NASDAQ at Highs but Watch for a Retracement

The US100 – NASDAQ has been trading in an upper range indicating a strong uptrend. This is the case partially to Yen getting weaker.

We can spot 2 POC zones. The first zone 13495-13600 is a shallow retracement, usually seen in strong trends. 38.2 Fib is making a confluence with W L4. On the other hand, we can see POC2 at 88.6/M L3 at 12794.Watch for rejections in any of the zones towards 14050 followed by 14109 and 14300. Breakout will happen above 14050. W H5 is 14366 which is the weekly target after a breakout.

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

Cheers and safe trading,

Nenad

 

European Equities: Corporate Earnings and Economic Data from the U.S in Focus

Economic Calendar:

Thursday, 15th April

German CPI (MoM) (Mar) Final

French CPI (MoM) (Mar) Final

French HICP (MoM) (Mar) Final

Italian CPI (MoM) (Mar) Final

Friday, 16th April

Eurozone Core CPI (YoY) (Mar) Final

Eurozone CPI (YoY) (Mar) Final

Eurozone CPI (MoM) (Mar) Final

Eurozone Trade Balance (Feb)

The Majors

It was a mixed day for the European majors on Wednesday.

The DAX30 fell by 0.17%, while the CAC40 and the EuroStoxx600 gained 0.40% and 0.19% respectively.

Corporate earnings results delivered support to the CAC40 and the EuroStoxx600, with LVMH announcing record high sales.

Positive bank earnings results from the U.S also provided support. Results on Wednesday muted the news of the U.S hitting pause on the roll-out of the Johnson & Johnson vaccine over blood clot concerns.

For the DAX, the talk of downward revisions to growth forecasts weighed mid-week, however.

The Stats

It was a busier day on the economic calendar on Wednesday.

Industrial production figures for the Eurozone and finalized inflation figures from Spain were in focus.

In February, industrial production across the Eurozone fell by 1.0%, reversing a 0.8% increase from January. Economists had forecast a 1.1% fall.

According to Eurostat,

  • Production of capital goods fell by 1.9%, energy by 1.2%, durable consumer goods by 1.1%, and intermediate goods by 0.7%.
  • Non-durable consumer goods production fell by a more modest 0.1% in the month.
  • By member state, France (-4.8%), Malta (-3.8%), and Greece (-2.5%) registered the largest monthly declines.
  • Ireland recorded the largest increase, rising by 4.2% in February.

Compared with February 2020, industrial production was down by 1.6%. In January, production had been up by 0.1% year-on-year.

  • The production of non-durable consumer goods slid by 4.3% when compared with February 2020.
  • Capital goods production (-2.2%) and energy production (-1.5%) were also a drag on the headline number, year-on-year.
  • While the production of intermediate goods slipped by 0.1%, the production of durable consumer goods rose by 0.7%.
  • Malta (-10.9%), Estonia (-8.9%), and France (-6.4%) registered the largest decreases when compared with February 2020.
  • By contrast, Ireland (+41.4%) and Lithuania (+9.7%) registered the largest increases year-on-year.

On the inflation front, Spain’s annual rate of inflation accelerated to 1.3% in March, which was in line with prelim figures. In February, inflation had stalled.

The Harmonized Index for Consumer Prices increased by 1.2% in March, which was also in line with prelim figures. In February, the Index had fallen by 0.1%.

From the U.S

It was a relatively quiet day, with economic data limited to import and export price index figures.

The stats had a muted impact on the majors, however.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. BMW slid by 1.62%, with Daimler falling by 0.82%. Continental and Volkswagen saw relatively modest losses of 0.44% and 0.30% respectively.

It was a bullish day for the banks, however, with U.S corporate earnings results delivering support. Deutsche Bank rose by 0.72%, with Commerzbank ending the day up by 0.89%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 0.66% and by 0.64% respectively. Soc Gen led the way, however, gaining 1.09%.

It was a mixed day for the French auto sector. Stellantis NV fell by 0.63%, while Renault rose by 1.25%.

Air France-KLM followed Tuesday’s 5.04% slide with a 2.06% loss, while Airbus SE recovered a 1.50% loss with a 1.85% gain.

On the VIX Index

It was back into the green the VIX on Wednesday, marking a 2nd daily gain in 6-sessions.

Reversing a 1.54% fall from Tuesday, the VIX rose by 2.04% to end the day at 16.99.

The NASDAQ and the S&P500 fell by 0.99% and by 0.41% respectively, while the Dow rose by 0.16%.

VIX 150421 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. Finalized March inflation figures for France, Germany, and Italy are due out.

Barring a marked upward revision, however, we don’t expect the numbers to provide the majors with direction.

Later in the day, economic data from the U.S will influence, however.

Key stats include the weekly jobless claims, retail sales, and Philly FED Manufacturing PMI numbers.

Other stats due out of the U.S include NY Empire State Manufacturing, business inventory, and industrial production figures. We don’t expect too much influence from these stats, however.

On the day, corporate earnings will also be in focus. Bank of America, BlackRock, Citigroup, and PepsiCo are amongst the big names announcing results later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 63 points, while the DAX was down by 15 points.

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

Volatile Wall Street Tech Trade Expected to Drag Asia-Pacific Shares Lower on Opening

The major Asia-Pacific stock indexes are expected to open lower on Thursday, following Wall Street’s lead. The benchmark S&P 500 Index fell from its record high in a volatile trade on Wednesday amid a sharp drop in technology shares. The tech-weighted NASDAQ Composite posted a dramatic technical reversal top and the blue chip Dow was higher.

Ahead of the Asia-Pacific opening, key global stock indexes scaled new peaks on Wednesday after upbeat U.S. and European earnings pointed to a strong recovery from the coronavirus pandemic, while the dollar dipped to three-week lows as Treasury yields eased off recent highs.

Wednesday’s Recap

Shares in China led gains in the Asia-Pacific region during Wednesday’s trade as Chinese tech stocks listed in the city jumped. Shares of Chinese tech firms listed in Hong Kong saw a rebound on Wednesday after 12 companies, including Baidu, JD.com and Meituan, signaled compliance with antitrust laws.

That development came just a day after Beijing gave so-called platform companies a month to examine their actions and rectify any anti-competitive practices. Shares of most Chinese tech giants in Hong Kong tumbled on Tuesday amid those regulatory fears.

Australia Shares Hit 13-Month High on Gold, Tech Boost

Australian shares climbed to a 13-month peak on Wednesday, led by gains in gold stocks and technology firms.

Australia’s gold subindex posted its biggest jump since January 4 as bullion prices, a traditional hedge against inflation, rebounded from a more than one-week low. Newcrest, the country’s largest gold miner, added 4.2%.

Resolute Mining soared more than 20%, its biggest surge in more than a year, as a lease for its Bibiani gold mine in Ghana was restored after being terminated last month.

Technology stocks also surged 2.1% on the back of the U.S. consumer price data, tracking overnight gains on the NASDAQ.

Buy now, pay later bellwether and index heavyweight Afterpay jumped as much as 3.6% to its highest gains on the NASDAQ.

Japanese Shares End Lower as Virus Resurgence Hits Risk Appetite

Japanese shares ended lower on Wednesday, weighed down by cyclicals, as a resurgence in COVID-19 cases cast doubts over prospects of economic rebound, while falling interest rates dragged on banking and insurer stocks.

“The expectations for the reopening of the economy shrank because rollouts of vaccines in Japan is much slower than other countries, while the number of new COVID-19 cases is on the rise,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

“The interest rates could fall if the economy slows down. That has sent bank and insurer shares lower on Wednesday.”

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

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – In Position to Post Closing Price Reversal Top

June E-mini NASDAQ-100 Index futures are getting pounded late in the session, putting the technology-based index in a position to post a potentially bearish closing price reversal top. The plunge in tech stocks is offsetting the first batch of corporate earnings from banks that largely exceeded expectations.

Tesla, a NASDAQ component, fell more than 3%. Big Tech stocks including Amazon, Facebook, Netflix and Apple all traded at least 1% lower.

At 19:50 GMT, June E-mini NASDAQ-100 Index futures are trading 13801.25, down 174.50 or -1.25%.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, late in the session, the index is trading lower which could be a sign that momentum is getting ready to shift to the downside.

A trade through 14029 will signal a resumption of the uptrend. A trade through 12609.75 will change the main trend to down.

The minor trend is also up. A move through 13512.50 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 13512.50 to 14029.00. Its 50% level at 13770.75 is currently being tested.

The short-term range is 12609.75 to 14029.00. Its retracement zone at 13319.25 to 13152.00 is the primary downside target and support area.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index into the close will be determined by trader reaction to 13975.75.

Bullish Scenario

A sustained move over 13975.75 will indicate the presence of buyers. If this creates enough upside momentum then look for the late rally to possibly extend into 14029.00.

Bearish Scenario

A sustained move under 13975.75 will signal the presence of sellers. The first target is the minor pivot at 13770.75. This price is a potential trigger point for an acceleration to the downside with the first target coming in at 13512.50.

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

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Reaction to 33570 Sets Tone into Close

June E-mini Dow Jones Industrial Average futures are trading higher shortly before the cash market close on Wednesday. The blue chip average hit another record high early in the session as investors digested the first batch of corporate earnings that largely exceeded expectations.

Shortly before the cash market opening, futures were trading higher, led by Goldman Sachs and JPMorgan Chase.

At 19:09 GMT, June E-mini Dow Jones Industrial Average futures are at 33632, up 62 or +0.18%.

Shares of Goldman Sachs climbed more than 3% after the bank blew past analysts’ expectations with record first-quarter net profits and revenues on strong performance from the firm’s equities trading and investment banking units.

JPMorgan Chase beat analysts’ estimates on the top and bottom lines, helped by a $5.2 billion benefit from releasing money it had previously set aside for loan losses that didn’t develop.

Daily June E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early in the session when buyers took out the previous high at 33712.

A trade through 31951 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the Dow is inside the window of time for a potentially bearish closing price reversal top.

The minor range is 33157 to 33800. Its 50% level or pivot at 33479 is potential support.

The short-term range is 31951 to 33800. Its retracement zone at 32876 to 32657 is the nearest support area.

Daily Swing Chart Technical Forecast

The direction of the June E-mini Dow Jones Industrial Average futures contract into the close is likely to be determined by trader reaction to 33570.

Bullish Scenario

A sustained move over 33570 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible retest of the intraday high at 33800.

Bearish Scenario

A sustained move under 33570 will signal the presence of sellers. The first downside target is the pivot at 33479. Taking out this level could trigger an acceleration to the downside with 33157 the next potential downside target.

Side Notes

A close under 33570 will form a closing price reversal top. If confirmed on Thursday, this could trigger the start of a 2 to 3 day correction.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Momentum Could Shift on Close Under 4132.75

June E-mini S&P 500 Index futures are trading lower late in the session after giving back earlier gains. The index was supported shortly before the cash market opening after upbeat earnings reports from Goldman Sachs and JPMorgan boosted investor expectations of a strong rebound for corporate America amid swift COVID-19 vaccinations.

At 18:28 GMT, June E-mini S&P 500 Index futures are trading 4123.75, down 9.00 or -0.22%.

Goldman Sachs Group Inc rose 3.9% after it reported a massive jump in first-quarter profit, capitalizing on record levels of global deal making activity. JPMorgan Chase & Co’s shares fell 1.0% even as the largest U.S. bank’s earnings jumped almost 400% in the first quarter, as it released more than $5 billion in reserves it had set aside to cover coronavirus-driven loan defaults.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the late session weakness may be an indication that momentum is getting ready to shift to the downside.

A trade through the intraday high at 4144.00 will reaffirm the uptrend. The main trend will change to down on a move through 3843.25. This is not likely, but the index is in a position to post a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 4101.25 will change the minor trend to down. This will also shift momentum to the downside.

The new minor range is 4101.25 to 4144.00. The index is currently testing its 50% level or pivot at 4122.50.

The short-term range is 3843.25 to 4144.00. Its retracement zone at 3993.50 to 3958.00 is the nearest support area.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index into the close on Wednesday is likely to be determined by trader reaction to 4132.75.

Bullish Scenario

A sustained move over 4132.75 will indicate the presence of buyers. If this move can create enough upside momentum then look for the buying to possibly extend into 4144.00.

Bearish Scenario

A sustained move under 4132.75 will signal the presence of sellers. The first downside target is 4122.50. Taking out this level could create the downside momentum needed to challenge the minor bottom at 4101.25. This price is a potential trigger point for an acceleration to the downside.

Side Notes

A close under 4132.75 will form a closing price reversal top. If confirmed on Thursday, this could trigger the start of a 2 to 3 day correction.

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

S&P 500 Price Forecast – S&P 500 Continues to March Higher

The S&P 500 has gotten a bit stretched over the last couple weeks, and we are starting to see that as the momentum is most certainly dropping. At this point in time, the market is likely to continue to see a lot of noise, but I do think that we have a couple of support levels underneath that should come into play. The first one would be the 4100 level, which of course has support due to the fact that we have tested it recently, and it is also a large, round, psychologically significant figure.

S&P 500 Video 15.04.21

After that, we have a gap near the 4000 level, which not only would it be supportive because of that gap, but also that large figure as well. The 50 day EMA then follows at the 3935 level. It is not until we break down below 3900 that I would be concerned about the uptrend, and even then, I would be a buyer of puts, not necessarily someone looking to short this market. After all, we have been taught over the last 13 years that the Federal Reserve will certainly jump into the fray every time it has to pick the market up, so the last thing you want to do is be short of an index when something like that happens. With that being the case, I am looking for pullbacks as potential buying opportunities going forward and will treat them as such. With that being the case, I am going to simply sit on the sidelines and wait for an opportunity to pick up “value” going forward.

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

US Equities Climb A “Wall Of Worry” To New Highs

Low volume rallies have become a standard of trending recently.  We see higher volume when volatility kicks in near areas of broad market volatility.  Otherwise, we see lower volume trending push the prices higher recently in a “melt-up” type of mode.

Two recent standout events confirm this type of trending and volatility phases of the markets: (1) the September 2020 to early November 2020 (pre-US Election) rotation in price; and (2) the recent February 2021 to late March 2021 sideways price rotation related to the FOMC meeting/comments.  Both of these events centered around external market components and prompted an extended period of price volatility related to uncertainty.  After these events passed, price fell back into a low volume rally mode for many months, where most of the actual price gains happened.

The following Daily QQQ chart highlights my observations related to this type of price activity.  We start in the pre-COVID-19 price rally from October 2019 to the peak near mid-February 2020.  It is easy to see the decreased volume activity while prices climbed more than 27%.  Then, the COVID-19 even sent volatility skyrocketing higher and prices collapsed by 30%.  This type of “Wall Of Worry” trending is common and presents a very clear opportunity for traders.

After the March 2020 bottom, prices began another low volume rally that lasted from April 2020 to August 2020 – totaling a substantial +45% gain.  Again, starting in mid November 2020 and ending in mid February 2021, the QQQ rallied over 15% in a low volume “melt-up” trend.

Currently, the volume has started to subside after the FOMC meeting/comments volatility and we are starting to see moderately strong upward price trending in the QQQ.  This suggests we have entered another “Wall Of Worry” trend which may continue for many weeks or months.

The following Weekly XLY, SPDR Consumer Discretionary ETF chart highlights how diverse this “Wall of Worry” trend really is.  It translates into other sectors with almost the same velocity as it does in the QQQ.  In this example, we can see the strong trending, highlighted by GREEN ARROWS, at the same time as the decreasing volume took place.  Each of these rally trends coincides with the QQQ trends.  The rally from April 2020 to August 2020 represented a +35% gain.  The rally from November 2020 to February 2021 represented a +21% gain.  The current rally attempt has already advanced over 17% higher and may continue to rally for many more weeks.

If there is no future disruption of this low volume trending, then we may expect to see the US stock market continue to move in this manner for many weeks or months to come.  These low-volume “Wall Of Worry” trends can be very profitable and can prompt big moves in sector ETFs.

Many traders continue to miss opportunities in these markets because of worry or concerns of a breakdown in the trend. Eventually, something will prompt a correction or breakdown of this rally trend.  But until that happens, traders need to be able to identify and profit from these strong low volume rallies as they present some of the lowest volatility price advances recently. Being able to identify and trade these sectors is key to being able to efficiently target profits.  You can learn more about the BAN strategy and how to identify and trade better sector setups by registering for my FREE Trading Course here.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

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

Enjoy the rest of the week!

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

 

Wells Fargo Q1 Earnings Blow Past Estimates on Release of Loan Loss Reserves; Target Price $47

San Francisco, California-based multinational financial services company Wells Fargo reported better-than-expected earnings in the first quarter, largely driven by the release of $1.6 billion in its reserves for credit losses.

The fourth-largest lender in the U.S. reported adjusted earnings per share $1.05, beating analysts’ expectations of $0.69 per share. With $18.06 billion in revenue, Wells Fargo surpassed Wall Street’s consensus estimates of $17.5 billion.

“Our results for the quarter, which included a $1.6 billion pre-tax reduction in the allowance for credit losses, reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities. Charge-offs are at historic lows and we are making changes to improve our operations and efficiency, but low-interest rates and tepid loan demand continued to be a headwind for us in the quarter,” said Chief Executive Officer Charlie Scharf.

Wells Fargo shares, which slumped more than 40% in 2020, rebounded over 31% so far this year.

Wells Fargo Stock Price Forecast

Sixteen analysts who offered stock ratings for Wells Fargo in the last three months forecast the average price in 12 months of $39.64 with a high forecast of $47.00 and a low forecast of $32.00.

The average price target represents a -0.38% decrease from the last price of $39.79. Of those 16 analysts, nine rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $47 with a high of $67 under a bull scenario and $21 under the worst-case scenario. The firm gave an “Overweight” rating on the financial services company’s stock.

Several other analysts have also updated their stock outlook. BofA raised the price objective to $44 from $43. Wells Fargo & Company had its price target lifted by Barclays to $42 from $36. They currently have an equal weight rating on the financial services provider’s stock. Seaport Global Securities raised to a buy rating from a neutral and set a $42 target price. Oppenheimer reaffirmed a hold rating on shares.

Analyst Comments

Wells Fargo (WFC) appears to be beginning to take action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. While uncertainty remains around the impact of business exits and timing of consent order/asset cap exit, we believe risk more than accounted for in the stock at 9x our 2022e EPS,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC benefit to EPS from rising long end rates is the highest in the group, with each ~50bps increase in the 10yr driving ~4% to NII and as much as ~8% to EPS. We model WFC driving their expense ratio down to 64% by 2023 on reduced risk and compliance spend, operational efficiencies, and branch optimization. Lower expense ratio possible.”

Check out FX Empire’s earnings calendar

Stocks Set To Open Higher As Big Banks Report Strong Earnings Results

Treasury Yields Stay Close To Recent Lows

S&P 500 futures are gaining some ground in premarket trading as Treasury yields remain close to recent lows. Yesterday, U.S. inflation reports indicated that inflation was rising a bit faster than analysts expected.

However, this increase is not sufficient enough to trigger any response from the Fed so Treasury yields declined after the release of inflation reports. Today, Treasury yields remain close to yesterday’s levels which is bullish for tech stocks which look ready to continue their upside move.

Big Banks Report Earnings

JPMorgan has recently released its quarterly results. The company reported revenue of $32.3 billion and earnings of $4.50 per share, beating analyst estimates on both earnings and revenue. Goldman Sachs and Wells Fargo reports also exceeded analyst estimates.

Financial stocks had a strong start of the year as yields moved higher, and it looks that investors have made a right move by betting on the financial segment as results look strong.

Interestingly, shares of Goldman Sachs and Wells Fargo are gaining some ground in premarket trading while JPMoran stock is down by about 0.5%, but the situation may change quickly when the regular trading session begins.

Oil Moves Higher As Iran Tensions Increase

WTI oil is currently trying to settle above the $61 level as the fate of renewed nuclear talks with Iran is under question. Recently, participants of the 2015 nuclear deal made an attempt to put Iran and U.S. back to the negotiation table, but the recent attack on Iran’s Natanz nuclear facility increased tensions.

In response to the attack, Iran stated that it would enrich uranium up to 60% purity. It is not clear whether Iran has the technical capability to do so in the near term, but the move clearly raises stakes in the complicated game between U.S., Iran and other participants of the 2015 nuclear deal.

It should be noted that the recent API Crude Oil Stock Change report indicated that crude inventories decreased by 3.6 million barrels and provided additional support to the oil market. If today’s EIA Weekly Petroleum Status Reports confirms API numbers, oil may gain additional upside momentum.

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

Australian Dollar On The Rise

Gold traders are fighting to keep the bullish dream alive and they’re trying to create the right shoulder of the Inverse head and shoulders pattern. A breakout of the neckline can possibly bring serious bullish sentiment.

Silver bounced from a crucial support on the 24.8 USD/oz.

Brent oil broke the mid-term down trendline and is aiming higher.

The Dow Jones is in the third wedge pattern in a row. The previous two ended in an upswing.

The EURUSD climbed back above the 23.6% Fibonacci.

The GBPUSD wasted a great chance for an upswing and failed to break the neckline of the inversed head and shoulders pattern.

The AUDUSD on the other hand, is very close to activating the buy signal from its own inversed head and shoulders formation.

The USDCAD is locked in a tight rectangle below major down trendlines.

The GBPAUD is in a sweet long-term sell signal, after the price created a head and shoulders pattern at the end of the wedge. A breakout of the lower line of the wedge opens a way towards new mid-term lows.

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

Morgan Stanley Lifts Magna International’s Target Price to $96, Upgrades to Equal-weight

Morgan Stanley raised their stock price forecast on Magna International to $96 from $61 and upgraded the mobility technology company’s stock to an “Equal-weight” rating.

“We upgrade Magna International (MGA) to Equal-weight from Underweight as we have greater confidence that management’s strategy can drive higher share/content on high growth BEV platforms. We double our revenue CAGR to 4% and raise our price target to $96,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Raised exit EBITDA margin forecast to 8.9% vs. 8.2% previously as our higher growth drives operating leverage, primarily in the BEV-exposed businesses (BEV Power & Vision, Body & Exterior, Complete Seating and Complete BEV vehicle assembly). This change adds approximately $5 to our price target.”

The company is set to announce its next earnings report on Thursday, May 6. According to ZACKS Research, Magna International is expected to post $9.75 billion in sales for the current fiscal quarter.

The U.S. listed Magna International’s shares, which surged over 25% in 2020, rose 4.6% to $93.64 on Monday.

Eleven analysts who offered stock ratings for Magna International in the last three months forecast the average price in 12 months at $92.18 with a high forecast of $100.00 and a low forecast of $61.00.

The average price target represents a -1.56% decrease from the last price of $93.64. Of those 11 equity analysts, seven rated “Buy”, three rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $135 and the worst-case scenario forecast of $55.

MGA is the third-largest global auto supplier, with leadership in many product segments, strong balance sheet, and attractive valuation vs. peers. We believe Magna has an ability to grow its EV and AV-related business lines in a way that can more than compensate for the run-out of ICE/legacy OEM product lines,” Morgan Stanley’s Jonas added.

“The net result is modest growth over market, balanced by a starting point of peak cycle and margins. We see the stock as largely fairly valued with a mostly even risk-reward skew.”

Other equity analysts also recently updated their stock outlook. Magna International had its price target upped by KeyCorp to $98 from $86. They currently have an overweight rating on the stock. Barclays upped their target price to $87 from $75 and gave the company an equal weight rating.

Check out FX Empire’s earnings calendar

European Equities: Economic Data, ECB President Lagarde, and Corporate Earnings in Focus

Economic Calendar:

Wednesday, 14th April

Spanish CPI (YoY) (Mar) Final

Spanish HICP (YoY) (Mar) Final

Eurozone Industrial Production (MoM) (Feb)

Thursday, 15th April

German CPI (MoM) (Mar) Final

French CPI (MoM) (Mar) Final

French HICP (MoM) (Mar) Final

Italian CPI (MoM) (Mar) Final

Friday, 16th April

Eurozone Core CPI (YoY) (Mar) Final

Eurozone CPI (YoY) (Mar) Final

Eurozone CPI (MoM) (Mar) Final

Eurozone Trade Balance (Feb)

The Majors

It was a relatively bullish day for the European majors on Tuesday.

The CAC40 rose by 0.36%, with the DAX30 and the EuroStoxx600 gaining 0.13% and 0.12% respectively.

Impressive trade data from China delivered support to riskier assets, while a pickup in U.S inflationary pressures failed to weigh on the majors.

Assurances from the FED of low for longer left the markets desensitized on the day.

Economic data from the Eurozone pegged the majors back, however, as economic sentiment across Germany and the Eurozone waned in April.

The Stats

It was another relatively quiet day on the economic calendar on Tuesday.

ZEW Economic Sentiment figures for Germany and the Eurozone were in focus early in the European session.

In April, Germany’s ZEW Economic Sentiment Indicator fell from 76.6 to 70.7. Economists had forecast a rise to 79.0. The Current Conditions indicator rose from -61.0 to -48.8. Economist had forecast an increase to -53.0.

For the Eurozone, the Economic Sentiment Indicator fell from 74.0 to 66.3.

From the U.S

It was a relatively busy day, with inflation figures in focus.

In March, the annual rate of core inflation ticked up from 1.3% to 1.6%, coming in ahead of a forecasted 1.5%.

Month-on-month, core consumer prices increased by 0.3%, following a 0.1% rise in February. Economists had forecast a 0.2% increase.

Consumer prices increased by 0.6%, following a 0.4% rise in February. Economists had forecast a 0.5% increase.

From Elsewhere

Earlier in the day, trade data from China had set the tone ahead of the European open.

In March, China’s USD trade surplus widened from $103.25bn to $116.35bn. Economists had forecast a narrowing to $52.05bn.

Exports increased by 49.0%, following a 60.6% surge in February, with imports rising by 38.1%. In February, imports had risen by 22.2%.

Economists had forecast exports to increase by 35.5% and imports to rise by 23.3%.

The Market Movers

For the DAX: It was another mixed day for the auto sector on Tuesday. Continental rose by 1.53% to buck the trend on the day. Volkswagen slid by 1.00%, with BMW and Daimler falling by 0.46% and by 0.55% respectively.

It was a bearish day for the banks, however. Deutsche Bank declined by 1.06%, with Commerzbank ending the day down by 1.59%.

From the CAC, it was another mixed day for the banks. BNP Paribas rose by 0.43%, while Credit Agricole and Soc Gen ended the day with modest losses of 0.08% and 0.05% respectively.

It was also a mixed day for the French auto sector. Stellantis NV rose by 1.39%, while Renault fell by 1.83%.

Air France-KLM took the biggest hit, however, sliding by 5.04%, with Airbus SE ending the day down by 1.50%. Talk of the French government planning to ban domestic flights delivered the downside for Air France-KLM.

On the VIX Index

It was back into the red the VIX on Tuesday, marking a 4th daily loss in 5-sessions.

Reversing a 1.32% rise from Tuesday, the VIX fell by 1.54% to end the day at 16.65.

The NASDAQ and the S&P500 rose by 1.05% and by 0.33% respectively, while the Dow fell by 0.20%.

VIX 140421 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic calendar. Eurozone industrial production figures for February are due out later today.

Finalized March inflation figures from Spain are also due out but will likely have a muted impact on the European majors.

From the U.S, import and export price figures are due out that should also have a muted impact on the European boerses.

On the monetary policy front, ECB President Lagarde is scheduled to speak later in the day. Expect any chatter on the economy or monetary policy to influence.

From the FED, FED Chair Powell is also scheduled to speak but after the European close.

On the day, corporate earnings will also be in focus. The U.S banking sector will be in the spotlight, with Goldman Sachs, JPMorgan Chase, and Wells Fargo announcing results later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 32 points, while the DAX was up by 11 points.

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

Many Sectors Are Primed For Another Breakout Rally – Are You?

As we start moving into the Q1:2021 earnings season, we need to be aware of the risks associated with the volatility often associated with earnings data and unknowns.  Nonetheless, there are other factors that appear to be present in current trends which suggest earnings may prompt a moderately strong upside breakout rally – again.

One key factor is that the US markets are already starting to price in forwarding expectations related to a reflation economy – a post-COVID acceleration in activity, consumer participation, and manufacturing.  Secondarily, we must also consider the continued stimulus efforts, easy monetary policy from the US Fed, and the continued trending related to the 12+ month long COVID-19 recovery rally.

In some ways, any damage to the economy related to COVID-19 may have already happened well over 6+ months ago.  Certainly, there are other issues we are still dealing with and recovering from, but the strength of the US economy since May/June of 2020 has been incredible.  When we combine the strength of the economic recovery with the extended support provided by the US Fed and US government stimulus/policy efforts, we are left with only one conclusion:  the markets will likely continue to rally until something stops this trend.

Just this week, after stronger inflation data posted last week, and as earnings data starts to hit the wires, we are seeing some early signs that the US major indexes are likely to continue to trend higher – even while faced with odd earnings data.  If this continues, we may see the US major indexes, and various ETF sectors, continue to rally throughout most of April – if not longer.

Today, Aphria (APHA), announced a third-quarter “miss” on sales, and net operating loss fell more than 14%.  This tugged many Cannabis-related stocks lower and pulled the Alternative Harvest ETF (MJ) lower by over 4%.  Still, the Transportation Index, Financial sector ETF (XLF), and S&P500 SPDR ETF (SPY) rallied to new all-time highs.

This suggests the market is discounting certain sector components as “struggling” within a broadly appreciating market trend.  In this environment, even those symbols which perform poorly won’t disrupt the Bullish strength of the general markets.  Because of this, we believe the overall trend bias, which is Bullish, will continue to push most of the market higher over the next few days/weeks… at least until something happens to break this trend or when investors suddenly shift away from this trend.

SPY Rally May Be Far From Over At This Stage

Let’s start by reviewing this SPY Daily chart below (S&P500 SPDR ETF).  As you can see, the recent rally has already moved above the GREEN 100% Fibonacci Measured Move target level near $410.  Any continued rally from this level would suggest an upside price extension beyond the 100% Fibonacci Measured Move level is initiating.  This type of trending does happen and can often prompt a higher target level (possibly 200% or higher) above our initial targets.

What is interesting in our review of these charts is the SPY may be rallying above recent price range targets, using the Fibonacci Measured Move technique, but other sectors appear to really have quite a bit of room to run.

Transportation Index Continues To Suggest Stronger US Recovery

This Transportation Index Daily Chart, TRAN, suggests a target level near $15,627 so it is reasonable to assume the Transportation Index may continue to rally more than 4% higher from current levels.  Ideally, if this were to happen, it would suggest the broader economic recovery is strengthening and we may expect to see the US major indexes continue to rally higher as well.

At this time, when economic data and Q1:2021 earnings are streaming into the news wires, we usually expect some extended volatility in the markets.  The VIX may rally back above 19 to 24 over time if the markets reflect the varied earnings outcomes we expect.  Yet, we believe the overall bias of the markets at this stage of the trend is solidly Bullish.

Financial Sector ETF Ready To Rally Above $37

The Financial sector ETF (XLF), as seen in the following chart, is poised to break higher after a dramatic recovery in price after December 2020.  The rally from $29 to over $35 represents a solid +20% advance and the recent resistance level, near $35.30, is a key level to watch as this sector continues to trend.  Once that resistance level is breached, we believe a continued rally attempt will target $37, then $39.40.

The expected recovery in the US economy will prompt more consumer spending and the use of credit.  Over the past 8+ months, US consumers have worked to bring down their credit levels and saved more money because of the change in how we addressed COVID work-styles and lack of travel (and extra money from the Stimulus payments).  That may not change right away, but eventually, consumers will start to engage in the economy as travel starts to recover and summer activities start to take place.  This suggests spending, travel, vacationing, eating out and other activities will prompt a new wave of economic activity within the Financial Sector.

The US markets are uniquely poised to further upside price gains because the US has such a dynamic core economy.  Our base of consumers is, generally, working in jobs, saving more, and more capable of traveling within the US to engage in summer activities.  Because of this, we believe the continued recovery of the US economy will prompt another wave of higher prices throughout the Q1:2021 earnings season.  We believe a number of solid earnings and expectations will support the market and future expectations will support a continued moderate price rally in certain sectors.

The strongest sectors are going to continue to be the best performers over time.  Being able to identify and trade these sectors is key to being able to efficiently target profits.  You can learn more about the BAN strategy and how to identify and trade better sector setups by registering for our FREE webinar here.  We’ve built this technology to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

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

Happy Trading!

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

PepsiCo Q1 Earnings to Rise about 4%; Target Price $150

Harrison, New York-based global food and beverage leader PepsiCo is expected to report its first-quarter earnings of $1.12 per share, which represents year-over-year growth of about 4% from $1.07 per share seen in the same quarter a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue growth of over 5% to about $14.6 billion. In the last four consecutive quarters, on average, the company which holds approximately a 32% share of the U.S. soft drink industry has delivered an earnings surprise of nearly 6%.

PepsiCo’s better-than-expected results, which will be announced on Thursday, April 15, would help the stock to recoup this year’s losses. PepsiCo shares, which rose over 8% in 2020, slumped about 4% so far this year.

PepsiCo Stock Price Forecast

Seven analysts who offered stock ratings for PepsiCo in the last three months forecast the average price in 12 months of $150.67 with a high forecast of $161.00 and a low forecast of $136.00.

The average price target represents a 5.49% increase from the last price of $142.83. Of those seven analysts, three rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $158 with a high of $185 under a bull scenario and $102 under the worst-case scenario. The firm gave an “Overweight” rating on the beverage company’s stock.

Several other analysts have also updated their stock outlook. Zacks Investment Research raised shares of PepsiCo from a “hold” rating to a “buy” rating and set a $142price target. Sanford C. Bernstein issued an “underperform” rating and a $136 target price. Deutsche Bank increased their target price to $148 from $143 and gave the company a “hold” rating. Wells Fargo issued an “equal weight” rating and a $157 target price.

Analyst Comments

“We are OW PEP. We forecast Pepsi will post superior topline growth relative to peers driven by exposure to the higher growth/higher margin snacks category (2/3 of PEP’s profit). Snacks is a higher growth category given: (1) shift to snacking vs. sit-down meals; (2) less pressure from health/wellness vs. beverages, and (3) PEP’s leading share in snacks vs. fragmented competition, driving share gains, and higher margins/ROIC,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“We also see more structural Pepsi market share benefits post-COVID, as PEP uses its DSD distribution advantage, to gain shelf space and share in snacks, and in beverages, where PEP is advantaged vs competition with a much lower mix in away-from-home.”

Check out FX Empire’s earnings calendar

S&P 500 Price Forecast – Stock Markets Continue Drive Higher

The S&P 500 has initially pulled back towards the 4100 level on the Globex exchange overnight, but then turned around to show signs of strength. By doing so, it suggests that the market is ready to continue going higher, especially considering that the Johnson & Johnson vaccine has been paused, but it seems that the markets are completely willing to overlook that. If that is going to be the case, then I do not see any reason why we will go looking towards 4200.

S&P 500 Video 14.04.21

I would like to see some type of pullback in order to get involved, as it would give us an opportunity to pick up a little bit of “value” in the market. Ultimately, the 50 day EMA is starting to reach towards the 4000 handle, where I also see a massive gap. That is an area where we would see a lot of interest in the market, and I do think that a massive amount of buying pressure would come back in.

I have no interest in shorting this market anytime soon, as the 13 previous years have been full of money flooding into the market, and it is only a matter of time before more comes. Central banks will keep the pedal to the metal when it comes to quantitative easing and cheap money, and of course Wall Street loves that. With that being the case, I do not think that there is much that is going to drive us below the 4000 handle, barring some type of “black swan event.”

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

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Hits New Record High as ‘Stay at Home’ Shares Rise

June E-mini NASDAQ-100 Index futures are trading higher after hitting a record high shortly before the opening on Tuesday. Despite weakness in the S&P 500 and Dow due to the possible impact of a halt to the rollout of Johnson & Johnson vaccines, the technology-based NASDAQ rose as trader bought several so-called “stay at home” stocks.

At 13:23 GMT, June E-mini NASDAQ-100 Index futures are at 13879.50, up 70.75 or +0.51%.

In other news, traders showed a muted reaction to the news that the consumer price index, one of Wall Street’s most-popular inflation gauges, rose 0.6% in March and increased 2.6% from the same period a year ago. Economists polled by Dow Jones were projecting the headline index to rise by 0.5% month over month and 2.5% year over year.

The early price action indicates investors may have priced in the CPI data, but the J&J news came as a total surprise.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the February 26 main top at 13888.00.

A trade through 12609.75 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, today’s session begins with the index inside the window of time for a potentially bearish closing price reversal top.

A closing price reversal top won’t change the trend to down, but it indicates the selling is greater than the buying at current price levels.

The minor trend is also up. A trade through 13512.50 will change the minor trend to down. This will also shift momentum to the downside.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index futures contract on Tuesday is likely to be determined by trader reaction to 13808.75.

Bullish Scenario

A sustained move over 13808.75 will indicate the presence of buyers. Taking out the intraday high at 13896.00 will indicate the buying is getting stronger. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 13808.75 will signal the presence of sellers. The first potential downside target is a minor pivot at 13704.25. This level will continue to move up as the market moves higher. If it fails as support then look for the selling to possibly extend into the minor bottom at 13512.50.

Side Notes

A close under 13808.75 will form a closing price reversal top on the daily chart. If confirmed on Wednesday, this could trigger the start of a 2 to 3 day correction.

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

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Reaction to 33631 Sets the Tone

June E-mini Dow Jones Industrial Average futures are trading lower following the release of the U.S. consumer inflation report and on a steep loss in shares of Johnson & Johnson after the Food and Drug Administration (FDA) asked states on Tuesday to temporarily halt using Johnson & Johnson’s COVID-19 vaccine “out of an abundance of caution” after six women in the U.S. developed a rare blood-clotting disorder.

At 12:36 GMT, June E-mini Dow Jones Industrial Average futures are trading 33553, down 78 or -0.23%.

The consumer price index rose 0.6% from the previous month but 2.6% from the same period a year ago. The year-over-year gain is the highest since August 2018.

The index was projected to rise 0.5% on a monthly basis and 2.5% from March 2020, according to Dow Jones estimates.

Daily June E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, may be getting ready to shift to the downside. The uptrend was reaffirmed earlier in the session when buyers took out yesterday’s high.

A trade through 31951 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the market is inside the window of time for a potentially bearish closing price reversal top.

This chart pattern won’t change the main trend to down, but if confirmed, it could fuel the start of a 2 to 3 day correction.

The minor range is 33157 to 33712. Its 50% level at 33435 is potential support.

The short-term range is 31951 to 33712. If the closing price reversal top is confirmed then its 50% to 61.8% retracement zone at 32832 to 32624 will become the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the June E-mini Dow Jones Industrial Average futures contract on Tuesday is likely to be determined by trader reaction to 33631.

Bullish Scenario

A sustained move over 33631 will indicate the presence of buyers. The first upside target is the intraday high at 33712. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 33631 will signal the presence of sellers. The first downside target is the minor pivot at 33435.

Buyers could come in on the first test of 33435, but if it fails then look for the selling to possibly extend into the minor bottom at 33157.

Side Notes

A close under 33631 will form a closing price reversal top on the daily chart. If confirmed on Wednesday, this could trigger the start of a 2 to 3 day correction with 32832 to 32624 a potential downside target.

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

Stocks Mixed After Inflation Exceeds Analyst Expectations

Inflation Rate Increased By 2.6% In March

The U.S. has just released Inflation Rate and Core Inflation Rate reports. The reports indicated that Inflation Rate increased by 2.6% year-over-year in March compared to analyst consensus which called for growth of 2.5%. Core Inflation Rate increased by 1.6% year-over-year compared to analyst consensus of 1.5%.

Inflation is moving higher on a year-over-year basis as prices were weak during the acute phase of the coronavirus crisis a year ago. Inflation looks more calm on a month-over-month basis although it also exceeded analyst expectations. Inflation Rate grew by 0.6% month-over-month in March compared to analyst consensus of 0.5%, while Core Inflation Rate increased by 0.3%.

S&P 500 futures are swinging between gains and losses in premarket trading after the release of inflation reports. Meanwhile, Treasury yields failed to gain additional upside momentum after reports indicated that inflation exceeded analyst expectations.

U.S. Recommends Pausing The Use Of Johnson & Johnson’s COVID-19 Vaccine

Shares of Johnson & Johnson found themselves under pressure in premarket trading after U.S. health agencies called for a temporary pause of the use of the company’s coronavirus vaccine.

The problems of Johnson & Johnson are similar to AstraZeneca‘s problems. In rare cases, recipients of the vaccine developed blood clots.

While these cases are extremely rare, the negative headlines may decrease people’s confidence in vaccination in general, so Johnson & Johnson’s problems may serve as a bearish catalyst for the market.

Euro Area Economic Sentiment Declines

Today, EU reported that Euro Area ZEW Economic Sentiment Index decreased from 74 in March to 66.3 in April. Analysts expected that it would grow to 77. In Germany, Economic Sentiment Index declined from 76.6 to 70.7 compared to analyst consensus of 79.

The reports indicated that European businesses have started to feel the pressure from the third wave of the virus. At the same time, it should be noted that ZEW Economic Sentiment Index remains at high levels.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Set Up for Closing Price Reversal Top

June E-mini S&P 500 Index futures are trading lower shortly before the release of a U.S. consumer inflation report at 12:30 GMT and the cash market opening at 13:30 GMT. The benchmark index erased earlier gains in a quick plunge after the U.S. Food and Drug Administration (FDA) said it’s recommending a pause in the Johnson & Johnson Covid vaccine after reported cases of blood clotting.

At 12:06 GMT, June E-mini S&P 500 Index futures are at 4108.50, down 11.75 or -0.29%.

Economists polled by Dow Jones are projecting the headline consumer inflation index to rise by 0.5% month-over-month and 2.5% year-over-year.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous high.

A trade through 3843.25 will change the main trend to down. This is highly unlikely, but the early price action suggests the index may be poised for a potentially bearish closing price reversal top. This won’t change the trend, but it could trigger the start of a 2 to 3 day correction.

The minor range is 3843.25 to 4127.00. If a correction generates enough downside momentum then look for the selling to possibly extend into its retracement zone at 3985.00 to 3951.50.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to 4120.25.

Bullish Scenario

A sustained move over 4120.25 will indicate the presence of buyers. Taking out the intraday high at 4127.00 will indicate the buying is getting stronger. This could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 4120.25 will signal the presence of sellers. This could put pressure on the index.

A close under 4120.25 will actually form a closing price reversal top. If confirmed on Wednesday, this could trigger a 2 to 3 day correction with the minor 50% level at 3985.00 the nearest potential downside target.

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