OCTOBER 27, 2020
Stocks – AMD, CAT, LLY, EXAS
Macro – SPY
Stocks are rising on October 27, with the S&P 500 ETF trading higher by around 50 bps, making up for some of yesterday’s drop. The best thing that could happen today for the market is an early gap-fill lower after the open and then a steady grind higher for the day’s balance. The S&P 500 will need to reclaim the 3,425 level, while the QQQ ETF will need to reclaim the $282 level. The worst thing that could happen is for the indexes to fail at resistance.
The big news of the day is that AMD pre-announced the quarter and said it would buy Xilinx (XLNX)for around $35 billion. This is an all-stock deal, and I know AMD had a great quarter, but the stock should be down, not up. Currently, the stock is up 2%, but the deal is dilutive to existing shareholders and accounts for nearly 35% of AMD’s market value. The stock should continue to fall, heading towards $75.
Eli Lilly (LLY)
Eli Lilly is trading lower after it reported weaker results. The stock has really broken down the last few weeks and needs to hold onto support at $132.
Caterpillar is getting rocked after it reported weak results. The stock is approaching support at $159, and that needs to hold. Otherwise, $148 is next.
Exact Sciences (EXAS)
Exact Sciences is rising today after it announced it would buy an early cancer detection company for over $2 billion and raised about $870 million through a direct offering to ten institutional investors. The stock is now approaching a big resistance level at $114.50, which is where it could pause for sometime after a huge run-up.
-Have a good one!
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