SP500 at Key Daily Support – Break It or Make It

Fundamental analysis

The U.S. is actually moving pretty close to having most Covid restrictions lifted across the country on businesses like restaurants, amusement parks, theaters, museums, music venues, etc.

There are social gathering capacity limits in some states and cities still, but those are mostly scheduled to phase out by this summer, assuming no major setbacks in getting and keeping the virus under control.

Data yesterday showed the ISM Manufacturing Index unexpectedly slid in April though the gauge remained in expansion territory for the 11th month in a row. The read of 60.7% is considered very healthy but the slowdown reveals underlying struggles to meet demand.

The supply-demand imbalance pushed the backlog of orders component to a record-high while customer inventories plunged to an all-time low. The Prices component jumped to its highest level since 2008 with all 18 industries reporting they paid higher prices for raw materials for the fourth straight month. This reflects two main competing narratives on Wall Street right now.

Bullish vs bearish expectations

Bulls believe pent-up consumer demand, underpinned by generous fiscal and monetary supports, will usher in an economic boom not experienced in a generation, which will pull corporate profits up along with it.

Bears, on the other hand, believe higher prices will continue building and eventually put a dent in the rosy expectations for growth. Federal Reserve officials continue to make the case that the current inflation trends are transitory and will ease as supply chain kinks get ironed out.

Many Wall street bears argue that higher prices will be more sticky than anticipated, particularly those that are already being passed on to consumers. Today brings both the Trade Balance Report and Factory Orders for March.

First quarter earnings also continue to flow with Pfizer among today’s highlights. Pfizer’s vaccine, developed with BioNTech, is one of the three authorized for use in the U.S. Along with Moderna,

Pfizer stands apart from rival vaccine makers Johnson & Johnson and AstraZeneca because they are selling their Covid-19 vaccines for profit. Pfizer reports before markets open. Today I am closely watching Zillow, Activision Blizzard, Corteva, CVS, Ferrari, Marathon, and Virgin Galactic.

Technical analysis

I have mentioned swing setup in my weekly outlook. So, today I want to focus on intraday levels. SP500 is approaching key Gann level at 4160. If price sustains below, expect to see a sell-off. On the other hand, 4225 is a bullish breakout level. It seems not easy to get there.

Neutral zone 4225 – 41160. Middle-strength level within this area – 4129.5, weak levels – 4209 and 4176.5. In case of bearish breakout, look for 4128, 4096 (middle-strength levels) and 4144, 4112, 4180 (weak levels).

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

J&J reports $100 million in vaccine sales as results top forecasts

The company, which has previously said the vaccine will be available on a not-for-profit basis until the end of the pandemic, also tightened its forecast for adjusted profit this year, showing it largely performed as previously expected.

Use of the vaccine was paused last week by U.S. regulators as they review reports of rare but serious blood clots in recipients.

The company now expects full-year adjusted profit of $9.42 to $9.57 per share, compared with its prior forecast of $9.40 to $9.60 per share, after sales in its pharmaceuticals business helped boost overall profit.

Excluding items, the company earned $2.59 per share, beating analysts’ estimates of $2.34 per share, according to IBES data from Refinitiv.

Sales of cancer drug Darzalex rose 45.7% to $1.37 billion and sales of Stelara, a treatment for Crohn’s disease and plaque psoriasis, rose about 18% to $2.15 billion.

Net earnings rose nearly 7% to $6.20 billion, or $2.32 per share.

Sales rose 7.9% to $22.32 billion, beating estimates of $21.98 billion.

The company also declared an increase in its quarterly dividend to $1.06 per share from $1.01 per share.

(Reporting by Manas Mishra and Manojna Maddipatla in Bengaluru; Editing by Anil D’Silva)

Gold Prices Surge As U.S Inflation Heats Up – What’s Next?

Gold prices surged on Tuesday from their lowest level in more than a week after a sharp rise in U.S inflation boosting the metal’s appeal as an inflation hedge.

The Consumer Price Index, which measures the change in what customers pay for goods and services such as groceries, clothing and gas, climbed 0.6% in March – it’s biggest monthly increase since August 2012. This report follows last week’s PPI data, which showed producer prices rose 4.2% annually, the fastest pace since September 2011.

The U.S government and Federal Reserve’s massive quantitative easing programs have started to draw criticism and raise concerns about the long-term risks of overspending and overstimulating the economy at such an aggressive pace.

Inflation will remain the hot topic this week with Federal Reserve Chair Jerome Powell speaking at the Economic Club of Washington on Wednesday.

So far, Jerome Powell has artfully dodged questions relating to the rapid rise in inflation, stating that any price acceleration will be temporary. But policy makers will have to address this problematic issue eventually before it snowballs into something they can no longer control.

Another macro event that has lend support to gold prices this week was news that U.S health officials’ have halted the use of Johnson & Johnson’s COVID-19 vaccine, due to blood clotting occurrences in a few recipients.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

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.

What is next for US stock market and dollar?

SP500 index is now up more than +9% year-to-date, while the Dow is up +9.5% and the Nasdaq is up more than +7%. Bulls remain committed to their outlook for an economic boom, all of which is underpinned by the U.S. Federal Reserve’s continued easy monetary policies.

Fundamental analysis

Federal Reserve and monetary policy

Federal Reserve Chairman Jerome Powell reiterated last week that the Fed would continue to remain extremely accommodative until the economy has further recovered. Speaking during an IMF event, Powell pointed out that while parts of the economy are recovering strongly, “there’s a very large group of people who are not.”

The Fed Chair acknowledged the better than expected job gains in March and said the Fed would consider a string of similar monthly gains to progress. Also, Powell again pointed to the weak labor market participation rate as a disinflationary force that will keep temporary price spikes under control. What Powell seems more concerned about is the ongoing pandemic and rising infections across many parts of the world, noting that the “world economy” can’t return to normal until the virus is under control everywhere.

Vaccination

Keep in mind, many of our largest U.S. businesses get +40% or more of their revenue from the global economies. Obviously, it is going to take more widespread vaccination and better efforts in other countries to orchestrate a global recovery. The U.S. remains one of the leaders in vaccinations but there might be a little hiccup the next week or two, as Johnson & Johnson has run into some manufacturing snafus. The CDC said -85% fewer doses of the company’s vaccine will be shipped to states next week, though they did not provide a reason.

Around 15 million J&J doses had to be destroyed because of an ingredient mix up at a factory late last month. Traders are also keeping an eye on developments surrounding AstraZeneca’s Covid-19 vaccine which has been suspended in several country’s due to a possible link to blood clots. Unfortunately, the AstraZeneca drug is the dominant vaccine in use across the globe because of its lower cost and easier distribution. Most advanced economy countries that are using AstraZeneca’s drug also have vaccine supplies from other drug makers but the suspension will still mean a slowdown for vaccine rollouts in many parts of Europe and Asia.

AstraZeneca’s safety issues could mean no vaccine supplies at all for some developing countries where it’s the only option. An underlying concern is that these compounding safety issues, shot suspensions, and other hiccups could lead to an overall “crisis of confidence” in vaccine campaigns, meaning fewer people getting inoculated and delaying the global end to the pandemic.

News and data to watch

Next week brings the Consumer Price Index on Tuesday; Import/Export Prices and the Fed’s Beige Book on Wednesday; Empire State Manufacturing, Retail Sales, Industrial Production, Business Inventories, and the NAHB Housing Market Index on Thursday; and Housing Starts on Friday.

The main focus next week will likely be on Q1 earnings, with the season “unofficially” kicking off with results from big Wall Street banks Goldman Sachs, JPMorgan Chase, and Wells Fargo on Wednesday, followed by Bank of America, Citigroup, and U.S. Bancorp on Thursday.

SP500 technical analysis

sp500 technical analysis

So far SP500 futures still didn’t break above Gann’s resistance. Yet the weekly closing looks very strong. But we can consider longs at this stage only if this resistance turns into support. In that case, 4250 is the natural magnet. However, I am a bit skeptical it may happen.

I like to trade SP500 when Advance Decline Line and cycles give the same signal. At the moment, it is better to pay attention to commodities. There are few markets ready for big moves. At the same time, SP500 cycles turned to the downside, while ADL is very bullish. If we will see a divergence in ADL in coming week or two, I will look for a sell signal. But at the moment, nothing is clear yet.

Dollar Index (DXY) technical analysis

dollar forecast

Overall, the Federal Reserve policy remains bearish for American currency in the long run. But we don’t have a strong fundamental setup to establish swing trades. So, I want you to pay attention to the smaller time frame. The dollar index (DXY) respects 4h MA50 and MA200 quite well. So, we can take advantage of that.

If the price breaks and sustains under 91.90, the price will reach 91.5 and 91 in extension. On the other hand, breaching the 4h MA50, the dollar will target the 93 – 93.5 zone.

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

Why Shares Of Johnson & Johnson Are Under Pressure Today?

Johnson & Johnson Video 09.04.21.

Johnson & Johnson Stock Moves Lower After European Medicines Agency Starts To Review Reports Of Rare Blood Clots

Shares of Johnson & Johnson found themselves under pressure after the European Medicines Agency started to review possible cases of blood clots that may have been caused by the company’s coronavirus vaccine. The European Medicines Agency noted that it found four cases of such blood clots.

Johnson & Johnson stated that “no clear causal relationship has been established between these rare events and the Janssen COVID-19 vaccine”.

Earlier, AstraZeneca COVID-19 vaccine was found to cause blood clots in rare cases. The UK recommended not to use the vaccine for people under 30, while Australia decided that vaccine should not be given to people under 50.

While regulators have stated that benefits outweighed risks in the case of AstraZeneca vaccine, the scope of probes into vaccine safety has grown while various countries have introduced restrictions on its use.

What’s Next For Johnson & Johnson?

While there are just four reports of potential blood clots in people who received Johnson & Johnson coronavirus vaccine and no link between the vaccine and clots has been established, the news served as a bearish catalyst for the stock.

AstraZeneca’s problems got a lot of bad press, so the news about potential issues with the Johnson & Johnson vaccine could also generate many negative headlines.

At the same time, Johnson & Johnson is a huge company which does not depend on the success of its coronavirus vaccine. Analysts expect that the company will report earnings of $9.51 in 2021 and $10.31 in 2022, so the stock is trading at roughly 15 forward P/E which is rather cheap in today’s market environment.

In this light, the negative headlines may continue to put some pressure on shares of Johnson & Johnson in the upcoming trading sessions, but the stock may also attract value-oriented investors who are trying to find reasonably valued companies.

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

EU Drugs Regulator Clears J&J’s Single-Shot COVID-19 Vaccine

By Muvija M and Pushkala Aripaka

The COVID-19 shot is the fourth to be endorsed for use in the EU after vaccines from Pfizer-BioNTech, AstraZeneca-Oxford University and Moderna, and is recommended for those over 18 years of age, the European Medicines agency (EMA) said. It’s the first single-dose shot.

The United States, Canada and Bahrain have also approved the shot. South Africa is carrying out an expedited review.

“With this latest positive opinion, authorities across the European Union will have another option to combat the pandemic and protect the lives and health of their citizens,” EMA’s Executive Director Emer Cooke said.

Final approval by the European Commission is expected soon. EU conditional marketing authorisation allows a treatment to be sold for a year without full data on its efficacy and side-effects being available.

The region is having difficulty taming a spike cases driven by a more contagious variant of the coronavirus, with countries including Italy and France imposing fresh lockdowns.

J&J chief scientific officer Paul Stoffels described it as a “landmark moment” for the U.S. drugmaker and the world as governments struggle to control the pandemic which has crushed economies and killed more than 2.7 million.

The shot, called COVID Vaccine Janssen after the J&J unit that developed it, will help bulk up EU vaccine supplies after a faltering rollout due to delivery delays from Pfizer and AstraZeneca.

J&J has agreed to deliver at least 200 million doses to the EU this year, including 55 million in the second quarter, with the first shipments expected next month.

Exact volumes are not clear though and the U.S. drugmaker has told the European Union it is facing supply issues that may complicate plans to deliver the second quarter doses in full.

The news came as Norway and Denmark temporarily suspended the use of AstraZeneca’s vaccine after reports of the formation of blood clots in some who have been vaccinated.

TRIAL DATA

In J&J’s 44,000-person global trial, the vaccine was found to be 66% effective at preventing moderate-to-severe COVID-19 four weeks after inoculation. It was 100% effective in preventing hospitalization and death due to the virus.

In its statement on Thursday, the EMA said the vaccine was found to be 67% effective two weeks after inoculation.

The side effects were usually mild or moderate and cleared within a couple of days after vaccination, it said. The most common ones were pain at the injection site, headache, tiredness, muscle pain and nausea.

Though many rival shots have reported a higher protection rate, J&J’s vaccine could help boost thin EU supplies and simplify inoculation campaigns because it does not require a second dose or need to be shipped frozen.

Direct comparison between headline numbers reported by different drugmakers is difficult because their trials had different goals, and J&J’s study was conducted while new, more contagious variants of the virus were circulating.

Its vaccine delivers immunity-building proteins through a weakened version of a common cold virus, similar to AstraZeneca’s shot. J&J has also used the technology in its EU-approved Ebola vaccine.

(Reporting by Muvija M and Pushkala Aripaka in Bengaluru; additional reporting by Francesco Guarascio in Brussels and Bart Meijer in Amsterdam; Editing by Josephine Mason, Mark Potter and Kevin Liffey)

 

Gold Continues Declines on Bond Yield Jitters

Not good. Gold bulls can be truly upset. The yellow metal continued its bearish trend last week. As the chart below shows, the price of gold has declined from $1,807 on Monday (Feb. 22) to $1,743 on Friday (Feb. 26).

What happened? Well, last week was full of positive economic news. In particular, personal income surged by 10 percent in January, compared to only 0.6-percent rise in the previous month. Meanwhile, consumer spending increased 2.4 percent, following a 0.4-percent decline in December. This means that, on an absolute basis, personal consumption expenditures have almost returned to the pre- pandemic level, as the chart below shows.

Additionally, durable goods orders jumped by 3.4 percent in January versus a 1.2-percent increase one month earlier. Moreover, initial jobless claims declined from 841,000 to 730,000 in the week ending February 20, as the chart below shows. It means that the economic situation is improving, partially thanks to the December fiscal stimulus.

And, on Saturday (Feb. 27), the House of Representatives passed Biden’s $1.9 trillion stimulus package. Although the bill has yet to be approved by the Senate, the move by the House brings us one step closer to its implementation. Although the additional fiscal stimulus may overheat the economy and turn out to be positive for gold prices in the long-term, the strengthened prospects of higher government expenditures can revive the optimism in the financial markets, negatively affecting the safe-haven assets such as gold .

Finally, on Saturday, the FDA authorized Johnson & Johnson’s vaccine against COVID-19. This decision expands the availability of vaccines, which brings us closer to the end of the epidemic in the U.S. and offers hope for a faster economic recovery. The new vaccine is highly effective (it provides 85-percent protection against severe COVID-19 28 days after vaccination) and most importantly, requires only one dose, which facilitates efficient distribution. So, the approval of another vaccine is rather bad news for gold and could add to the metal’s problems in the near future.

However, the most important development from the last week was the jump in the bond yields . As the chart below shows, after a short stabilization in the first half of the week, the yields on the 10-year Treasuries indexed by inflation rose from -0.79 to -0.60 percent on Thursday (Feb. 25). This surge in the real interest rates is negative for the price of gold.

Implications for Gold

What does this all mean for the price of gold? Well, the increase in the bond yields is clearly bad for the yellow metal. Although they have partially risen to strengthened inflation expectations, the real interest rates have also soared. It means that investors expect wider fiscal deficits and expanding vaccination to accelerate inflation only partially, but in a large part, it will speed up real economic growth. This is a huge problem for gold, as real interest rates are a key driver of gold prices.

An additional issue is that the expectations of higher economic growth and inflation create accompanying expectations for the Fed to tighten its monetary policy and hike the federal funds rate , which exerts downward pressure on gold prices.

This is what we were afraid of at the beginning of the year. We noted that the real interest rates were so low that the next move could be up. Importantly, there is further room for upward trajectory, as the real interest rates are still importantly below the pre-pandemic level.

However, we wouldn’t bet on the return to the levels seen last year. After all, interest rates didn’t return to the pre-crisis level after the Great Recession , so it’s unlikely that they will do it now. Additionally, investors should remember that the U.S. government is now so heavily indebted that if Treasury yields continue to increase, the Fed would have to intervene. A failure to do so would mean that the interest expenses would grow too much, creating serious problems for the Treasury. So, the current bearish trend in gold may not last forever – although it may still take some time.

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

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

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

Gold Futures Lag Far Behind the Other Three Precious Metals in Trading Today

However, at the same time, the three other precious metals that trade on the futures exchange gained value. Silver futures gained $0.19 (+0.70%) in trading today and are currently fixed at $26.625. Platinum futures gained $6.20 (+0.52%) and are currently fixed at $1191.50. Lastly, palladium futures gained $33 (+1.43%) and remained the most expensive of the precious metals complex at $2346.50.

gld 31

si 31

pl 31

pa march 1

The most reasonable explanation for why gold continues to underperform when valued against the other three precious metals that are traded on the futures complex is that gold has the least industrial usage when compared to platinum, palladium, and silver. That fact, coupled with the strong rally in U.S. equities markets today, is at the root of why three precious white metals have been consistently outperforming gold recently. It was another strong showing in all three major indexes, with the Dow Jones industrial average gaining 603 points (+1.95%), the Standard & Poor’s gained 90.67 points (+2.38%), and the NASDAQ composite gaining 398 points (+3.010%).

While it has been recent gains in Treasury yields that led to the strong selling pressure witnessed in gold last week, the primary factor moving equities higher and gold pricing lower is data that suggests that the economy in the United States is gaining momentum that is resulting in a rally in stocks on the first trading day of March.

As reported in MarketWatch, Jim Baird, chief investment officer at Plante Moran Financial Advisors, said, “Increasingly, it appears that the economy sidestepped a feared hard-landing despite a period of soft consumer spending that contributed to negative conditions for parts of the service sector and a surge in layoffs. If anything, it appears that manufacturers may have benefited from consumer spending habits that favored goods over services in recent months.”

One recent development has been the emergency use approval by the CDC of the Johnson & Johnson one shot coronavirus vaccine, which was greenlighted by the FDA last week. In fact, J&J began shipping their vaccine today, beginning with four 4 million doses. While not as effective as the other two primary vaccines granted emergency use (Pfizer-BioNTech and Moderna), the J&J vaccine is stable when stored in a refrigerator for three months and requires only one shot. Many medical professionals believe that this potentially could be key to the rural areas of the United States, which makes it difficult to ship and store the other vaccines at subzero temperatures.

These developments, when coupled with the passage in the Congress last week of President Biden’s $1.9 trillion aid package, have has shifted market sentiment towards the risk-on asset class rather than the safe-haven assets.

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

 

Why Shares Of Johnson & Johnson Are Moving Higher Today?

Johnson & Johnson Video 01.03.21.

Johnson & Johnson Stock Gains Ground After FDA Approves Its Vaccine

Shares of Johnson & Johnson gained upside momentum after the company’s coronavirus vaccine was approved for use in the U.S.

The J&J vaccine is a single-shot vaccine while vaccines from Pfizer/BioNTech and Moderna require two shots. According to the data which was published a month ago, J&J vaccine was 66% effective in preventing moderate-to-severe COVID-19 and offered complete protection against coronavirus-related hospitalization and death. It is also easy to store and administer since it requires only one shot.

The U.S. purchased 100 million doses of the vaccine, and J&J plans to deliver 20 million doses by the end of March. The vaccine may also gain market share outside of the U.S. as convenience and low price are important in these markets.

What’s Next For Johnson & Johnson?

Johnson & Johnson is a huge company, and it remains to be seen whether positive vaccine news will be sufficient enough to push its stock to new highs.

J&J shares have benefited from the rotation into cyclical stocks at the beginning of 2021, but February was not a successful month for the stock.

Currently, Johnson & Johnson is trading at about 16 forward P/E which looks reasonable in the current market environment. In recent days, traders were focused on the potential inflation after the new round of stimulus in the U.S., and fears of high inflation put pressure on some high-flying stocks.

Johnson & Johnson is set to benefit from direct support provided to consumers so the stock may show some strength in case the general market moves lower on inflation worries.

Shares of Johnson & Johnson have already declined by about 8% from all-time high levels that were reached at the end of January, and this pullback may soon attract more investors who are searching for attractive stocks in the current market environment.

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

Stocks Move Higher At The Start Of The Month

The Market Is Set To Rebound After Sell-Off

S&P 500 futures are up by about 1% in premarket trading as traders look ready to buy stocks after the recent sell-off.

The U.S. House of Representatives has approved Biden’s $1.9 trillion coronavirus aid package which will now go to the U.S. Senate. The package includes $1,400 stimulus checks which are expected to boost consumer spending and push prices higher.

The yields of U.S. government bonds began to move higher after the recent pullback as traders remained focused on the threat of higher inflation. That said, inflation expectations have failed to put any material pressure on the stock market today. Tech stocks like Tesla or Amazon look ready to rebound after the recent weakness, and the market’s mood is clearly bullish at the start of this month.

Oil Gains Ground On Vaccine Optimism

WTI oil is currently trying to settle back above the $62 level as traders bet that Johnson & Johnson vaccine will provide additional support to recovery in the longer-term.

FDA has recently approved the company’s coronavirus vaccine which is the first one that requires just one shot. This is the third vaccine which has been approved in the U.S. since the beginning of the pandemic. Pfizer/BioNTech and Moderna vaccines are distributed in two doses.

At this point, the supply of Johnson & Johnson vaccine is limited, but it will significantly increase in the upcoming months which is bullish for oil.

Manufacturing PMI Reports Show That The  Manufacturing Segment Continues To Recover

Today, traders will have a chance to take a look at the final reading of U.S. Manufacturing PMI report. Analysts expect that Manufacturing PMI declined from 59.2 in January to 58.5 in February.

Other countries have already published their PMI reports which indicated that the recovery in the manufacturing segment was stronger than expected. Euro Area Manufacturing PMI grew from 54.8 to 57.9 compared to analyst consensus of 57.7. In the UK, Manufacturing PMI increased from 54.1 to 55.1 compared to analyst consensus of 54.9.

If U.S. Manufacturing PMI exceeds analyst expectations, the market may get additional support.

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

SP500 Analysis – A Pullback on its Way?

Fundamental analysis

Stock bulls have struggled to find fresh news last week. Economic data as of late has sent some mixed messages, with the recovery clearly expanding in some areas but still appearing stalled in others. Weekly Jobless Claims came in higher than expected and the previous week was also revised up sharply, indicating the job market is far from rebounding.

Housing Starts also disappointed a bit, falling -6.0% to a seasonally adjusted annual rate of 1.580 million last month. However, the slower-than-expected homebuilding was largely blamed on skyrocketing lumber prices and other climbing input costs. That narrative feeds right into increasing concerns about inflation, which is unmistakable in some areas like housing and food prices, and now energy prices with this week’s winter storms.

Last week also saw mortgage rates climb to their highest levels since November, averaging 2.81% for the week ending February 18, up eight basis points from the week prior. Rising mortgage rates are trailing Treasury yields, which hit their highest levels in a year earlier this week. Fed officials have been out in force talking down the risks of inflation, though, echoing the sentiments of many bulls that believe any price increases are going to be temporary, both now and post-pandemic.

The timeline for an end to the pandemic is still the second half of 2021. The Biden administration is again increasing the number of vaccines being sent to 13.5 million a week to states and will also be sending +2 million doses per week directly to local pharmacies.

So in total, around 15.5 million doses a week should now be getting distributed, with supplies expected to continue ramping up and a greater number of more doses being sent.

JNJ is saying they are still committed to supplying +100 million doses of its one-shot vaccine by June. The administration’s top medical adviser estimates that vaccines will be available readily to the general public by mid-May or early-June, and expects most all Americans (who chose to be) will be inoculated by late summer.

More housing data is on deck next week with the S&P Case-Shiller Home Price Index on Tuesday, New Home Sales Wednesday, and Pending Home Sales on Thursday.

Earnings highlights coming up next week include Berkshire Hathaway, Dell, Etsy, Home Depot, Lowes, Nvidia, Salesforce, and Square. It’s worth mentioning that Berkshire Hathaway’s vice-chairman and legendary investor Charlie Munger will headline the Annual Meeting of Shareholders of the Daily Journal Corporation next week. The event will be live-streamed on Yahoo Finance on Thursday.

Technical analysis

We have a clear channel up on the daily chart. Every time price touches its upper range we see a rejection. So, we need some really significant fundamental factors to break up above this range and sustain. Based on recent economic data it seems unlikely to happen. Moreover, based on the cycle forecast we can expect a pullback of 5 – 10% in the coming few weeks. Besides, Advance Decline Line shows early signs of weakness.

There is no strong bearish setup at the moment in SP500, but taking into account all mentioned above factors, I see a high chance for a pullback. Certainly, if the price breaks above the daily channel and sustains above it, it will be a game-changer. Other than that, we can see a retest of 3830 or even 3770 in the coming weeks.

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

US Stock Indices Daily Recap: That Wasn’t Much of a Down Day…

Technically, the Dow and S&P snapped their 7-day winning streak.

Technically.

I hardly consider a decline of 0.03% and 0.11% for the Dow and S&P, respectively, a down day.

Meanwhile, the Nasdaq and Russell saw a record close for who knows how many consecutive days.

Can the market keep this up? Who even knows anymore. Everything seems to defy expectations and logic. Yeah, it’s possible. But I’d be surprised if we don’t see at least one sharp pullback before the end of the week.

The sentiment is surely rosy right now. The economic recovery appears to be gaining steam, and the Q1 decline everyone predicted might not be as swift as we anticipated- if at all. President Biden’s stimulus could officially pass within days as well and provide much-needed relief to struggling businesses and families.

Have you seen the vaccine numbers lately, too? More people in the U.S. have now been vaccinated than total cases. On Monday (Feb. 8), vaccine doses outnumbered new cases 10-1. New daily COVID cases have also reached their lowest levels since October.

With Johnson and Johnson’s (JNJ) one dose vaccine candidate seemingly days away from FDA approval, the outlook is certainly more positive at this point than many anticipated.

But we’re not out of the woods yet, and three non-pandemic related factors still concern me- complacency, overvaluation, and inflation.

Jim Cramer’s “Seven Deadly Sins” from Mad Money Monday night (Feb. 8) reflect many of my concerns too:

Source: CNBC

Yes, I know I keep saying to beware. I also know that earnings are on pace to rise by over 20% in 2021. Since 1980, only 12 years have earnings increased by 15% or more. Except for 2018, the market gained an average of 12% in all of those years.

But consider some valuation metrics that scream “bubble.”

As of February 4, 2021, the Buffett Indicator , or the ratio of the total US stock market valuation to the GDP, was at a level not seen since the dotcom bubble. If you take the US stock market cap of $48.7 trillion and the estimated GDP of $21.7 trillion, we’re nearly 224% overvalued and 84% above the historical average.

Keep in mind; this chart was dated February 4. This number has only grown since then. Tuesday (Feb. 9) was hardly a down day. If anything, it was plain dull.

Fears of a bubble are genuine. The S&P 500’s forward 12-month P/E ratio is back to above 22 and well above the 10-year average of 15.8. The Russell 2000 is also back at a historic high above its 200-day moving average. Tech stock valuations are again approaching dot-com bust levels.

Bank of America also believes that a market correction could be on the horizon due to signs of overheating.

While I don’t foresee a crash like we saw last March, I still maintain that some correction before the end of Q1 could happen.

Corrections are healthy and normal market behavior, and we are long overdue for one. They are also way more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

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

Bank of America also echoed this statement and said that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions.”

The key word here- buyable.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.

With that said, to sum it up:

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

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

Small-Caps are Officially Overbought

Figure 1- iShares Russell 2000 ETF (IWM)

This pains me to write this because I love Russell 2000 small-cap index in 2021.

But this is getting ridiculous now.

As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November. Since the close on October 30, the IWM has gained nearly 50% and more than doubled ETFs’ returns tracking the larger indices. What happened to the Nasdaq being red hot? This chart makes it look like an igloo.

Since the close on January 29, the Russell has done just about the same again and gained 11.10%. It’s outperformed all the other major indices by a minimum of 5% in that period.

Not to mention, year-to-date, it’s already up a staggering 18%.

Small-caps are funny. They either outperform and underperform and can be swayed easily by the news. I foresaw the pullback two weeks ago coming for over a month, and unfortunately, I see the same thing happening now. But only for the short-term.

I remain bullish due to aggressive stimulus, which could be put in motion this week.

I also love small-cap stocks for the long-term, especially as the world reopens and this Biden agenda gets put in motion. It seems like things are finally trending in the right direction.

For now, though, the index is once again overbought.

The RSI is at a scorching 75, and I can’t justify calling this a BUY or HOLD right now. It’s an excellent time to take profits.

SELL and take profits. If and when there is a deeper pullback, BUY for the long-term recovery.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

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

* * * * *

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

US Stock Market: Boosted by Optimism Over Earnings, Stimulus Talks, Progress in Vaccine Rollouts

The major U.S. stock indexes finished higher on Friday, boosted by optimism over earnings, stimulus talks and progress in vaccine rollouts. Wall Street wrapped up a strong week as investors hoped a disappointing January jobs report would increase the likelihood of further stimulus.

The S&P 500 Index closed higher for a fifth straight session, its longest winning streak since August. Additionally, the benchmark index and the tech-heavy NASDAQ Composite posted record closing highs for a second day.

Cash Market Performance

In the cash market on Friday, the S&P 500 Index settled at 3886.83, up 15.09 or +0.40%. The blue chip Dow Jones Industrial Average finished at 31148.24, up 92.38 or +0.31% and the NASDAQ Composite closed at 13856.30, up 78.56 or +0.59%.

Payrolls Disappoints, Unemployment Rate Improves

A smaller-than-expected rebound in the labor market last month highlighted the need for more government aid to shore up the economy. The Labor Department’s data showed job losses in manufacturing and construction, the two sectors that have been propping up the economy. Job losses in December were also deeper than initially thought.

The Labor Department said the U.S. added 49,000 jobs in January, slightly below the 50,000 payrolls expected by economists. The unemployment rate fell to 6.3%, better than projections of 6.7%. December’s numbers were revised much lower, with the month posting a loss of 227,000 from the initial reading of 140,000 jobs lost.

Solid Earnings Season So Far

Wall Street was also in the middle of a solid earnings season. Of the 184 companies in the S&P 500 that have reported to date, 84.2% topped analyst expectations, according to Refinitiv.

So far, stronger-than-expected corporate results in the fourth quarter have driven up analysts’ expectations, and S&P 500 companies are on track to post earnings growth for the period instead of a decline as initially expected.

Democrats Move Biden’s Stimulus Package Forward

The Senate passed a budget resolution early Friday, as Democrats move forward with the process to pass a $1.9 trillion coronavirus relief bill without Republican votes. The package includes $1,400 stimulus checks, a supplemental jobless benefit and COVID-19 vaccine and testing funds.

President Joe Biden on Friday warned that Republican efforts to pass a smaller bill would only prolong the economy’s path to recovery.

Volatility Eases

The CBOE Volatility Index, known as the VIX, has fallen more than 12 points this week to around 21 Friday with a speculative trading frenzy dissipating. Some on Wall Street believe if the fear gauge breaks below 20, it could send a big “risk on” signal as the level would trigger buying from algorithmic traders and other big players.

Shares of GameStop Corp, caught in the recent social media-hyped trading frenzy, was higher on Friday, after online broker Robinhood lifted all the buying curbs imposed at the height of the battle between amateur investors and Wall Street hedge funds.

Vaccination News

The Biden administration is exploring every option for increasing manufacturing of Johnson & Johnson’s COVID-19 vaccine, which is under regulatory review, and said on Friday that currently expected levels of early doses were less than hoped.

J&J applied on Thursday for U.S. emergency use authorization. It expects to have some vaccine ready for distribution as soon as authorized but has not said how much.

The White House has invoked the Defense Production Act to help Pfizer Inc ramp up COVID-19 vaccine production and that “every option” was on the table to produce more Johnson & Johnson vaccine should it be authorized.

Officials have said that one J&J’s vaccine is authorized, it would mean that millions more doses would be available to states. The vaccine is one-shot, as opposed to Pfizer’s and Moderna Inc’s two-dose vaccines, and can be stored in a refrigerator.

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

US Stock Indices Daily Recap: Bulls on Stock Parade

Six days into 2021, the Capitol saw its first insurrection since 1814.

Two weeks later, we inaugurated a new president.

A week later, we saw class warfare before our eyes when Redditors from the “WallStreetBets” subreddit took on hedge funds and won.

After declining in two of the last four weeks, the indices haven’t seen a single down day all week. If Friday (Feb. 5) futures stay the same, we might not have a down day all week.

Bulls on parade.

Good morning investors, thanks for finally caring about strong earnings and not paying attention to GameStop (GME) (that was fun while it lasted, though).

The sentiment is rosey and for good reason. Earnings continue to crush. Some form of President Biden’s aggressive stimulus could also pass within days. Jobless claims fell for the third consecutive week and hit the lowest level since the end of November, labor market data looks strong, vaccines hit a record daily total on Thursday (Feb. 4) and could be distributed at CVS and Walgreens within days, and the 5-to-30 year treasury curve was the highest its been since March 2016.

Johnson & Johnson (JNJ) also just applied to the FDA for emergency use authorization for its one-dose vaccine. If approved, it could be game-changing.

Happy days.

My overheating and trading concerns in an overbought market remain, though, and have returned with a vengeance. I liked where many sectors and indices ended last week for potential BUY opportunities. This blazing win streak, though, is teetering on the edge of mania and overvaluation again.

The S&P 500, Nasdaq, and Russell 2000 hit new record closes yet again.

Are we in a bubble? Maybe.

I worry about complacency and overvaluation.

The S&P 500’s forward 12-month P/E ratio is back to nearly 22 and well above the 10-year average of 15.8. The Russell 2000 is also back at a historic high above its 200-day moving average. Tech stock valuations are even approaching dot-com bust levels, once again.

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

The market needed last week’s pullback, but it was nothing but a minor cooldown period thanks to Reddit in the grand scheme of things.

We are long overdue for a correction. Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

Well, hello, we haven’t seen one since last March!

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

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.

With that said, to sum it up:

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

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

Four Days in a Row and Counting for the S&P 500…

Figure 1- S&P 500 Large Cap Index $SPX

Have you ever rooted so hard for a team that can frustrate and excite you at the same time? Rip off a 4-day winning streak, followed by a slump of losing 5 out of 6 games, then come back with another winning streak? Does it have you questioning if the team is outstanding or a mirage?

If I could compare the S&P 500 to a team, it would probably be the Philadelphia 76ers.

This index looks like a winner and seemingly rips off multiple-day winning streaks weekly. Now and then, though, it can show inconsistency, make you scratch your head, and go on a frustrating losing streak.

Two weeks ago, the S&P was hovering around a record-high. Its forward P/E ratio was the highest since the dot-com bust, and the RSI consistently approached overbought levels.

By the end of last week, it was nearly oversold.

Now, this week? Its RSI is back above 60, we’re at another record high, we’re on a four-day winning streak (which could be five if futures remain in the green), and we’re at a forward 12-month P/E ratio at nearly 22 and well above the 10-year average of 15.8.

I said before that once the S&P approaches a 3600-level, we can start talking about it as a BUY. Well, the index came pretty darn close to it last week, but it wasn’t enough for me. Despite this week’s rally, short-term concerns remain, with long-term optimism.

To me, because of the RSI and how the index has traded, it remains a HOLD. But we’re teet

A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am sticking with the S&P as a HOLD.

For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

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

* * * * *

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

 

EURUSD Analysis: Nearing Stimulus Approval Boosts the USD

The US vaccination plan and restrictions implemented resulted in a decrease of the new active cases.

Source: Worldometers

More and more trials and tests are ongoing in different pharmaceutical companies, and yet another giant – Johnson and Johnson reported that their vaccine is 72% effective against moderate and severe disease in the US, and 57% in South Africa. In South Africa, 95% of cases in the trial were due to a variant known as B.1.351, which is known to be more contagious and carries mutations. These mutations are most likely to be less responsive to antibodies. The spread of this variance is already confirmed in the UK and caused anxiety. Another best part of this vaccine is that it’s single-dose and affordable.

President Biden’s administration already signed a policy to lift the rate of vaccination among the US delivering more than 33 million shots. The European Union on the other hand is demonstrating a rather weaker approach to beating the Covid-19 spread, with Spain hitting new records of Covid-19 cases.

US GDP as per the final quarter of the last year, released on January 28, demonstrated a 4% growth, while the data from the EU, released yesterday, were rather unsettling. Europe’s GDP (QoQ) is down 0.7% and (YoY) is down 5.1%. Despite the released positive PMI data and a rather positive Core CPI (YoY) s per January, Euro still looks weaker against the US Dollar.

EUR/USD quote on Overbit

As seen on the chart above the pair is following it’s downtrend path within a descending channel. By the time of writing this article the pair is testing the $1.20120 support and lacks momentum to retrace from this level. Hence, EUR/USD will most likely break the aforesaid support level and drop to test the lower edge of the channel and find support at $1.19650-$1.19600. After the test of $1.20120 support, the pair retraced and tested the previous strong support at $1.12500 as resistance, hence this adds bearish sentiment to the pair.

The path of the downtrend on a 15M chart also demonstrates the same levels and a rather bearish sentiment of EUR/USD.

EUR/USD quote on Overbit

The Non-farm Employment change which is going to be released today and tomorrow’s Initial Jobless Claims will be significant for the USD, as the employment growth is the FED’s key metrics for the economic recovery.

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

Short Squeeze Mania – Stocks Swoon

It’s officially “stonk season” in the markets. The IPO market continues to baffle, and SPACs continue to pop-up like weeds in your front yard.

Plus if you’ve seen GameStop (GME), AMC Entertainment (AMC), and Blackberry (BB) lately, you know the Robinhooders are at it again.

These speculative gambles are ridiculously frothy right now as hedge funds and institutions continue to try and cover their shorts. The moves these stocks are making are more detached from reality than the guy in a buffalo headdress at the Capitol 3 weeks ago.

Complacency is the most significant near-term risk to stocks by far, and I have been warning about this for weeks. It also reminds me of the Q4 2018 pullback ( read my story here ).

It’s also earnings season (for those who care, like analysts), and it’s time for some big swings and volatility.

Well, not entirely. Monday (Jan. 25) saw a sudden mid-day plummet and subsequent recovery, and Tuesday (Jan. 26) traded slightly down. Wednesday (Jan. 27) looks set to open lower – we will see how that ends up.

Earnings have so far impressed, though, and there were some big moves from individual stocks.

General Electric (GE) popped over 9% thanks to a healthy outlook for 2021 and better than expected industrial free cash flow.

Johnson & Johnson (JNJ) also saw a nice 3% gain after beating earnings. Investors are also eagerly anticipating results from its vaccine’s trial. Johnson & Johnson’s vaccine is one dose and does not require any crazy storage protocols like Pfizer (PFE) and Moderna’s (MRNA). Strong results and FDA approval could genuinely change the tide of the pandemic and vaccine rollout.

Earnings from Microsoft (MSFT) and Advanced Micro Devices (AMD) also came in after the closing bell and impressed as well. Microsoft posted record quarterly sales, and AMD exceeded $3 billion in revenue.

Does this mean we’re all clear now and can party like it’s 1999?

Not exactly. Plus, if you’re a stock nerd like I am, you don’t want to party like it’s 1999. Because that means 2000 will come—the end of one of the biggest parties, investors have ever seen. I’m talking about the dot-com bust.

Fair warning: the S&P 500 is still at or near its most-expensive level in recent history on most measures, and the Russell 2000 has never traded this high above its 200-day moving average.

The more GameStop pops, the more of a circus I think this market is. GameStop a $15+ billion company? Really? A correction at some point in the short-term would not be shocking in the least.

John Studzinski , vice chairman of Pimco, believes that market valuations are sound and reflect expectations of this eventual reopening and economic recovery by the second half of the year.

I agree on some level about the second half of the year. Outside of complacency, though, I have other short-term concerns.

For one, trillions in imminent stimulus could be useful for stocks but bring back inflation by mid-year. The worst part about it? The Fed will likely let it run hot. With debt rising and consumer spending expected to increase as vaccines are rolled out to the masses, the Fed is undoubtedly more likely to let inflation rise than letting interest rates rise.

All of this tells me that the market remains a pay-per-view fight between good news and bad news.

We may trade sideways this quarter- that would not shock me in the least. But I think we are long overdue for a correction since we haven’t seen one since last March.

Corrections are healthy for markets and more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

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

Therefore, to sum it up:

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

In a report released last Tuesday (Jan. 19), Goldman Sachs shared the same sentiments.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth. Hopefully, you find my insights enlightening, and I welcome your thoughts and questions.

We have a critical week ahead with the Fed set to have its first monetary policy meeting of 2021 and more earnings announcements. I wish you the best of luck. We’ll check back in with you at the end of the week.

Small-caps are Too Hot to Handle

Figure 1- iShares Russell 2000 ETF (IWM)

As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks underperformed the larger indices on Tuesday (January 26). The RSI is no longer technically overbought, but I still think that the Russell has overheated in the short-term. Stocks don’t just go up in a straight line without experiencing a sharp pullback. That’s just the nature of the beast.

Barron’s also claims that the Russell 2000/S&P 500 ratio has entered a powerful 15-year resistance area .

Nobody knows what will happen during this critical week of earnings, but I called a decline after the IWM began the week over a 70 RSI. Indeed the IWM is having a down week to this point, but it’s not sharply down enough for me to switch my call. Not even close.

I love small-cap stocks in the long-term, especially as the world reopens. Small-caps are also the most likely to benefit from Biden’s aggressive stimulus plan.

But the index has overheated. Period.

Before January 4, the RSI for the IWM Russell 2000 ETF was at a scorching hot 74.54. I called a sell-off happening in the short-term due to this RSI, and it happened.

After the RSI hit another overbought level of approximately 77 two Wednesdays ago (January 13), the IWM declined by another 1.5%. I said that Russell stocks would imminently cool down because the RSI was too hot, and precisely that’s what happened.

Consider this too. In its entire history as an index, the Russell has never traded this high above its 200-day moving average.

Small-caps may have priced in vaccine-related gains by now, and some stimulus optimism may have been priced in too.

I hope small-caps decline before jumping back in for long-term buying opportunities. I love where these stocks could end up by the end of the year.

SELL and take profits if you can- but do not fully exit positions . If there is a deeper pullback, this is a STRONG BUY for the long-term recovery.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

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

* * * * *

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

 

COVID-19 Vaccine Update – New Strains and Supply Issues Remain a Concern

Vaccine News

Over the weekend, the news wires reported that the Johnson & Johnson vaccine could receive approval in just 2-weeks.

Dr. Anthony Fauci’s comments came amidst announcements of supply issues.

With just 2 vaccines currently approved for emergency use in the U.S, an approval of a 3rd vaccine would ease the strain.

Things may not improve near-term for the likes of the EU, however, which is likely to continue to face supply constraints.

In other parts of the world the AstraZeneca vaccine has already received approval for emergency use. This is not the case in the EU and the U.S, however.

While the EMA is scheduled to review AstraZeneca vaccine later this week, the U.S timeline is far lengthier.

The U.S FDA is currently due to review the AstraZeneca vaccine in April.

It goes without saying, however, that the U.S is not alone in needing access to multiple vaccines.

A Johnson & Johnson and AstraZeneca approval in the U.S and the EU will be key, though supply will remain a concern.

We have heard plenty of bullish production numbers floated by the leading three in the race to end the pandemic.

It remains to be seen, however, if the three can play catch up and meet their 1st quarter targets.

If the most recent updates are anything to go by, the need for a single dose vaccine has become all the more urgent.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the U.S has administered 22,396,673 doses as at 24th January.

U.S states have only administered 54% of shots delivered, however, leaving the vaccination rate at just 6.8 doses per 100.

Transportation and storage requirements of both Pfizer Inc. and Moderna Inc.’s vaccines have contributed to the low vaccination rate.

By contrast, the UK has seen its vaccination rate jump to 10.21 doses per 100 people. The UK’s approval of the AstraZeneca vaccine enabled the sharp rise in the vaccination rate.

As at 24th January, Israel continued to have the highest vaccination rate at 39.94.

The UAE ranked 2nd, with a vaccination rate of 23.14, with the Seychelles coming in ahead of the UK, with a rate of 19.12.

In terms of actual doses administered, however, the U.S and China were well ahead of other nations.

As at 20th January, China had administered 15 million doses of the vaccine, sitting behind 22.4 million in the U.S.

In spite of supply issues, the EU ranked 3rd, administering 8.6 million doses.

The UK ranked 4th, with 6.8m doses, followed by Israel (3.6m) and the U.A.E (2.5m)

Looking across the EU, the Netherlands had amongst the lowest vaccination rates. As at 22nd January, the vaccination rate stood at just 0.78 doses per 100 people.

For France, one of the worst affected EU member states, the vaccination rate stood at 1.58. While this was up from 1.49 doses per 100 as at 22nd January, the rise was a marginal one at best.

Germany also trailed the EU front runners, with a rate of 1.96 doses per 100 people as at 23rd January.

Spain and Italy had performed somewhat better, with vaccination rates of 2.51 (22nd January) and 2.28 (24th January) respectively.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 99,774,351 confirmed COVID-19 cases and 2,139,03` related deaths.

By geography, the U.S had reported 25,702,125 cases and 429,490 COVID-19 related deaths.

India reporting 10,668,674 cases, with Brazil reporting 8,844,600 cases.

Sitting behind Russia (3,719,400) remained the UK (3,647,463).

France (3,053,617), Italy (2,466,813), Spain (2,603,472), and Germany (2,147,740) reported a combined 10,271,642 cases.

Looking Ahead

Johnson & Johnson’s vaccine approval by the FDA and AstraZeneca approval by the EMA remain key near-term.

Pfizer Inc. and AstraZeneca, in particular, will also need to address supply issues, however, to support a marked increase in vaccination rates.

Over the weekend, news hit the wires of further lockdown measures to hit France next month.

Of greater concern, however, was reports that vaccinated people can still spread the coronavirus.

For countries with low vaccination rates, this would mean that containment measures may remain in place for longer.

Coupled with the rising number of new and reportedly more virulent strains, border controls could also be seen across a wider number of countries.

For countries with higher vaccination rates, governments will also need to maintain momentum to deliver the 2nd doses.

This will also mean that countries would need to avoid supply constrains to meet the vaccination timelines.

The UK’s British Medical Association Board chair stated last week that there was increased concern that the vaccine would become less effective with doses 12-weeks apart.

It will therefore be all the more important to complete the vaccine dose regimens within optimal timelines.

When considering the supply shortage that the EU currently faces, a quick resolution is going to be needed to avoid making the 8.57 million administered doses redundant.

Earnings to Watch Next Week: Microsoft, Apple, Tesla and Facebook in Focus

Earnings Calendar For The Week Of January 25

Monday (January 25)

IN THE SPOTLIGHT: KIMBERLY-CLARK

Kimberly-Clark, an American multinational personal care corporation, is expected to report a profit of $1.62 in the fourth quarter of 2020, which represents a year-over-year decline of about 5.2% from the same quarter a year ago when the company reported $1.71 cents per share.

However, Wall Street forecasts the company’s revenue to grow over 3% to $4.7 from the same period year ago. For full-year 2020, revenue is expected to be at $19.1 billion.

“We maintain our Buy-rating and above-consensus EPS estimate into KMB’s 4Q report BMO on Monday. Kimberly Clark’s (KMB) shares have lagged staples as the market remains concerned about moderating POS trends in Dec/Jan and commodities; however, we see an upside to Street 4Q20 and ’21/’22 ests. w/commodity inflation reasonably reflected at current spots and view the bar as low into the print w/KMB trading at 16x P/E (30% discount to HPC peers vs. 20% hist. avg.),” noted Kevin Grundy, equity analyst at Jefferies, who rated the paper products giant “Buy” and set the price target at $152.

Florida-based insurance broker Brown & Brown will post earnings of $0.29 per share for last quarter of 2020.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 25

Ticker Company EPS Forecast
CBU Community Bank System $0.76
BOH Bank of Hawaii $1.11
PHG Koninklijke Philips $1.04
KMB Kimberly Clark $1.62
WSFS Wsfs Financial $0.91
AUY Yamana Gold USA $0.11
CR Crane $1.10
HXL Hexcel -$0.20
BXS BancorpSouth $0.62
JJSF J&J Snack Foods $0.26
SFBS ServisFirst Bancshares $0.81
BRO Brown & Brown $0.29
GGG Graco $0.51
AGNC American Capital Agency $0.65
STLD Steel Dynamics $0.76
FUL HB Fuller $0.85
ACKAY Arcelik ADR $0.61
ASH Ashland $0.44
ELS Equity Lifestyle Properties $0.33
BKRKY Bank Rakyat $0.17

Tuesday (January 26)

IN THE SPOTLIGHT: MICROSOFT

MICROSOFT: The global technology giant is expected to report a profit of $1.64 in the fiscal second quarter, which represents year-over-year growth of about 8.6% from the same quarter last year when the company reported $1.51 per share.

The world’s largest software maker’s revenue is forecasts come at $40.23, up from the $36.91 billion reported the same quarter a year earlier.

“Q2 results likely highlight the durability of Microsoft‘s commercial businesses and conservatism in forward consensus expectations. After clearing tough Q2 product cycle comps and lingering COVID-19 impacts, strong secular positioning and an attractive multiple make Microsoft (MSFT) a top stock for the recovery,” said Keith Weiss, equity analyst at Morgan Stanley.

“At 26x CY22e GAAP EPS, MSFT trades at a premium to the S&P, warranted due to MSFT‘s premium return profile. Multiple expansion will likely come from gaining comfort in the durability of commercial business gross profit dollars.”

Johnson & Johnson, one of the world’s largest and most comprehensive manufacturers of healthcare products, will post earnings of $1.83 per share for last quarter of 2020.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 26

Ticker Company EPS Forecast
NEE NextEra Energy $0.38
NEP Nextera Energy Partners $0.37
JNJ Johnson & Johnson $1.83
NVS Novartis $1.36
RTX Raytheon Technologies Corp $0.69
GE General Electric $0.09
AXP American Express $1.31
LMT Lockheed Martin $6.42
MMM 3M $2.15
PLD ProLogis $0.39
FCX Freeport-McMoran $0.38
PCAR PACCAR $1.21
ROK Rockwell Automation $1.89
DHI DR Horton $1.68
WAT Waters $2.87
IVZ Invesco $0.57
ALV Autoliv $1.92
PII Polaris Industries $2.90
ALK Alaska Air -$2.86
SNV Synovus Financial $0.81
PPBI Pacific Premier Bancorp $0.56
GATX GATX Corp $0.87
SFNC Simmons First National $0.42
XRX Xerox $0.63
CIT CIT $0.57
ADM Archer-Daniels Midland $1.10
RNST Renasant $0.59
MSFT Microsoft $1.64
TXN Texas Instruments $1.34
SBUX Starbucks $0.56
AMD Advanced Micro Devices $0.47
CNI Canadian National Railway USA $1.42
COF Capital One Financial $2.80
MXIM Maxim Integrated Products $0.68
VAR Varian Medical Systems $1.05
BXP Boston Properties $0.60
CHRW C.H. Robinson Worldwide $0.97
FFIV F5 Networks $2.44
WRB W.R. Berkley $0.79
EHC Encompass Health Corp $0.85
RNR Renaissancere -$1.92
SLGN Silgan $0.53
UMBF UMB Financial $1.32
NAVI Navient $0.83
WSBC WesBanco $0.61
FMBI First Midwest Bancorp $0.26
RXN Rexnord $0.38
EBAY eBay $0.84
HOG Harley Davidson $0.10

Wednesday (January 27)

IN THE SPOTLIGHT: APPLE, TESLA, FACEBOOK

APPLE: The consumer electronics giant is expected to report profit growth of more than 12% of $1.41 in the fiscal first quarter of 2021 on sales of $102.61 billion, highlighted growth of over 11% from the year-ago quarter. That growth is largely driven by a strong demand iPhone handset, Mac computers, iPad tablets and wearables in the holiday season.

“Our December quarter revenue of $108.2B is 5% above consensus, while our EPS of $1.50 is 7% above consensus. We expect demand strength to continue and our FY21 revenue and EPS estimates are both 5% above consensus,” wrote Katy Huberty, equity analyst at Morgan Stanley.

“Given positioning into the quarter is muted after the rotation out of high-quality stocks over the past several months, we expect strong follow-through post-earnings and are buyers into the print. We also raise our price target to $152, from $144, as we mark our price target to market accounting for recent peer multiple expansion.”

TESLA: The California-based electric vehicle and clean energy company is expected to report a profit of $1.04 in the fourth quarter of 2020, posting a profit for the sixth straight quarter. The manufacturer of high-performance electric vehicles’ revenue is forecast to surge about 35% to $10 billion.

“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher % of revenue from recurring/high-margin services revenue. Services drive the upside. We forecast Tesla’s (TSLA) network services EBITDA as a % of total TSLA EBITDA to reach 11% by 2025, 19% by 2030 and 37% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc.,” said Adam Jonas, equity analyst at Morgan Stanley.

“Valuation supportive vs. tech. Including Network Services, Energy & Insurance to our core auto forecasts, at $810 Tesla trades at 25x EV/EBITDA in 2025 and 5x 2025 sales. Expensive vs. auto but not vs. software/tech comps.”

FACEBOOK: The world’s largest online social network is expected to report a profit of $3.16 in the fourth quarter of 2020, which represents year-over-year growth of 23.4% from the same quarter a year ago when the company reported $2.56 cents per share.

According to the Zacks Research, the social media conglomerate’s revenue will increase of 24.7% to $26.29 billion from the year-ago, largely driven by solid ad-revenue growth amid advertiser demand during the holiday period.

“Monetization Potential: We are positive on FB‘s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modeling 29% GAAP opex (excl. one-time items) growth in 2021, implying an incremental $15bn in opex. Our base case model implies opex per employee moderates in ’21 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a 28% CAGR (2019-2022).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 27

Ticker Company EPS Forecast
ANTM Anthem $2.53
GIB CGI Group USA $0.97
VFC VF $0.90
TDY Teledyne Technologies $3.05
KNX Knight Transportation $0.91
PB Prosperity Bancshares $1.35
OSK Oshkosh $0.73
NYCB New York Community Bancorp $0.26
CVLT Commvault Systems $0.47
EAT Brinker International $0.35
T AT&T $0.73
ABT Abbott $1.35
BA Boeing -$1.60
ADP ADP $1.29
NSC Norfolk Southern $2.49
PGR Progressive $1.64
GD General Dynamics $3.54
BX Blackstone $0.90
TEL TE Connectivity $1.28
APH Amphenol $1.02
GLW Corning $0.48
NDAQ Nasdaq Omx $1.46
MKTX MarketAxess $1.81
HES Hess -$0.65
ROL Rollins $0.11
TXT Textron $0.90
SEIC SEI Investments $0.78
PTC PTC $0.66
TTEK Tetra Tech $0.81
CACI Caci International $3.59
LSTR Landstar System $1.72
SLM SLM $0.36
RLI RLI $0.66
SLG SL Green Realty -$0.27
AXS Axis Capital -$0.28
AVT Avnet $0.39
CNS Cohen & Steers $0.68
CNMD CONMED $0.77
MTH Meritage Homes $3.33
CATY Cathay General Bancorp $0.76
ISBC Investors Bancorp $0.27
CALX Calix $0.33
CP Canadian Pacific Railway USA $5.03
AMP Ameriprise Financial $4.52
AAPL Apple $1.41
TSLA Tesla $1.04
FB Facebook $3.16
NOW ServiceNow $1.06
SYK Stryker $2.55
LRCX Lam Research $5.69
CCI Crown Castle International $0.62
EW Edwards Lifesciences $0.53
LVS Las Vegas Sands -$0.29
TER Teradyne $1.00
HOLX Hologic $2.17
URI United Rentals $4.26
DRE Duke Realty $0.16
RJF Raymond James Financial $1.65
PKG Packaging Of America $1.48
WHR Whirlpool $6.00
MKSI MKS Instruments $2.01
AZPN Aspen Technology $1.17
CREE Cree -$0.25
LPL Lg Display $0.19
CVBF CVB Financial $0.34
XLNX Xilinx $0.69
UMC United Microelectronics $0.08

Thursday (January 28)

IN THE SPOTLIGHT: Mastercard, McDonald’s, Visa

Mastercard Inc, a leader in global payments and a technology company, will post earnings of $1.53 per share for last quarter of 2020, which represents a year-over-year decline of about 22% from the same quarter a year ago when the company reported $1.96 cents per share.

McDonald’s Corporation, one of the world’s largest American fast-food chain, will post earnings of $1.79 per share for last quarter of 2020. Visa Inc is also expected to report first-quarter earnings on the same day, with earnings of $1.28 per share for the quarter.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 28

Ticker Company EPS Forecast
MKC McCormick $0.81
LEA Lear $3.40
FCFS FirstCash $0.82
VLO Valero Energy -$1.28
LUV Southwest Airlines -$1.66
AAL American Airlines -$4.12
NUE Nucor $1.16
MSCI Msci $1.92
JBLU JetBlue Airways -$1.67
FRME First Merchants $0.66
MA Mastercard $1.53
CMCSA Comcast $0.48
ATI Allegheny Technologies -$0.35
ABMD Abiomed $1.12
ADS Alliance Data Systems $2.44
TROW T. Rowe Price $2.64
MCD McDonalds $1.79
STM Stmicroelectronics $0.54
DHR Danaher $1.87
DOW Dow Chemical $0.64
CNX Consol Energy $0.16
SHW Sherwin-Williams $4.84
KEX Kirby $0.24
MO Altria $1.01
NTCT Netscout Systems $0.52
CFR Cullen/Frost Bankers $1.28
PNR Pentair Ordinary Share $0.63
TSCO Tractor Supply $1.47
PHM PulteGroup $1.39
EWBC East West Bancorp $1.01
RCI Rogers Communications USA $0.72
NOC Northrop Grumman $5.77
SWK Stanley Black & Decker $2.99
AIT Applied Industrial Technologies $0.74
BPOP Popular, Inc. $1.62
AOS A.O. Smith $0.58
XEL Xcel Energy $0.55
FLWS 1-800-Flowers $1.38
EXP Eagle Materials $1.74
MMC Marsh & McLennan Companies $1.13
COLB Columbia Banking System $0.60
BC Brunswick $1.02
FLEX Flextronics International $0.37
WRK WESTROCK $0.54
MTSI MACOM Technology Solutions $0.37
VLY Valley National Bancorp $0.25
PEXNY PTT Exploration & Production $0.01
DOV Dover $1.38
DLB Dolby Laboratories $0.34
FFBC First Financial Bancorp $0.45
HTH Hilltop $1.13
NATI National Instruments $0.13
RMD ResMed $1.25
GBCI Glacier Bancorp $0.74
ABCB Ameris Bancorp $1.16
CE Celanese $1.69
FIBK First Interstate BancSystem $0.80
JNPR Juniper Networks $0.53
SIGI Selective $1.20
V Visa $1.28
WDC Western Digital $0.52
EGHT 8X8 -$0.03
X United States Steel -$0.62
FHI Federated Hermes Inc $0.78
AJG Arthur J. Gallagher $0.78
SWKS Skyworks Solutions $2.08
OLN Olin -$0.11
MDLZ Mondelez International $0.66
PFG Principal Financial $1.42
EMN Eastman Chemical $1.50
ORI Old Republic International $0.43
FICO Fair Isaac $2.35
MSTR Microstrategy $1.62
RHI Robert Half International $0.68
LANC Lancaster Colony $1.57
RDN Radian $0.60
CAJ Canon $0.31
TOELY Tokyo Electron Ltd PK $0.78
HOCPY Hoya Corp $0.84
DGE Diageo £80.90
KPELY Keppel Corporation -$0.05
NVR NVR $78.78
FFIN First Financial Bankshares $0.37

Friday (January 29)

Ticker Company EPS Forecast
PSXP Phillips 66 Partners $0.89
JCI Johnson Controls $0.40
AN AutoNation $2.05
HON Honeywell International $2.00
MSGS Madison Square Garden Sports -$1.63
ATLCY Atlas Copco ADR $0.39
SAP SAP $1.95
LLY Eli Lilly $2.37
CHD Church Dwight $0.52
LHX L3Harris Technologies Inc $3.09
CL Colgate-Palmolive $0.76
BAH Booz Allen Hamilton $0.93
BBVA Banco Bilbaoizcaya Argentaria $0.13
ERIC Ericsson $0.20
RDY Drreddys Laboratories $0.58
CVX Chevron $0.07
SYF Synchrony Financial $0.89
CAT Caterpillar $1.48
CHTR Charter Communications $4.82
PSX Phillips 66 -$0.81
BMI Badger Meter $0.43
GNTX Gentex $0.50
ROP Roper Industries $3.49
WY Weyerhaeuser $0.42
LYB LyondellBasell Industries $1.36
ROLL Rbc Bearings $0.82
FBP First Bancorp FBP $0.18
KKR KKR & Co LP $0.41
HMC Honda Motor $0.89
GCTAY Siemens Gamesa ADR $0.02
NNIT Nnit A/S kr1.62
SPG Simon Property Group $0.85
ASEKY Aisin Seiki Co $1.19
ALNPY ANA Holdings ADR -$0.35
KMTUY Komatsu $0.26
TTM Tata Motors $0.17
TOTDY Toto $0.46

 

COVID-19 Vaccine Update – The EU’s Vaccine Woes Worsen and Is Unlikely to Improve Anytime Soon

EU Vaccine News

As the EMA readies to review the AstraZeneca vaccine on 29th January, there was some bad news for EU member states.

AstraZeneca has issued a warning to EU member states to expect limited supply of the vaccine near-term.

The EU has ordered up to 400 million doses of the AstraZeneca vaccine, with up to 100 million due within the 1st quarter.

Last week, the FT reported that AstraZeneca may only deliver less than half of the 100 million doses. That means that less than 25 million would receive full protection by the early part of the 2nd quarter.

It was also reported that there was deep satisfaction within the EU Commission even though the vaccine had yet to be approved.

With the EU having made significantly smaller Pfizer Inc. and Moderna Inc. vaccine orders, the shortfall will raise further concerns over the Eurozone economy and its recovery.

Less than 50 million doses would barely make a dent in inoculating the more than 440 million population.

The bad news followed Pfizer Inc’s cut back in supply to the EU earlier in the month.

Vaccination rates across the EU remain woefully short. The latest news will continue to leave vaccination rates on the lower side that will add further pressure on governments to contain the virus by other means.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the EU’s vaccination rate stood at 1.79 doses per 100 people as at 22nd January.

This continued to fall well short of the UK, the U.S and leading nations in the Middle East.

As at 22nd January, Israel had the highest vaccination rate of 37.14 doses per 100 people.

The U.A.E came in a distant second, with a vaccination rate of 21.76 doses per 100.

Bahrain ranked 3rd, with a rate of 9.71 (19th January), with the UK coming in 4th with a rate of 8.76 doses per 100.

With Joe Biden’s drive to vaccinate 100 million in 100 days, the U.S vaccination rate climbed to 6.04 as at 22nd January.

Looking across the EU, France was amongst the worst performers, with a vaccination rate of just 1.49.

Germany also trailed the front runners in the EU, with a rate of 1.81 doses per 100 people.

Spain and Italy had performed somewhat better, with rates of 2.51 and 2.17 respectively.

When considering the fact that these 4 member states are the worst affected, the numbers should have been better.

A lack of supply and currently low rates are a bad combination for the EU. This raises the prospects of even more restrictions to hurt the region’s economy.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 98,750,103 confirmed COVID-19 cases and 2,116,438 related deaths.

By geography, the U.S had reported 25,390,042 cases and 424,177 COVID-19 related deaths.

India reported 10,640,544 cases, with Brazil reporting 8,755,133 cases.

Sitting behind Russia (3,677,3520) remained the UK (3,583,907).

France (3,011,257), Italy (2,411,854), Spain (2,603,472), and Germany (2,125,261) reported a combined 10,151,844 cases.

Looking Ahead

The reported AstraZeneca supply constraints make Johnson & Johnson’s vaccine availability all the more important.

A single dose vaccine would certainly ease the strain on the EU that will now have to maintain containment measures for longer.

The EU will be able to order up to 400 million doses of the Johnson & Johnson vaccine. This would cover close to the entire EU population should a single dose vaccine receive approval.

For the EU, however, a lack of supply by AstraZeneca and Sanofi troubles mean that the entire population would not receive a vaccine for some time.

The EU had preordered 300 million doses from Sanofi, which won’t be ready until later this year at the earliest.

As the markets respond to supply issues, we can expect focus on vaccination rates, infection rates, supply to become greater near-term.

Johnson & Johnson Vaccine News

News hit the wires this week that late clinical trial results will be available within the coming weeks.

With the U.S FDA ready to review the vaccine, single dose vaccines could be available within the U.S this quarter.

The easier to transport vaccine means that governments would be able to ramp up vaccination rates. For governments lagging behind, the biggest advantage will be the fact that it is a single dose vaccine.

Approvals would need to be given, however, for distribution of the vaccine. A slow moving EMA could see the EU fall further behind its peers.

It’s worth noting that the EU had secured enough vaccine doses to cover 183.5% of the population.

While Johnson & Johnson may be able to ease the pain, it will be some time before vaccination rates hit appropriate levels.