E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Main Trend Changed to Down on Friday

The technology-driven September E-mini NASDAQ-100 Index dropped sharply on Friday as investors fled market-leading tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could exacerbate a deep economic recession. Geopolitical uncertainties also added to investor skittishness ahead of the weekend.

On Friday, September E-mini NASDAQ-100 Index futures settled at 10460.75, down 87.50 or -0.84%.

For the second day in a row, the tech sector weighed heaviest on all three major U.S. stock averages. Intel led the decline on Friday, its shares plunging after the chipmaker reported a delay in production of a smaller, faster 7-nonmeter chip.

In other news, Intel rival Advanced Micro Devices Inc shares jumped, while Tesla Inc extended Thursday’s losses.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trade through 10358.75 on Friday changed the main trend to down. The main trend will change to up if buyers take out the pair of main tops at 11058.00 to 11058.50.

The first short-term range is 9728.75 to 11058.50. Its 50% level at 10393.50 was tested on Friday.

The second short-term range is 9368.25 to 11058.50. Its retracement zone at 10213.25 to 10014.00 is the next downside target zone.

The third range is 8841.00 to 11058.50. Its retracement zone at 9949.75 to 9688.00 is another potential support area.

The combination of the retracement zones creates a potential support cluster at 10014.00 to 9949.75.

Short-Term Outlook

Our best downside target on Monday is 10014.00 to 9949.75. Since it is a potential support cluster, we’re anticipating that counter-trend buyers will show up on a test of this area. This could trigger a technical bounce.

If 9949.75 fails then the market is going to move into the wide retracement zone at 9949.75 to 6988.00. Aggressive counter-trend buyers could step in on a test of this area also.

Despite the change in trend to down, we’re still looking for a labored break because of the large number of retracement levels. This could create choppy, two-sided trading conditions.

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 – Confirmed Reversal Top Shifts Momentum to Downside

September E-mini S&P 500 Index futures finished sharply lower on Friday with the broad sell-off blamed on weak earnings, surging coronavirus cases and geopolitical uncertainties.

The S&P Tech Sector weighed heaviest on the benchmark index, led by a decline by Intel Corp. Shares of the chipmaker plunged after reporting a delay in production of a smaller, faster 7-nonometer chip.

On Friday, September E-mini S&P 500 Index futures settled at 3204.00, down 23.50 or -0.73%.

In other news, more than 1,000 Americans died from COVID-19 on Thursday, the third straight day for that grim milestone as total cases surged past 4 million. Meanwhile, Beijing fired back at Washington shuttering China’s Houston consulate by closing the U.S. consulate in the city of Chengdu.

Daily September E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of the closing price reversal top on July 23 and its subsequent confirmation on Friday.

A trade through 3284.50 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a move through the last main bottom at 3105.25.

The minor trend is also down. This confirms the shift in momentum.

The minor range is 3188.50 to 3284.50. Its 50% level at 3236.50 is resistance.

The short-term range is 3105.25 to 3284.50. Its retracement zone at 3194.75 to 3173.75 is potential support.

A second short-term range is 2983.50 to 3284.50. Its retracement zone at 3134.00 to 3098.50 is another potential support area.

Short-Term Outlook

Since investors have been buying breaks into retracement zones, we’re going to be watching the price action and order flow at 3194.75 to 3173.75 early Monday.

If 3173.75 fails to hold then our next downside target zone becomes 3134.00 to 3098.50. This zone is most important because it is the last potential support zone before the main bottom at 3105.25. Buyers are likely to come in to defend the trend on a test of this zone.

If 3098.50 fails then look out to the downside. The next major support comes in at 2983.50.

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

U.S. Stocks Set To Open Lower As China Orders U.S. To Close Its Consulate In Chengdu

China Decides To Close U.S. Consulate In Chengdu In Retaliation For Closure Of Its Consulate In Houston

China has previously promised to introduce counter-measures after the U.S. ordered closure of the Chinese consulate in Houston.

According to early reports, China was thinking about closing the U.S. consulate in Wuhan.

Such a measure would have been viewed as an attempt to show that the country is ready for counter-measures without dealing significant damage to relations with U.S. since work is hardly active in the place where the coronavirus pandemic emerged.

However, China decided to implement a more hard-line approach, ordering the closure of the U.S. consulate in Chengdu. China argued that some employees of this consulate interfered in its internal affairs.

This move has put markets under pressure, and S&P 500 futures are losing ground in premarket trading.

Intel Under Pressure After Delaying 7-Nanometer Chip Process

Intel has recently reported its second-quarter earnings, beating analyst estimates on both earnings and revenue. However, the stock found itself under major pressure and is losing about 13% during the premarket trading session.

The reason for this weakness is the delay in 7-nanometer chip process, which is now expected to be ready in late 2022 or early 2023.

This delay is a material problem for Intel as it provides time for its competition to get a leading market position. Not surprisingly, AMD shares are gaining more than 6% in premarket trading.

All Eyes On Upcoming PMI Reports

A few minutes after the market open, the U.S. will provide Flash Services PMI and Flash Manufacturing PMI reports for July.

Services PMI is expected to increase from 47.9 in June to 51 in July while Manufacturing PMI is expected to grow from 49.8 to 51.5. Numbers above 50 show expansion.

Earlier, PMI reports for UK easily beat estimates as the country continued to reopen after the acute phase of the coronavirus crisis, and similar results may be reported in the U.S., which could provide some support to the market.

In addition to PMI reports, traders will also have to digest data on New Home Sales for June. After growing by 16.6% on a month-over-month basis in May, New Home Sales are expected to increase by 4% in June.

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

Markets’ Weather Weekly: Сloud-Computing and Office Software Business Missed Quarterly Estimates.

Overview and trends

U.S. weekly jobless claims hit 1.4 million, the first increase since March, as spiking virus cases halt reopening plans.

Microsoft shares tumbled as much as 2.8% on Thursday after its cloud-computing and office software business missed quarterly estimates. The share price slump caused nearly $46 billion dollars erased from the company’s market capitalization. Intel Corporation (INTC) shares were trading lower yesterday despite the company reported better-than-expected second-quarter EPS and earnings results.

As a result, the tech-heavy Nasdaq Composite finished down 2.3%. The S&P 500 closed down 1.2%. It was their worst performance since June 26. The Dow (INDU) fell 1.3%, or 354 points, its worst day in two weeks.

Stocks weren’t the only assets in the red. The US dollar, as measured by the ICE US Dollar Index, fell 0.2%. The index hit its lowest level since September 2018.

So far quarterly earnings come very mixed. On positive side there are good reports and good responses to the earnings reports from IBM (IBM), Texas Instruments (TXN), Biogen (BIIB), KeyCorp (KEY), as well as yesterday’s miracle from Tesla (TSLA) and upbeat sales commentary from Best Buy (BBY).

Then again, a close candidate for why things are “bad” would be the negative responses to earnings reports from Bank of America (BAC), Netflix (NFLX), Snap (SNAP), Capital One (COF), United Airlines (UAL), and Interactive Brokers (IBKR). Microsoft (MSFT) stock sank over 2% after reporting earnings that beat Wall Street expectations in most ways except in a key business. All these stories prompt us to be extremely vigilant, resourceful and contemplative – correct instrument selection and trade direction is key to trading success through this period!

The week was full of important news. US stocks climbed on Wednesday on positive earnings numbers from Microsoft and Tesla and as traders weighed raging tensions between the U.S. and China, a potential legislative extension to unemployment benefits, and coronavirus vaccine news. Donald Trump’s administration ordered the abrupt closure of China’s consulate in Houston, and official Beijing promptly responded with its intention to close the U.S. consulate in Wuhan in a tit-for-tat game condemned by Beijing as outrageous and unprecedented.

The U.S. government has struck an agreement with Pfizer (PFE) and BioNTech (BNTX) for up to 600 million doses of their COVID vaccine candidate should it be approved. This optimistic expectation and early preparation effort have created positive sentiment in terms of thinking about light at the end of the tunnel down the road.

Trading ideas

The Gold/Silver complex has caught renewed bids this week, which was tipped off by the major gold ETF – SPDR Gold Trust – showing up on the “Doji Week” scan back on Monday. The Doji Week scan is designed to find stocks that are in narrow ranges compared to prior week’s activity that is geared up for a stronger directional move.

There are a number of Gold/Silver – related ETFs and stocks appearing on the Wide Range Breakouts, Power Up, and Overbought results today as the market gets behind their momentum against a sliding US Dollar. As investors’ classics – Barrick Gold (GLD) and Newmont Corp. (NEM) – look increasingly overvalued by both investment multiples and technically, new kids on the block, such as Agnico Eagle Mines (AEM) and Kinross Gold (KGC) look increasingly promising. The two latter stocks unveil single digit price-to-sales ratios as opposed to double-digit ones for Barrick and Newmont.

AT&T (T)

The largest American telecom AT&T (T) beat estimates by 4 cents a share, with quarterly earnings of 83 cents per share. Revenue was in line with forecasts. The company said the COVID-19 pandemic impacted results across all its businesses. Thus, WarnerMedia revenue fell 23% to $6.8 billion as the pandemic shut down film production and movie theaters. Group revenue was down 9% YoY to $41 billion, roughly in line with the $41.1 billion consensus. In contrast, AT&T’s HBO Max boasted by around 36 million active customers (including legacy HBO subscribers), picking up 3 million in the quarter. Cash from operations was $12.1 billion with free cash flow of healthy $7.6 billion.

Total dividend payout ratio remains slightly below 50%. Nevertheless, we must not forget about this telecom’s two extremely important properties: number one, it is the value high dividend stocks. And number two, it is classic defensive countercyclical stock. Given increasing odds of exacerbating recession and noting almost ridiculously cheap valuations at P/E of less than 15, dividend yield of 7% and price-to-cash-flow of just 8 (yes, this is a single-digit number, eight), at the current price level AT&T is perhaps one of very few smart medium term buys.

Vladimir Rojankovski, Grand Capital Chief Analyst

US Stock Market: Multiple States Investigate Apple, Disney Delays Major Film Releases, Fear Gauge Rises

Thursday’s U.S. stock market losses led to investors seeking protection in options and Treasurys. This drove the Cboe Volatility Index (VIX) – seen by Wall Street as the market’s best “fear gauge” – to 26 and benchmark 10-year Treasury yields to 0.57%.

Some of the volatility was fueled late in the session by extreme “whipsaw” action. The wild, two-sided trade that steepened the late session selloff was triggered by a report from a watchdog group that said Apple Inc faces consumer protection investigations in multiple states. Apple traded 4.5% lower after the report.

Apple Faces Deceptive Trade Practices Probe by Multiple U.S. States:  Axios

Multiple U.S. states are investigating Apple Inc for potentially deceiving consumers, according to a March document obtained by a tech watchdog group, Reuters reported.

The Texas attorney general may sue Apple for violating the state’s deceptive trade practices law in connection with the multi-state investigation, according to the document, which was obtained by the Tech Transparency Project.

The document did not provide additional details.

The office of the Texas attorney general declined to comment. Apple did not immediately respond to a Reuters request for comment.

Apple has faced class-action lawsuits from consumers alleging that it deceived them about slowing the performance of iPhones with aging batteries. The company agreed to pay up to $500 million to settle one such lawsuit earlier this year.

Apple is also facing lawsuits alleging that it knew and concealed how the “butterfly” keyboards on its MacBook laptops were prone to failure.

Treasury Yields Fall Slightly After Jobless Claims Come in Worse Than Expected

Treasury yields dipped on Thursday after data showed U.S. jobless claims rose more than expected last week. The yield on the benchmark 10-year Treasury note fell one basis point to 0.584% and the yield on the 30-year Treasury bond were also lower at 1.274%. Yields more inversely to prices.

US Companies Making Headlines After Thursday’s Bell

Intel’s stock dropped 8% in extended trading after the company offered disappointing third-quarter guidance. Intel released its second quarter earnings, beating predictions of analysts surveyed by Refinitiv.

After Intel said the company’s 7mm-based CPU product timing is delayed, shares of Advanced Micro Devices climbed 7% in after hours.

Moderna’s stock dropped 2% in extended trading after falling 9.49% earlier in the day. The drop comes after the U.S. Patent and Trademark Office ruled Moderna does not have a claim to a patent held by a rival company.

The ruling could potentially delay Moderna’s race to produce a coronavirus vaccine. Shares of BioNTech jumped 2% while Novavax’s stock fell 1% in after hours.

Disney’s stock fell 1% after the closing bell. The company announced Thursday afternoon that its movie “Mulan” is delayed indefinitely and all Star Wars films and Avatar sequels have been pushed back a year due to theater closures and production shutdowns spurred by the coronavirus pandemic.

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

Intel’s Delay of New 7-Nanometer Chip Raises Concerns; Target Price $45 in a Worst-Case Scenario

Intel Corporation, an American multinational corporation and technology company headquartered in California, said that its new 7-nanometer-based CPU was behind schedule by six months and expect it won’t be ready until late 2022 or early 2023, sending its shares down over 10%.

“Intel has been projecting a front half loaded year since January, and that’s playing out with a strong Q2, but Q3 guidance that we found surprisingly weak, down 8% q/q. 7-nanometer delays are negative for the narrative, but the willingness to outsource could be a watershed transition for the company,” said Joseph Moore equity analyst at Morgan Stanley.

“We had expected this quarter to be a positive catalyst, but we were wrong about that; while this guidance likely remains conservative, conditions still get tougher from here. The company will be entering CY21 with revenues down materially year on year in the early part of the year, with fixed costs rising significantly, coming out of a CPU shortage that helped pricing, with a very strong PC market-creating tough comparisons over the year; we have been 13% below consensus for next year.”

The largest semiconductor company in the world said they have identified a defect mode in their 7nm process that resulted in yield degradation and expect to see initial production shipments of its new 7-nanometer data-centre CPU design in the first half of 2023.

Intel forecasts Q3 revenue to be around $18.2 billion on adjusted earnings of $1.10 a share and updated its 2020 annual revenue guidance to $75 billion. For Q2, Intel reported that its overall revenue and adjusted profits were $19.73 billion and $1.23 a share.

Intel shares sank more than 10% on Thursday, following a 1.1% decline in the regular session to close at $60.40.

Intel stock forecast

Seventeen analysts forecast the average price in 12 months at $63.25 with a high forecast of $82.00 and a low forecast of $45.00. The average price target represents a 2.79% increase from the last price of $61.54. From those 17, eight analysts rated ‘Buy’, seven rated ‘Hold’ and two rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $61 under the base case, $73 under a bull scenario and $39 under the worst-case scenario. Several other equity research analysts have downgraded their Intel’s stock outlook on Friday. Intel had its price objective slashed by stock analysts at RBC to $48 from $52. Goldman Sachs lowered their price target to $54 from $65 and cut the stock rating to ‘Sell’ from ‘Neutral’. Credit Suisse Group lowered its target price to $70 from $75.

We think it is good to hold for now as 50-day Moving Average and 100-200-day MACD Oscillator signals a mild bearishness.

Analyst view

“Primary revenue drivers are PCs and Data Center, which we estimate flat and increasing low to mid-teens respectively in 2020, driving minimal revenue growth long term. We are reasonably upbeat on the long-term prospects for the Data Center Group, believing that the growth trajectory of the business is in the HSD range,” said Joseph Moore equity analyst at Morgan Stanley.

“Non-PC/server initiatives such as memory are likely to continue to disappoint. Process node transitions take longer; 10nm server has been delayed a number of times now to late 2020.”

Upside and Downside risks

PC and Zen server share gain accelerates as Zen adoption picks up; Intel’s competitive response at 10nm is less impressive than expected. Console cycle turns out to be stronger than expected, Morgan Stanley highlighted as upside risks to Intel.

Intel’s server CPUs for 2020 (Cooper Lake in 1H on 14nm and Ice Lake in 2H on 10nm) stifle AMD’s momentum and allow it to regain share. AMD loses graphics share to NVIDIA. Console cycle underperforms expectations, Morgan Stanley highlighted as downside risks.

Stock Pick Update: July 22 – July 28, 2020

The broad stock market has extended its uptrend in the last five trading days (July 15 – July 21). The S&P 500 index broke above its early June local high and it got closer to 3,300 mark. More than three months ago on March 23, the market sold off to new medium-term low of 2,191.86. It was a stunning 35.4% below February 19 record high of 3,393.52. The corona virus and economic slowdown fears have erased more than a third of the broad stock market value. Right now the index is just 4.01% below the record high.

The S&P 500 index has gained 0.97% between July 15 and July 21. In the same period of time our five long and five short stock picks have lost 0.21%. Stock picks were relatively weaker than the broad stock market. Our long stock picks have lost 0.28% and short stock picks have resulted in a loss of 0.14%. However, the overall results remain relatively better than the S&P 500 index over last months.

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

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

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

  • July 21, 2020
    Long Picks (July 15 open – July 21 close % change): DOW (-1.40%), INTC (+2.83%), MCD (-0.47%), XOM (-0.84%), HST (-1.54%)
    Short Picks (July 15 open – July 21 close % change): COG (+4.57%), VNO (-5.52%), AON (+2.30%), LIN (+1.36%), AAPL (-2.01%)Average long result: -0.28%, average short result: -0.14%
    Total profit (average): -0.21%
  • July 7, 2020
    Long Picks (July 1 open – July 7 close % change): INTC (-2.67%), F (+0.33%), PPG (+2.17%), DTE (-0.35%), AIG (-5.93%)
    Short Picks (July 1 open – July 7 close % change): XEL (+2.00%), BLK (+0.91%), EOG (-5.72%), MSFT (+2.52%), EBAY (+8.14%)Average long result: -1.29%, average short result: -1.57%
    Total profit (average): -1.43%
  • June 30, 2020
    Long Picks (June 24 open – June 30 close % change): WY (+0.36%), CTSH (+3.76%), HIG (-0.57%), BSX (-2.39%), COP (-2.28%)
    Short Picks (June 24 open – June 30 close % change): EW (-1.51%), WMB (0.00%), ETR (-0.27%), CCI (+2.04%), ADBE (-1.07%)Average long result: -0.23%, average short result: +0.16%
    Total profit (average): -0.04%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, July 22 – Tuesday, July 28 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (July 22) and sold or bought back on the closing of the next Tuesday’s trading session (July 28).

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

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

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

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

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

Trend-following approach:

  • buys: 1 x Materials, 1 x Consumer Discretionary, 1 x Technology
  • sells: 1 x Energy, 1 x Real Estate, 1 x Financials

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Real Estate
  • sells: 1 x Materials, 1 x Consumer Discretionary

Trend-following approach

Top 3 Buy Candidates

MLM Martin Marietta Materials – Materials

  • Stock broke above the downward trend line
  • Potential medium-term uptrend continuation
  • The resistance level of $230

MCD McDonalds Corp. – Consumer Discretionary

  • Stock broke above month-long downward trend line
  • The resistance level of $200 (short-term upside profit target)
  • The support level remains at $180

INTC Intel Corp. – Technology

  • Stock remains above medium-term upward trend line
  • The resistance level and upside profit target level at $65
  • The support level is at $56-57

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

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

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

Thank you.

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

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Disclaimer

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

 

Stock Pick Update: July 15 – July 21, 2020

The broad stock market has been advancing between July 1 and July 7. The S&P 500 index got closer to its early June medium-term local highs again. More than three months ago on March 23, the market sold off to new medium-term low of 2,191.86. It was a stunning 35.4% below February 19 record high of 3,393.52. The corona virus and economic slowdown fears have erased more than a third of the broad stock market value. Then we saw huge come-back rally, as the index got back above 3,200 mark.

The S&P 500 index has gained 1.27% between July 1 and July 7. In the same period of time our five long and five short stock picks have lost 1.43%. Stock picks were relatively weaker than the broad stock market. Our long stock picks have lost 1.29% and short stock picks have resulted in a loss of 1.57%. However, the overall results remain relatively better than the S&P 500 index over last months.

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

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

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

  • July 7, 2020
    Long Picks (July 1 open – July 7 close % change): INTC (-2.67%), F (+0.33%), PPG (+2.17%), DTE (-0.35%), AIG (-5.93%)
    Short Picks (July 1 open – July 7 close % change): XEL (+2.00%), BLK (+0.91%), EOG (-5.72%), MSFT (+2.52%), EBAY (+8.14%)Average long result: -1.29%, average short result: -1.57%
    Total profit (average): -1.43%
  • June 30, 2020
    Long Picks (June 24 open – June 30 close % change): WY (+0.36%), CTSH (+3.76%), HIG (-0.57%), BSX (-2.39%), COP (-2.28%)
    Short Picks (June 24 open – June 30 close % change): EW (-1.51%), WMB (0.00%), ETR (-0.27%), CCI (+2.04%), ADBE (-1.07%)Average long result: -0.23%, average short result: +0.16%
    Total profit (average): -0.04%
  • June 23, 2020
    Long Picks (June 17 open – June 23 close % change): BA (-3.41%), DLR (-0.81%), WLTW (+1.27%), BMY (+2.05%), HSY (-2.03%)
    Short Picks (June 17 open – June 23 close % change): DHR (-0.23%), CLX (+1.76%), AEP (-1.58%), MMM (-1.47%), PLD (-6.67%)Average long result: -0.58%, average short result: +1.64%
    Total profit (average): +0.53%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, July 15 – Tuesday, July 21 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (July 15) and sold or bought back on the closing of the next Tuesday’s trading session (July 21).

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

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

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

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

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

Trend-following approach:

  • buys: 1 x Materials, 1 x Technology, 1 x Consumer Discretionary
  • sells: 1 x Energy, 1 x Real Estate, 1 x Financials

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Real Estate
  • sells: 1 x Materials, 1 x Technology

Trend-following approach

Top 3 Buy Candidates

DOW Dow Holdings Inc. – Materials

  • Stock broke above over month-long downward trend line
  • Potential medium-term uptrend continuation
  • The resistance level of $46 (short-term upside profit target level)

INTC Intel Corp. – Technology

  • Stock remains above medium-term upward trend line
  • The resistance level and upside profit target level at $61-65
  • The support level is at $56

MCD McDonalds Corp. – Consumer Discretionary

  • Stock broke above downward trend line
  • The resistance level of $200 (short-term upside profit target)
  • The support level remains at $180

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

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

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

Thank you.

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

* * * * *

Disclaimer

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

 

Stock Pick Update: July 1 – July 7, 2020

The broad stock market has extended its short-term consolidation in the last five trading days (June 24 – June 30). More than three months ago on March 23, the S&P 500 index sold off to new medium-term low of 2,191.86. It was a stunning 35.4% below February 19 record high of 3,393.52. The corona virus and economic slowdown fears have erased more than a third of the broad stock market value. Then we saw huge come-back rally, as the index got back above 3,200 mark. In the first half of June the broad stock market has broken below its short-term upward trend line. Since then it has been trading within a consolidation following bouncing off 3,000 mark.

The S&P 500 index has lost 0.45% since last Wednesday’s open. In the same period of time our five long and five short stock picks have lost just 0.04%. Stock picks were relatively slightly stronger than the broad stock market last week. Our long stock picks have lost 0.23% and short stock picks have resulted in a gain of 0.16%. The overall results remain relatively better than the S&P 500 index over last months.

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

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

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

  • June 30, 2020
    Long Picks (June 24 open – June 30 close % change): WY (+0.36%), CTSH (+3.76%), HIG (-0.57%), BSX (-2.39%), COP (-2.28%)
    Short Picks (June 24 open – June 30 close % change): EW (-1.51%), WMB (0.00%), ETR (-0.27%), CCI (+2.04%), ADBE (-1.07%)Average long result: -0.23%, average short result: +0.16%
    Total profit (average): -0.04%
  • June 23, 2020
    Long Picks (June 17 open – June 23 close % change): BA (-3.41%), DLR (-0.81%), WLTW (+1.27%), BMY (+2.05%), HSY (-2.03%)
    Short Picks (June 17 open – June 23 close % change): DHR (-0.23%), CLX (+1.76%), AEP (-1.58%), MMM (-1.47%), PLD (-6.67%)Average long result: -0.58%, average short result: +1.64%
    Total profit (average): +0.53%
  • June 16, 2020
    Long Picks (June 10 open – June 16 close % change): SLB (-11.06%), IEX (-4.63%), L (-10.45%), BSX (-4.33%), KR (-1.69%)
    Short Picks (June 10 open – June 16 close % change): ABBV (-0.96%), COST (-1.67%), ADBE (+3.02%), VLO (-7.62%), NOC (-4.84%)Average long result: -6.43%, average short result: +2.41%
    Total profit (average): -2.01%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, July 1 – Tuesday, July 7 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (July 1) and sold or bought back on the closing of the next Tuesday’s trading session (July 7).

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

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

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

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

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

Trend-following approach:

  • buys: 1 x Technology, 1 x Consumer Discretionary, 1 x Materials
  • sells: 1 x Utilities, 1 x Financials, 1 x Energy

Contrarian approach (betting against the recent trend):

  • buys: 1 x Utilities, 1 x Financials
  • sells: 1 x Technology, 1 x Consumer Discretionary

Trend-following approach

Top 3 Buy Candidates

INTC Intel Corp. – Technology

  • Stock broke above month-long downward trend line
  • Potential medium-term uptrend continuation
  • The resistance level of $61-65 (initial upside profit target level)

F Ford Motor Co. – Consumer Discretionary

  • Stock is above its June downward trend line
  • The resistance level and upside profit target level at $65
  • The support level is at $5.75

PPG PPG Industries, Inc. – Materials

  • Potential advance after breaking above downward trend line
  • The resistance level of $115 (short-term upside profit target)
  • The support level is at $100

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

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

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

Thank you.

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

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Disclaimer

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

 

Apple Chips to Overcome Intel Silicon “Valley”

After years of rumors, it’s now official: Apple is breaking up with Intel.

The news sent Apple to a new all-time high with a year-to-date climb that has now exceeded 22 percent.

Intel’s stock still managed to track broader gains in US stock markets, although it remains some 13 percent below its year-to-date high.

Cry me a revenue stream

The breakup of the 15-year relationship however carries more symbolic value than financial pain.

In its 2019 financial year, Mac computers accounted for less than 10 percent of Apple’s total revenue. Over the prior three financial years (FY 2016-2018), fewer than 20 million MAC computers were sold per FY, which is less than half of the total number of iPads sold. iPhones remain the company’s primary hardware product, making up about 77 percent of total units sold, while accounting for more than half of total revenue according to Bloomberg data. Meanwhile, it’s estimated that the Mac line of computers accounts for less than five percent of Intel’s annual revenue.

Apple’s other relationships also tested

While this latest move appears to be chipping away at Intel’s position as the world’s largest chipmaker, Apple’s own position is also being challenged.

The Cupertino-based company is facing a backlash from third-party developers who will play a crucial role in ensuring that apps can still function well on the new Macs that are set to be powered by Apple’s own processors by year-end. Apple however appears to have extended an olive branch to the developer community on Monday by allowing them to challenge App store policies.

At the same time, US and European regulators are scrutinising Apple’s policies over its App Store, which contributed about 18 percent of Apple’s total revenue in the 2019 fiscal year, a figure which exceeded US$ 46 billion. The iPhone maker is also still contending with the ill effects of the coronavirus pandemic. Just last week, Apple announced that it will reclose 11 stores in Florida, Arizona, North Carolina, and South Carolina amid a resurgence in Covid-19 cases. While the immediate impact appears minor for the time being, a larger wave of US lockdowns could erode Apple’s sales, considering its reliance on hardware sales.

Apple shares set to shake it off

Even when facing such headwinds, markets are still holding up Apple as the world’s most valuable company, with a market cap of US$1.555 trillion. Given the grip it has over its software and hardware ecosystems, Apple’s shares are expected to ride out potential valleys to come and climb onto loftier peaks.

Written on 06/23/20 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.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Intel Upgrade Could Stoke Buying Interest

Dow component Intel beat Q1 2020 estimates in April, posting $1.45 earnings-per-share (EPS) on $19.83 billion in revenue. However, the chip giant also warned that Q2 results would not meet expectations, lowering EPS guidance to $1.10. Not surprising, they didn’t offer annual profit or revenue guidance due to continued uncertainly, driven by the pandemic. The company is scheduled to report Q2 2020 earnings on July 23.

The semiconductor sector held up well in the first quarter, with idled workers turning to virtual meetings, digital communications, and video gaming. Intel has benefited from this usage because the pandemic has bolstered sagging demand for personal computers and video gaming consoles. However, smartphones have yet to show a 2020 sales uptick, undermining one source of steady income.

KeyBank Upgrade

KeyBanc’s Weston Twigg just upgraded the stock to ‘Overweight’, highlighting their competitive advantages. He noted the company is “aggressively tackling new markets, quickly launching products on 10nm, and unifying chips, software, and developers.” He also mentioned that CEO Bob Swan “appears to be gaining confidence”, shaking the company out of its “recent malaise.” Swan took the helm in January 2019 from former CEO Brian Krzanich. Twigg has established a price target of $82, or 16 times the firm’s 2021 EPS estimate of $5.12.

Wall Street analysts have been mixed on the mega-cap’s long-term outlook so far in 2020, providing 11 ‘Buy’, 15 ‘Hold’, and 3 ‘Sell’ recommendations. Price targets range from a low at $51 and a high at $85. The stock is now trading about $3.00 below the median $64.25 target. COVID-19 has weighed on these ratings, with the company now forced to prove it can prosper in the new landscape.

Intel Price Action

Intel has failed to match the outstanding performance of high tech peers in recent years. The stock slumped through the first half of the last decade due to an ‘old school’ approach by the former CEO, who departed in 2018. It’s gained ground in the last 5 years but is still trading more than 14 points under the all-time high posted in 2000. This compares unfavorably with the Nasdaq-100 index, which has more than doubled in price during the same period.

Asia Slumps, ECB Stands Pat, US Equities Rebound On Strong Earnings

Asia Falls Hard, Led By Tech

Asian indices fell hard in Thursday trading following a massive rout in the US. The Japanese Nikkei led with a loss of 3.72% and outpaced most other major indices in the region. The Nikkei created a large price gap at the open and fell from there, creating a large red candle and setting a new 9-month low. The is bearish and gaining momentum although price action is now approaching a key support level near 21,000.

The Australian ASX posted the second largest decline during the Asian session with a loss near 2.80%. The ASX was led by tech, but bloodshed was not limited to one sector. The energy, financial, and mining sectors all saw substantial losses with shares of Rio Tinto and BHP falling roughly 3.0%. Chinese indices were not immune to the selloff but fared much better than either the Nikkei or ASX. The Hong Kong Heng Seng led Chinese markets with a loss of -1.0%, the mainland Shang Hai index posted a gain of 0.02%.

The ECB Holds Rates Unchanged

In Europe attention was focused on earnings and the ECB. The ECB held their October policy meeting over the past two days and released their statement this morning. The bank decided to hold rates unchanged which was expected; the bank also maintained its outlook for tightening. The ECB says they are on track, barring unexpected data, to end their bond purchase program in December and to begin policy tightening mid to late 2019.

EU markets were mostly flat and mixed at midday. The UK FTSE was the only index to hug the flatline, trading in a tight range over and under 0.00%, while the DAX and CAC were both able to post gains. The CAC led advancing markets with a gain near 1.0% followed by a distant 0.35% for the DAX. Markets in the region were buoyed by earnings more than anything else. Automakers were strong performers as their results reveal dominance over US car makers like Ford (F) who reported sales decline for the region.

US Futures Point To Rebound, Earnings In Focus

In the US futures trading indicated a strong open. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite were all indicated to post a gain of near 1% led by tech. The NASDAQ was indicated to open with a gain near 1.5% as strong earnings from Microsoft (MSFT), VISA (V), and Tesla (TSLA) all blew past expectations for revenue and earnings growth.

Regarding earnings and earnings season; today is the single busiest day of the season with 66 S&P 500 companies reporting. Reports from Amazon, Google, Intel, Pricesmart, Mattel, and Chipotle Mexican Grill are all due after the bell. Based on reports so far there is a high likelihood this batch will produce better than expected results with a few outlying misses. What will matter to traders is the impact of tariffs and trade war on earnings and how they will affect the outlook for earnings growth over the next five quarters.

SP500 Index Changing Drastically

The beginning of October brings with it the biggest changes to the SP500 index since 1999. Some sectors and industries will most likely emerge, and some may disappear, with their respective weight in the index changing as well. Additionally, some stocks may move to other sectors. These changes may mostly affect the IT, telecommunications and consumer goods sectors.

Consequently, the weight of the information technology sector may fall from the current 25 percent to 20 percent. A new sector is likely to be created, specifically the communication services sector, which may have a weight of 10 percent in the SP500 index. This new sector will be created by moving all titles from the telecommunications industry, which previously had a weight of 2 percent in the SP500 index. After this, the telecommunication sector will probably cease to exist. In addition, several IT and consumer goods companies will most likely be transferred to this new communications services sector.

Among the stock titles that should complete the emerging communications services industry by moving from the IT sector are Alphabet (Google), the dominant social networking player Facebook, as well as EA, Activision and Take-Two Interactive games. Verizon and AT&T will most likely move from the telecommunications sector. From the consumer discretionary sector, Netflix, Disney, 21st Century Fox, and a number of more companies may join the new communications sector in the near future.

What might be the impacts of changes on investors? There are many of them, and in the long run, many of them are crucial. They relate, for example, to the nature of the sectors, including impacts on growth outlooks, dividend yield, exposure to the cloud or AI trends, automatic or forced the rebalancing of portfolios of hundreds of ETF funds and other aspects.

These changes may have a major impact on the IT sector, which has grown to a quarter of its weight in the SP500 index and, has begun to dominate the index. The two major companies which might be affected by this are Facebook and Alphabet, the two main growth drivers with a very high market capitalization. The ‘new’ technology sector may, therefore, have lower expected future revenue growth, earnings per share and a lower margin than the current or future new communications services sector. The largest companies in the technology sector after this change will probably be Apple (19 percent) and Microsoft (16 percent), followed by Intel (5 percent). These are companies with lower valuations, measured for example by the P/E or P/S multiples, and which also have a lower regulatory risk. On the other hand, these companies have a significantly lower growth outlook and weaker exposure to growing cloud services and artificial intelligence. The nature of the IT sector is changing significantly, so investors focusing on growth titles may be able to assess current changes by rebalancing out their portfolios.

On the contrary, new money can be moved to the newly emerging communications sector. This will probably provide an appealing vision of future growth, as Alphabet, Facebook and Netflix will most likely move here. However, this growth dynamics should be moderated by the AT&T and Verizon telecoms companies, which are growing in the same way as the whole economy (for example, they are defensive stocks). In return, they may provide higher revenue stability and higher dividend yields.

Analysis and opinions provided herein are intended solely for informational and educational purposes and don’t represent a recommendation or an investment advice by TeleTrade. Indiscriminate reliance on illustrative or informational materials may lead to losses.

This article was written by Peter Bukov, one of TeleTrade’s leading analysts. 

IoT Platform Wars Have Begun, Blockchain Might Foster a Win-Win for All Stakeholders

Internet of Things (IoT) is here to stay because big data is the future of business and IoT provides a seamless way to gather this data. IoT simply refers to billions of devices connected to the Internet, assigned IP addresses to actively collect and share data. IoT can effectively transform otherwise “dumb” devices into smart devices that could take part in both machine-to-machine communications and machine-to-human communications for a seamless merger of digital and physical words.

Analysts at Gartner expect that the IoT industry will continue to grow and the number of IoT devices in use will reach 20.4 billion by 2020. The analysts also noted that total spending on IoT endpoints and services will reach $2.9 trillion by 2020. Interestingly, getting consumers to ditch their current devices in favor IoT enabled devices still appears to be an uphill task. This piece provides insight into how blockchain could facilitate the faster adoption of IoT in the mass market.

The platform wars in IoT

In mobile technology, the war of platforms is predominantly between Apple’s (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOGL)’s Android OS. In the desktop, the platform battle is predominantly between Microsoft Corporations (NASDAQ:MSFT) Windows and Apple’s MacOS. In gaming, there’s an ongoing platform war between Microsoft’s Xbox and Sony’s PlayStation.

Interestingly, in the IoT segment, there are many different platforms – the likes of IBM, Microsoft, GE, Bosch, Siemens and hundreds of emergent start-ups are trying to build the market-leading IoT platform.

Unfortunately, the fragmented nature of the IoT platform market also makes it hard for OEMs (original equipment manufacturer) to know which platform would make the best business sense for IoT integration with their devices. The current conundrum of the IoT platform wars is that OEMs don’t want to build devices for a platform that doesn’t have any existing users. The fact that OEMs are cautious about pitching their tent on a platform that doesn’t have users also means that IoT devices aren’t being produced as fast as one would have imagined.

Blockchain could incentivize a faster adoption of IoT in the mass-market

Blockchain technology in practical terms is a decentralized network on which users can transfer unique pieces of digital property to other users with the guarantee that the transfer is secure, visible to everybody on the network, and such that the legitimacy of the transfer cannot be challenged. Blockchain technology could encourage data-sharing that would facilitate the mainstream adoption of IoT systems.

A blockchain-based platform could be open sourced, making it easy for all OEMs to build devices that can be integrated to function in an IoT marketplace without being forced to adopt a protocol from any single platform. For instance, blockchain-based IOTW is a platform trying to transform all IoT devices into micro-mining rigs for the cryptocurrency. Many of the existing devices are being retroactively outfitted with IoT capabilities. However, these devices often end up running outdated software that requires consistent manual patches and upgrades.

With IOTW, users don’t need to buy new hardware or commit to repetitive software upgrades on their existing devices. All that is required for existing devices to connect to the IOTW ecosystem is a firmware upgrade from an open SDK solution. Interestingly, once the device is turned on, it will serve the dual purpose of participating in an IoT marketplace and mining cryptocurrencies without any significant increase in power consumption.

More interesting is the fact that IoT device owners will be rewarded with IOTW coins for participating in its data marketplace. The coins can then be used to buy media content, services, or goods in open markets. Device owners can also leverage the coins to pay for services or spare parts on their devices. The IOTW is based on the Ethereum platform and can be exchanged with Ether coins.

2 stocks facilitating growth in the IoT Space

While most IoT companies come out with promises of how they intend to take over the world with their futuristic projects; investors can look at opportunities to make short, medium, and long-term plays. Below are 2 IoT stocks to add to your watchlist as we head into Q4 2018.

Intel Corporation (NASDAQ:INTL)

Intel Corporation (NASDAQ:INTL), is the second largest and highest valued semiconductor and chipmaker in the world. Intel has a strong footprint in the global IoT market, having unveiled its IoT platform for coordinating and managing the security and connectivity of connected devices in 2014. Over the last three years, Intel has worked with some of the largest tech firms to integrate Intel IoT platform with open standards for increased interoperability.

Intel Chart
Intel Chart

In the last three year since launching its IoT division, the shares of Intel have climbed by 74.31% and its quarterly revenue has surged 17.26% as seen in the chart above. In Q2 2018, Intel reported earnings of $1.04 per share on revenue of $16.96B. The reported top and bottom line did outperform the consensus analysts’ estimate of earnings of $0.96 per share on earnings of $16.77B. For what it’s worth, Intel has consistently delivered a positive surprise on price and EPS estimates in the last three quarters.

Texas Instrument Incorporated

Texas Instrument Incorporated (NASDAQ:TXN) is another major stakeholder in the global IoT market. In 2014, Texas Instruments cemented its presence in the IoT space when it introduced its Internet of Things (IoT) ecosystem for third-party cloud providers to enable devices manufacturers to use it’s TI technology to connect to the IoT more easily and rapidly. By leveraging Texas Instruments’ processors, a microcontroller (MCU), and wireless connectivity solutions; companies such as LogMeIn, IBM, Spark, Thingsquare, ARM, 2lemetry, and ARM have been able to launch a wide cross-section of IoT solutions across multiple sectors.

Texas Instruments
Texas Instruments

In the last 4 years of launching its IoT ecosystem, the shares price of Texas Instruments has surged by 147% and its quarterly revenue has increased by 14.74% in the same period as seen in the chart above. In Q2 2018, Texas Instruments reported earnings per share of $1.40 on revenue of $4.02 billion to beat the consensus analyst estimate of earnings of $1.30 per share on revenue of $3.96 billion. It is also important to note that Texas Instruments has consistently delivered a positive surprise on price and EPS estimates in the last three quarters.

Intel Downgrade Weighs on Major Indexes, Fed’s Bullard Sides With Trump on Tariffs

After a two-sided pre-market trade, U.S. stocks opened slightly lower in the cash market, as weakness in shares of Intel raised concerns about the technology sector.

Intel dropped more than 1 percent on the opening after Barclays downgraded the company to equal weight from overweight, citing rising competition from rival chipmaker Advanced Micro Devices. The downgrade comes nearly two weeks after the company reported better-than-expected earnings.

The move in Intel is significant because the stock is part of all three major indexes – the Dow, S&P 500 Index and NASDAQ Composite Index. The overall stock market could tread water today if shares of Intel continue to weaken.

In the absence of fresh economic data on Monday, investors will be primarily focused on earnings as the second quarter season comes to a close. Among those reporting, Cardinal Health and Tyson Foods reported better-than-expected results. Warren Buffet’s Berkshire Hathaway posted stronger-than forecast quarterly profit on Friday, sending its Class B shares up by 2.6 percent.

According to FactSet, this earnings season has been stronger than analysts had expected. Of the S&P 500 companies that had reported through Friday, 80 percent have posted better-than-expected profits. Additionally, second-quarter earnings have grown by 24 percent through Friday, beating pre-season expectations of 20 percent growth.


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Fed’s Take on Tariffs

Up until Monday, the Fed has been quiet about the impact of tariffs on the economy.

In July, Federal Reserve Chairman Jerome Powell only touched on the topic when he was giving testimony before Congress. At that time, when asked during Senate testimony about what impacts tariffs have on growth, the central bank chief did not directly address policies that have led to worries about a burgeoning global trade war.

However, he did speak in general terms and said the prognosis for protectionism is generally not good.

“In general, countries that have remained open to trade, that haven’t erected barriers including tariffs, have grown faster, they have higher incomes, higher productivity,” Powell said. “Countries that have gone in a more protectionist direction have done worse. I think that’s the empirical result.”

At last week’s Federal Open Market Committee monetary policy meeting, policymakers didn’t even address the subject.

On Monday, St. Louis Federal Reserve Bank President James Bullard told CNBC his opinion on tariffs and they sounded very close to what the Trump administration has been preaching.

Bullard said countries espousing free trade in response to U.S. trade war threats should drop all their own tariffs to zero, but they won’t.

“The positioning here is that the other countries are all free trade and the U.S. is not. If that’s really what we’re saying then just drop all tariffs and all nontariff barriers. Go down to zero. That would be better outcome for the whole world,” Bullard told CNBC’s “Squawk Box Europe.”

That sounds like a plan to me and perhaps it would put an end to all the negative comments about Trump’s plan to level the playing field and make trade fair across the board. So I guess the U.S. isn’t the “bully bad guy” after all. I have to applaud Bullard for his comments. They were much nicer than saying to China, the European Union and Canada, “quit your whining”.

Treasury Yields Drop Amid Concerns Trade Disputes Will Slow Economic Growth

A government report released on Friday showed that economic growth jumped in the second quarter at its fastest pace in nearly four years. According to the Department of Commerce, U.S. Gross Domestic Product rose 4.1 percent, its best pace since the third quarter of 2014 and the third-best growth rate since the Great Recession. The GDP number matched expectations from economists and was supported by an increase in consumer spending, exports and business investment.

In other economic news, U.S. consumer sentiment declined in July according to the University of Michigan. The index fell to 97.9 from 98.2 in June, as both the assessment of current economic conditions and expectations fell. Economists had forecast a 97.3 reading.

U.S. Treasury Markets

Despite the strong growth in the economy, which should have raised expectations for additional rate hikes by the Fed later in the year, U.S. Treasury yields fell on Friday as investors questioned whether the high growth rates will be sustainable especially in light of historically low levels of unemployment.

Investors followed in line with the thinking of U.S. Federal Reserve officials who are less certain GDP can remain above 4 percent. The central bankers forecast GDP to rise 2.8 percent for all of 2018 but then to tail off to 2.4 percent in 2019 and 2 percent in 2020.

The yield on 10-year Treasury note settled at 2.958, down 0.017, while the yield on the 30-year Treasury bond settled at 3.085, down 0.016.

U.S. Equity Markets

The major U.S. stock indexes finished lower across the board on Friday. Investors set aside the robust GDP report, choosing instead to focus on earnings.

In the cash market, the benchmark S&P 500 Index settled at 2818.82, down 0.7 percent. The blue chip Dow Jones Industrial Average closed at 25451.06, down 0.30% and the tech-driven NASDAQ Composite finished 1.49% lower at 7736.98.

Technology stock earnings continued to remain in focus. Contributing the most to the decline in the NASDAQ Composite were an 8.5 percent decline in shares of Intel, and 20 percent loss in shares of Twitter.

At the end of the week with over 50 percent of S&P 500 companies reporting earnings, 79.8 percent have reported better-than-expected earnings, according to data from FactSet.

U.S. Dollar

The U.S. Dollar fell against a basket of currencies on Friday, helped by the decline in U.S. Treasury yields. The drop in yields was in response to concerns that current GDP growth is unsustainable as lingering trade tensions are likely to be a drag on the economy in the second half of 2018.

The Euro finished slightly higher against the dollar following its steepest one-day loss in a month in reaction to the European Central Bank on Thursday reaffirming its plan to slowly end its accommodative monetary policy.

US GDP Grows at Fastest Pace Since 2014; Stocks Weaken as Twitter, Intel Disappoint

U.S. equity markets retreated, Treasury yields fell and the dollar weakened despite a U.S. Gross Domestic Product report that showed the economy grew at a robust 4.1 percent pace in the second quarter. While posting its best performance since 2014, the report also raised hopes that the economy was positioning itself for even better numbers in the future as it pulls out of an almost ten-year range.

One reason for the muted response to the strong figure was that it met economist expectations. Another reason may have been that it represents “stale” data now that we’re almost 30 days into the next quarter.

The 4.1 percent pace represents the fastest rate of growth since the 4.9 percent in the third quarter of 2014 and the third-best growth rate since the Great Recession. Furthermore, the Commerce Department also revised its first-quarter reading up from 2 percent to 2.2 percent.

The main catalysts behind the strong growth were increased consumer and business spending. Increases in exports and government spending also helped support growth. According to data, personal consumption expenditures rose 4 percent while business investment grew 7.3 percent. Federal government outlays also jumped by 3.5 percent.

Analysts said the jump in exports was related to increased activity by farmers who rushed to get soybeans to China ahead of expected retaliatory tariffs.

Data also showed that GDP would’ve been higher if not for declines in private inventory investment and residential fixed investment.

Aiding in the surge in growth were the tariffs as well as the massive tax cut enacted earlier this year.

Other U.S. Economic Reports

U.S. consumer sentiment declined in July according to the University of Michigan. The index fell to 97.9 from 98.2 in June, as both the assessment of current economic conditions and expectations fell. Economists had forecast a 97.3 reading.

“Despite the expectations of higher inflation and higher interest rates during the year ahead, consumers have kept their confidence at high levels due to favorable job and income prospects,” the University of Michigan said.

U.S. Equity Markets

The major U.S. equity markets are trading lower shortly before the close on Friday as the strong U.S. economic growth report took a backseat to poor earnings from Intel and Twitter.

Late in the session, the benchmark S&P 500 Index was trading about 1 percent lower. The blue chip Dow Jones Industrial Average was down nearly 0.50 percent and the NASDAQ Composite was off about 1.60 percent.

Intel declined more than 9.5 percent after announcing delays on its next generation chips. The company did report better-than-expected earnings, however.

Twitter, which reported earnings that matched expectations, dropped more than 19 percent after it said its number of monthly active users fell.

GPU and ASIC – A Correlation and Barometer for Cryptocurrency Traders

GPU, which are Graphics Processing Units, and act as a primary computing device for cryptocurrency mining because of the power they deliver technologically to the masses, may serve as a compelling correlation for cryptocurrency traders who are willing to examine corporate reporting among chip makers and the value of their own digital asset holdings.

While companies like Intel, Nvidia, and ADM control a predominant amount of the GPU marketplace and derive a solid percentage of their core business from selling the GPU products to cryptocurrency miners, revenues are predicted to fall.

These companies via their quarterly earnings forecast that the purchasing of GPU technology will begin to decrease in the coming quarters and year.

The eroding profit equation may be a perception among their analysts who suspect a decline in ‘mining’ is coming because of the rising costs associated with mining enterprises, but it is also certainly related to the changing technological composition of engineered – open source decentralized architecture.

Miners within the digital asset world continue to seek methods which allow for stronger and faster computational applications to be used as bigger mathematical calculations are needed because of the increasing amount of hash functions needed to create a single coin because more ‘nodes’ are needed among the likes of Bitcoin, Litecoin, and Zcash.

The biggest competitor emerging against GPU in the computational field is ASIC (Application Specific Integrated Circuits), and potentially creeping onto the horizon is technology via Google – which is reportedly close to launching – its TPU2 technology, which is an improvement on its Tensor Processing Unit and could prove a wildcard should Google decide to share this power – but this remains to be seen.

Many cryptocurrencies which use mining to create coins are trying to fight back against stronger applications such as ASIC because these stronger applications eliminate the ability of ‘the common man’ to be part of the mining landscape – and put these capabilities largely in the hands of only the well-funded.

Decentralized cryptocurrencies were supposed – in theory – to battle against the powerful. The control of cryptocurrency mining is predominantly in the hands of the elite when it was actually meant to give a voice to those who felt concentrated authority was an ‘evil’ – like central banks and fiat currencies which were argued to be false gods by some of the creators behind blockchains and their respective cryptocurrencies.

For instance, Vertcoin is said to be actively fighting against the use of ASIC’s – but problems persist in actually proving the systems – like Vertcoin’s which have built to keep out the big players – actually work. Vertcoin has reportedly said, it will initiate a ‘hardfork’ if it feels it is vulnerable to ASIC miners.

The question for traders, speculators, and investors in cryptocurrencies is if the correlation of sales of GPU and ASIC’s can be formulated into a working index to judge values in the digital value realm. We are not looking to solve the question here, but to point out the possibility that the technology behind ‘mining’ cryptocurrencies can be monitored and used as a potential sentiment gauge.

Cryptocurrency traders have an interesting correlation which may give rise to a method in order to judge market psychology for values of digital assets via the world of GPU and ASIC as a ‘viewable commodity index’. Thus, a barometer for relative strength and outlook of the broad cryptocurrency marketplace to decipher where the next price trends will develop is feasible.

ASIC is dominated by Bitmain of China. And cryptocurrencies such as Monero are aware of the grip on cryptocurrency mining Bitmain controls and are talking about making changes to its Proof of Work algorithm in an effort to confront Bitmain with modifications which they would have to recalibrate. And it should be pointed out that players like Samsung, Fujitsu, IBM and a host of other companies are developers of ASIC systems.


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While the sales of GPU are important via figures for the cryptocurrency community, the actual chief market for GPU are gamers which need the chips for the graphics interface. The high costs of GPUs because of price gauging caused by demand via the mining community has actually hurt the GPU market because gamers were not willing to pay the escalating prices in the resale market.

It is thought that a decrease of prices in the resale market for GPU devices will actually help companies like Nvidia, ADM and Intel perhaps – because they will once again start to pick up market share from game developers.

The climbing costs of ‘mining’ to create nodes becomes more expensive as more power and greater computational power is needed to create a coin.

Large companies have emerged within the ASIC landscape who can afford to mine cryptocurrency, and they are always looking for technical advantages to develop stronger capabilities of ASIC as an ingredient mechanically to effectively generate profitability.

Traders should not necessarily believe a decline in GPU means the value of cryptocurrencies will drop, but instead should look at the total computational application environment to make a judgment regarding sentiment and the trends in value it may create. Proving – as always – there are no simple formulas to determine worth.

Yaron Mazor is a senior analyst at SuperTraderTV.

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Intel (INTC) Beats The Odds To Achieve Positive Growth In Q1

Intel Corporation (NASDAQ:INTC) has announced its 2018 Q1 earnings and performance figures revealing impressive growth that has, in turn, boosted investor confidence.

The Q1 results were unveiled during the company’s earnings conference call which was held on April 26, 2018. The chipmaker revealed that it managed to achieve impressive revenue growth courtesy of its data center business. Its PC business also grew by 3 percent compared to its performance in the previous year despite facing heavy competition the rest of the computer industry and also the mobile industry.

Intel’s Q1 revenue came in at $16.1 billion marking a 9 percent bump from Q1 of the previous year and it also managed to surpass analysts’ estimate of $15.05 billion. The firm’s earnings per share (EPA) was $0.87 compared to the estimated figure of$0.72expected by analysts. It also marked a 32 percent increase compared to the EPA figure that was reported in Q1 of 2017.

The Q1 results had been highly anticipated as analysts were eager to see how things would go especially after Intel was rocked by concerns about how the recently discovered processor vulnerabilities would affect its performance. Additionally, there have also been reports that Apple Inc. (NASDAQ: AAPL) which is one of Intel’s biggest chip customers has been working on developing its own microprocessors for MacBooks. If the rumors are true, then losing Apple as one of it’s the chip customers would be a huge loss for Intel and it would significantly affect profits.

Future plans and performance expectations

Intel CEO Brian Krzanich stated that he was confident in the firm’s strategy which is backed by its strong business as well as data growth and strong demand for computing performance. The company also revealed that it plans to start improving its manufacturing plant for the 14-nanometer node sometime later this year. It also revealed that it plans to step into high gear production of the 10 nanometer node in the coming year.

William Stein, an analyst at Robinson Humphrey stated that the consensus anticipated strong results but the announced results were nothing short of impressive. However, the strong growth that Intel reported in Q1 of 2018 has raised questions as to whether it will maintain its current momentum amid the growing competition and uncertainties in the market.

Stein changed his price estimate for Intel from $50 to $57 after the announcement of the Q1 results. But not all analysts are convinced that the company will continue to experience positive growth. Stacy Rasgon, an analyst at Bernstein still maintains her bullish outlook on the company’s stock. Analysts like Rasgon argue that it will become increasingly difficult for Intel to maintain the positive growth especially now that the markets are growing even more competitive and also amid rumors about Apple’s plans for its own microprocessors.

Investors are also growing more concerned about the company’s ability to ramp up production of the 10-nanometer chip. Intel CEO Brian Krzanich stated during the earnings call that the rate of improvement has not been as high as expected.

Advanced Micro Devices, Inc. (NASDAQ:AMD) Takes Fight To Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA) After Stellar Q1 Results

Advanced Micro Devices, Inc. (NASDAQ:AMD) stock rallied after the company provided a second-quarter forecast that topped estimates. Investors also pushed the stock higher on the chipmaker posting first-quarter financial results that beat Wall Street expectations.

AMD Q1 Financial Results

The company reported earnings of 11 cents a share, beating analysts’ estimates of 9 cents a share. Last year, the company reported a net loss of (-$0.04) a share. Revenue in the first quarter was up 40%, to $1.65 billion and in the process beat Wall Street estimates of $1.57 billion.

Revenue growth was attributed to growth in the Graphics business Segment that posted revenues of $1.12 billion representing a 95% increase. Revenue could have been much higher had the Enterprise and Semi-Custom segment not posted a 12% drop in revenue that came in at $532 million. AMD attributes the decline to a drop in semi-custom revenue.

AMD also reported solid margins for the first quarter that came in at $36%, compared to 4% as of the end of the first quarter of last year. Lead operating income stood at $120 million compared to just $11 million. After struggling for almost a decade to post profits, AMD reported $114 million increase in net income that came in at $81 million.

For the current quarter, the company said it is expecting $1.72 billion in revenue compared to estimates of $1.58 billion. Blockchain accounted for 10% of the company’s revenue. However, the chip giant has warned of a potential decline in graphics revenue in connection to the blockchain.

Revenue Growth Drivers

Stellar first-quarter earnings and a positive second-quarter outlook underscores the success that AMD is getting with its Ryzen and Vega-based GPUs. AMD is increasingly becoming Ryzen driven company given that 60% of its revenue came from the sales of Ryzen products. The company is also benefiting from an increase in the prices of average desktop chip

The chip giant is already taking the fight to the likes of Intel Corporation (NASDAQ: INTC) with its Epyc server chips as it looks to gain market share in the lucrative marketplace. According to the Chief Executive Officer, Lisa Su, the company is poised to control mid-single-digit server unit share before the end of the year.

“I will say, for the first-generation Epyc, we’re seeing really nice customer interest, and it’s quite broad. And so it is across enterprise as well as the hyper-scale customers. And we view this as a multigenerational play, so we’re very excited about what Epyc can do over the next couple of quarters,” Su saidda.

AMD is slowly gaining a competitive edge against its fierce rivals after stealing market share from NVIDIA Corporation (NASDAQ: NVDA) in the graphics card market The Company also stole some market share from Intel in the Desktop chip market.

Focus going forward is on the launch of the second and third generation of the Epyc chips with production set for early next year. In addition to the Epyc Chip AMD continues to attract interest from companies with large data centers testing out its AMD Radeon graphics cards designed to handle artificial intelligence workloads.