 26 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Alphabet’s shares closed 1.51% lower at $1726.13 on Monday; however, the stock is rose over 30% in 2020.

“Google Websites growth is likely to rebound in 2021 as we believe there are several underappreciated products driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization,” Morgan Stanley’s Nowak added.

“Continued expense discipline leads to operating leverage and upward revisions on EPS estimates.”

Google Testing 38.2% Fib Support After 8% Decline

Google (GOOG) made a bullish breakout above the bull flat pattern as expected in our previous wave analysis. But a bearish pullback is taking place soon after price confirmed a higher high.

Price action is now testing the key support trend line (green) and the Fibonacci support. Let’s review what to expect.

Price Charts and Technical Analysis

Google 23.12.2020 4 hour chart

Google seems to be in a wave 4 (pink) pattern. This means that the 38.2% Fibonacci retracement level is a key support zone within the uptrend.

A bullish bounce at the Fib could confirm our view. But a breakout above the resistance trend line (orange) and 21 ema zone is needed to indicate the end of wave 4 and start of wave 5 (pink).

Even a deeper retracement towards the 50-61.8% Fibonacci zone could be part of a wave 4. But a break below the 61.8% Fib certainly places the uptrend on hold (yellow circle) whereas a break below the top of wave 1 invalidates it (red circle).

On the 1 hour chart, price action is building an ABC (grey) pattern. Which could complete wave 4 (pink) if price action can break above the local resistance (orange boxes) and long-term moving averages.

A break below the support trend line (green) indicates a push towards the 50% Fibonacci level mentioned on the 4 hour chart.

The bullish targets are first $1,800, followed by the previous top at $1,846 and the -27.2% Fibonacci target at around $1,950.

Google 23.12.2020 1 hour chart

Good trading,

Chris Svorcik

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

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

 

Stocks Move Higher As Stimulus Talks Make Progress

Stimulus Hopes Push Stocks Higher

S&P 500 futures are moving higher in premarket trading as traders are optimistic on the current stimulus talks.

It looks like negotiations between Republicans and Democrats are progressing well, and there’s a chance that a new coronavirus aid package will be approved before Christmas.

Tomorrow, the U.S. Fed will announce its Interest Rate Decision. The rate is expected to stay unchanged so traders will focus on Fed’s commentary.

The Fed may decide to increase purchases of long-dated bonds in order to put pressure on their yields which will be bullish for stocks.

Big Tech May Face Fines Of Up To 10% In EU

EU is expected to unveil new rules which will limit the power of tech giants like Facebook, Apple, Amazon and Alphabet.

Big Tech companies may face fines of up to 10% of annual turnover if they fail to comply with new rules which deal with antitrust concerns, disinformation, hate speech and other important areas.

It should be noted that EU members will still have to negotiate the final set of the rules which may take months or even years. However, it is already clear that Big Tech will face increased regulation in this decade.

At this point, investors remain confident that tech companies will be able to solve their regulatory problems, but it should be noted that most Big Tech stocks are trading below highs that were reached in early September.

Oil Ignores Grim Forecasts

Yesterday, OPEC cut its oil demand forecast for 2021 from 96.26 million barrels per day (bpd) to 95.89 bpd. Today, IEA also decided to cut its oil demand forecasts.

Both OPEC and IEA noted that current virus containment measures in Europe put material pressure on oil demand.

Interestingly, oil traders were able to shrug off near-term demand concerns, and WTI oil is trying to get to the test of the recent highs near $47.70.

Energy-related stocks suffered a serious sell-off during yesterday’s trading session, and they will have a good chance to rebound today.

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

Google Bull Flag Pattern Aims at $1,900 Target Zone

Google made a bullish breakout, pullback, and continuation above the 21 ema zone (blue box). Now price action is sailing above the previous top. Can the uptrend continue higher?

Price Charts and Technical Analysis

Google daily chart

Yes, the current bull flag chart pattern suggests that more upside is likely. In fact, even a retracement is likely to find buyers at the 38.2% or 50% Fibonacci support levels.

But price action does not need to retrace. Google could also break the flag and make an immediate bullish swing higher.

The main target zone of both Fibs is located at the -27.2% Fibonacci target around $1,900 – $1,905.A break above the Fractal at $1800 should confirm it.

On the 4 hour chart, we can see an internal 5 wave pattern (purple) within wave 3 (pink). This indicates that more wave 345 breakout, pullback and continuations are expected.

A break below the 50% Fibonacci and top of wave 1 (green box) does invalidate (red circle) the current wave pattern.

Google 4 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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

Mixed Bag of Quarterly Reports from Tech-Heavyweights Could Pressure US Stock Indexes on Friday

U.S. stock indexes posted a volatile reaction to a mixed bag of quarterly reports from top-tier technology companies after the closing bell on Thursday. Yesterday’s late reports came amid turbulence on Wall Street, with soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimming the outlook for an economic recovery and knocking over 3% off the S&P 500 so far this week.

After the cash market close on Thursday, Alphabet (Google) rallied, Apple sank, Twitter tumbled and Facebook dropped. Share swings in these companies following their earnings reports after the bell sent exchange-traded funds tracking the S&P 500 and NASDAQ Composite down about 1% each, suggesting downside pressure on Wall Street on Friday.

Alphabet Sales Growth Revived as Advertisers Flock Back to Google

Google parent Alphabet Inc on Thursday powered back to sales growth, beating analysts’ estimates for the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads.

Alphabet shares, up 13% on the year, rose 8.5% after hours to $1,689.89.

Apple’s Late iPhone Launch Temporarily Wiped $100 Billion Off Its Stock Value

The late launch of new 5G phones caused Apple Inc’s customers to put off buying new devices, leading the company on Thursday to report the steepest quarterly drop in iPhone sales in two years.

Apple fell over 5% at one point in after-hours trade, wiping $100 billion from its stock market value.

Since 2013, Apple has delivered new iPhones each September like clockwork. But pandemic-induced delays pushed the announcement back a month, with some devices still yet to ship.

Even as booming sales of Macs and AirPods boosted overall revenue and profit above what analysts had expected, iPhone sales dropped 20.7% to $26.4 billion.

Twitter Warns US Election Could Affect Ad Sales, Shares Drop 16%

Twitter Inc on Thursday added fewer users than Wall Street had expected and said a rise in expenses would accelerate in the fourth quarter, sending its shares tumbling 16%.

The San Francisco-based social media company said it expected expenses to increase by close to 20% in the fourth quarter compared with a year ago due to an increase in investments.

The company also cautioned that it was hard to predict how advertisers would react as the U.S. presidential election nears on November 3.

Shares of Twitter fell to $44.00 in after-market trading.

Facebook Anticipates Tougher 2021 Even as Pandemic Boosts Ad Revenue

Facebook Inc on Thursday warned of a tougher 2021 despite beating analysts’ estimates for quarterly revenue as businesses adjusting to the global coronavirus pandemic continued to rely on the company’s digital ad tools.

The world’s biggest social media company said in its outlook that it faced “a significant amount of uncertainty,” citing pending privacy changes by Apple and a possible reversal in the pandemic-prompted shift to online commerce.

“Considering that online commerce in our largest ad vertical, a change in this trend could serve as a headwind to our 2021 ad revenue growth,” it said.

Shares of the company were lower in extended trading.

Amazon Sees Pandemic Boosting Holiday Sales and Investment in Delivery

Amazon.com Inc on Thursday forecast a jump in holiday sales – and costs related to COVID-19 – as consumers continued to shop more online during the pandemic.

A company executive added that heightened spending on delivery infrastructure would likely continue over years, and shares fell 2% in after-hours trading.

For the fourth quarter, Amazon said it expects net sales of $112 billion to $121 billion. That would mark the company’s first over $100 billion and follows a third-quarter revenue beat that analysts such as eMarketer’s Andrew Lipsman did not expect.

“While it was clear that the pandemic-driven shift to e-commerce would keep Amazon’s topline elevated, it surprised by easily surpassing an already high bar,” Lipsman said.

Revealing Summary

Without Facebook, Apple, Amazon, Netflix and Alphabet – the so-called FAANG stocks – the S&P 500 would be down about 4% in 2020, compared with the index’s 2% year-to-date rise, according to a research note from Bespoke Investment Group on Thursday.

“Due to both the huge weight of these stocks and their outperformance, the market has become more reliant on them than ever before for its gains,” according to Bespoke.

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

Big Week for Big Tech

On October 28, the CEOs of Facebook (Mark Zuckerberg), Google (Sundar Pichai), and Twitter (Jack Dorsey) are set to testify before a Senate hearing about how these tech giants manage hate speech, misinformation, and privacy on their respective platforms. This will be a closely-followed hearing, considering that it comes mere days before the hotly contested US presidential elections on November 3.

Then, a day after the Senate hearing, Amazon, Apple, Alphabet (Google’s parent company), Facebook, and Twitter are all scheduled to release their respective Q3 results after US markets close on October 29.

Given that these tech titans are set to feature prominently in market headlines this week, such prospects may make for volatile trading, and the price swings may be captured within the FXTM Social Media index.

FXTM Social Media Index beats major US benchmarks

This index, which comprises four, evenly-weighted constituents, namely Google, Facebook, Twitter, and Snapchat, has far outperformed the gains seen in the major US benchmark indices so far in October. Since US markets closed on September 30th, the FXTM Social Media index has risen by 8.3 percent, even after Monday’s selloff. Compare that to the Nasdaq Composite index, which managed 1.71 percent during the same period, while the S&P 500 index has a month-to-date climb of 1.13 percent.

The FXTM Social Media index’s gains of late have been amplified by Snapchat’s inclusion. Shares of the loss-making social media platform have soared by an astonishing 58 percent on a month-to-date basis, setting multiple record highs after reporting a blowout Q3 quarterly earnings last week.

At home and bored: Social media’s dream

Advertisers ramped up their spending on Snapchat, knowing that users are using the platform a lot more amid the pandemic, given the disruptions to their daily routines and physical interactions. Snapchat has already added 31 million new daily active users in the first nine months of 2020, all while managing to steer clear of the negative headlines that have engulfed other platforms such as TikTok and Facebook.

Should Alphabet, Facebook, and Twitter also announce a Snapchat-esque Q3 earnings bonanza, one that’s fueled by ad spending, that could spell even more upside for the FXTM Social Media index before the week is up, provided that the Senate’s grilling of Zuckerberg, Pichai, and Dorsey on Wednesday do not heighten concerns surrounding these companies.

A bumpy upwards climb?

From a technical perspective, the FXTM Social Media index is now trading at relatively healthier levels after yesterday’s pullback, given that its 14-day relative strength index has pulled away from the 70 mark, which typically denotes overbought conditions. Still, this index is not immune to broader sentiment, which could see more market angst as investors’ concerns over looming US political risks are laid bare.

And the fundamentals of these social media giants could be clouded by the bipartisan campaign against Big Tech. Note that Zuckerberg and Dorsey are set to attend a separate Senate hearing on November 17th, which is two weeks after the US elections polling day, while Google is contending with a massive antitrust lawsuit by the US Justice Department.

While the legislative scrutiny could weigh on the performance of social media stocks, these downside risks may not be fully manifested for years more. As long as the tailwinds in this pandemic era remain intact, there could potentially be more gains to be had once we get to the other side of the US elections.

Written on 27/10/20 02:00 GMT by Han Tan, Market Analyst at FXTM

For more information, please visit: FXTM


Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

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Did Alphabet Make Shady Deal With Apple?

Google parent Alphabet Inc. (GOOGL) reports Q3 2020 earnings after Thursday’s U.S. closing bell, with analysts expecting a profit of $11.14 per-share on $42.81 billion in revenue. That would mark a modest 10% earnings-per-share (EPS) increase compared to the same quarter in 2019. The stock fell after a mixed Q2 report in July but bottomed out quickly, ahead of a strong advance that posted an all-time high at 1726.10 in September.

Department Of Justice Files Anti-Trust Suit

The U.S. Department of Justice filed an anti-trust suit against Alphabet last week, alleging “Google has unlawfully maintained monopolies in search and search advertising by (1) entering into exclusivity agreements that forbid pre-installation of any competing search service and (2) entering into tying and other arrangements that force pre-installation of its search applications in prime locations on mobile devices and make them undeletable”.

DoJ intends to target a questionable deal with an alleged co-conspirator to prosecute their anti-trust case. According to The New York Times, the company pays Apple Inc. (AAPL) an estimated $8 to $12 billion per year to make Google the exclusive search engine for all their devices and services, including the iPhone and Siri. More importantly, this is alleged to be Alphabet’s biggest single payout, accounting for as much as 21% of Apple’s annual profits.

Wall Street And Technical Outlook

Wall Street consensus is utterly euphoric, with a ‘Strong Buy’ rating based upon 31 ’Buy’ and 1 ‘Hold’ recommendation. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $1,600 to a Street-high $2,202 while the stock opened Monday’s U.S. session just $15 above the low target. This suggests Alphabet is undervalued but the lawsuit could weigh on buying pressure in coming months.

The stock reversed in September at a rising highs trendline going back to 2015 and sold off to the 200-day moving average. It bounced off that support level into October and has now recovered about 75% of the downdraft. Accumulation readings are perking up after garden variety profit-taking and a strong quarterly report could close the distance into the prior high. Even so, it will be tough to overcome trendline resistance between now and year’s end.

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

A Wall of Worry Provides a Great Buying Opportunity for NFLX and SNAP

For a bull trend to perpetuate it occasionally needs to climb a wall of worry. Bearish investors are always on the lookout for a theme that will provide them with an opportunity to short a stock or sector. If prices rise, investors who shorted-shares will need to cover, perpetuating the bull-trend rally. This concept has recently played out when it comes to large-tech and communication stocks which have seen their stock prices temporarily decline as regulatory scrutiny has become the next wall of worry.

Congress is Always Looking to Flex in Muscles

Congress always needs a whipping boy. Social media outlets continue to be the target of congressional frustration and more recently have been drawing the ire of several oversight committees. Most recently, Facebook and Google have been accused of engaging in anti-competitive, monopoly-style tactics. The House of Representations antitrust panel found during a 16-month investigation that these two companies relied on dubious, harmful tactics to achieve their dominance in web search and social networking. The Department of Justice announced on October 20, that it will file an antitrust lawsuit against Google.

Social media platforms, like Facebook, and Snapchat,  have repeatedly found themselves in the United States government’s crosshairs as their power has continued to grow since the 2016 elections. Social media companies have no designated oversight authority that regulates their activities.  If these companies get slapped with new rules, regulations, and fines it could trigger a broad market selloff for stocks. This fear has recently been priced into some of the more attractive large-cap tech shares which have provided an excellent buying-point within a long-term bull trend.

Buying Opportunity in Snapchat

Snap Inc, is an American company and maintains several products and services, namely Snapchat, Spectacles, and Bitmoji. The share price is in the midst of a bull trend but recently pulled-back into oversold-territory as the wall of worry gained traction. SNAP is scheduled to release quarterly earnings results after the closing bell on October 20, 2020. The social media concern is expected to report earnings per share of  $-0.05 versus $-0.04 a year ago, on revenue of $549 million. Analyst estimates of SNAP’s earnings have remained unchanged over the past 30-days, and the company is expected to begin turning a profit in 2021.

From a technical analysis perspective, SNAP share price is in a strong uptrend as seen on the combo chart of the 30-minutes and daily chart provided. I see SNAP with potential measured move using a Fibonacci extension to reach $39 per share before the year-end.

Notice the oversold zone on the SNAP chart shaded lime green. That is the first oversold pullback after a new trend takes place. The 30-minute price chart saw both an RSI below 30 and a fast stochastic below 20, which is an ideal low-risk entry point. The daily chart of SNAP also shows that the share price is fast approaching its all-time high which occurred right after its IPO. A break of this level will lead to an acceleration in price to its target Fibonacci level near $39 per share.

Netflix Has its First Oversold Pullback in a Fresh New Uptrend

I believe that Netflix’s business model of providing subscriptions to streaming entertainment is benefitting substantially from COVID-19. The company is scheduled to report financial results after the bell on October 20, 2020. The company is expected to deliver earnings per share of $2.13 versus $1.47 per share a year ago. Revenue is forecasted to rise to $6.38 billion.  The average earnings per share estimate have climbed slightly more than 1% during the last 7-days. Growth estimates are expected to expand by nearly 45%. Global subscriptions are forecast to rise sharply higher as the U.S. unemployment rate surged and more people were stuck at home during the pandemic.

The technical picture shows that NFLX recently dipped as the wall of worry drove prices down temporarily. NFLX is in a fresh new uptrend and just had its first oversold zone pullback. The 30-minute chart reflects a decline where the fast stochastic printed a reading below 20 representing an oversold situation. A breakout of the tight range capped by resistance near $560 a share will lead to a test of target resistance with an upside Fibonacci target of $742.

The Bottom Line

For stock prices to continue to rally they generally need to take a pause. During these pauses, new information can arise that allows bearish investors to short these stocks generating a wall of worry. For me, this represents an excellent opportunity to purchases shares especially during their first dip in a fresh uptrend. Both SNAP and NFLX have experienced recent dips, generated by the wall-of-worry associated with new potential congressional oversight concerning antitrust regulations.

Both NFLX and SNAP are scheduled to deliver financial results after the closing bell on October 20. Both stocks have exhibited behaviors that show that the bull-trend is intact and I expect the price to continue to target higher Fibonacci target levels as these stocks continue to climb the wall-of-worry.

Want to learn how we help traders and investors stay ahead of these bigger trends and setups?  Visit www.TheTechnicalTraders.com to learn more about the Technical Trader, my swing trade analysis and alerts, and the Technical Investor, my passive long-term signals service. Stay ahead of the market and protect your wealth by signing up today!

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

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

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.

 

GOOG Starts Bullish Rally towards $1650 Target Zone

Alphabet stock (GOOG) is showing its bullishness by attempting to break above the 21 ema zone. The bullish rally started after price action completed a bearish pullback at the 50% Fibonacci retracement level. What are the main targets?

Price Charts and Technical Analysis

Google stock daily chart

GOOG’s first major obstacle is the head and shoulders reversal chart pattern (red boxes). Price is expected to make a light pullback at that zone but then continue higher towards the Wizz target (orange and green arrows).

Only if price action were to show very strong bearish pressure (red arrow) at the resistance would the bullish outlook change. In that case, a deeper pullback towards the 61.8% Fibonacci level is possible.

A bearish bounce at the Wizz 7 target could indicate a larger ABC (orange) or ABCDE correction within wave 4 (purple). A break above the Wizz 7 confirms the wave 5 (purple).

The 4 hour chart has price action showing a break out above the local resistance (red). The blue candles from Elliott Wave indicators confirm the bullishness.

A first target is located at the 61.8% Fib and -100% Fib target (red circle). A bearish bounce at either of the two targets (red circle) indicates a wave B (orange). A break above those targets confirms a wave 3 and much more upside.

The main method to recognize whether price is in a real trend or larger correction is to keep an eye on the patterns after price reaches the targets:

  • Strong bearish price action indicates reversal.
  • Sideways price movement indicates bullish continuation.

Google 4 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter.

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

Alphabet (GOOG) Strong Decline Puts Bulls in Waiting Mode

Alphabet (GOOG) has made a serious decline in the past trading days. The bearish momentum is strong and testing the Fibonacci levels and long-term moving averages. Can GOOG make a bullish recovery?

Price Charts and Technical Analysis

Google daily chart

Probably yes. The support zone is very strong (blue boxes) and a bullish bounce is likely to take place. The 50-61.8% Fibonacci retracement levels combined with the 144-233 emas should send price action higher. The next question is whether price will be able to fully break above the 21 ema zone. Also here a bounce is probable and the bears could push it lower to test the previous bottom. This is when the moment of truth for the Alphabet stock arrives. Will price action break through the bottom for a larger bearish correction (orange arrows)? Or will it bounce and test the previous top (green arrows)? The answer depends on the chart and price patterns that emerge around the key support zone (purple box).

Alphabet is likely to make a bullish bounce due to the pinbar. The bullish wick at the bottom of the current candlestick is indicating buying pressure. But as price moves up, it will face hefty resistance from the head and shoulders zone (red boxes) and the consolidation zone (orange box). A bearish break below the -61.8% Fibonacci (green box) confirms a deep bearish ABC (orange) pattern. A bullish bounce at the green box makes a bullish ABC (purple) more likely.

Google 4 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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