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The Stock Market Faces A Critical Test The Week of April 23
Michael Kramer and the Clients of Mott Capital own shares of NXPI, V, and SBUX
The week of April 23 will be a big week for earnings, and I already highlighted in my five predictions for earnings the outlooks for AMD, Alphabet, Microsoft, Facebook, and Amazon. But there are plenty of others such as Intel, Qualcomm, PayPal, Visa, Ford, General Motors, Starbucks, Exact Sciences, and the big Oil companies Exxon and Chevron.
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Earnings Outlook
Yes, earnings do matter, and more important will be those outlooks for the coming quarters. According to data from Dow Jones S&P Indices, earnings are expected to climb by 40 percent in 2018 to $153,90 from $109.58 in 2017, that is a massive rise in profits, for one-year, and that leaves the S&P 500 trading at 17.35 times 2018 estimates. Earnings are seen climbing another 10 percent in 2019 to $168.64 and that leaves the S&P 500 trading at 15.8 times 2019 estimates. What do you think happens to those estimates should earnings be better than expected? That is right, full-year numbers come up; if they are weaker than predicted those estimates come down. In both cases, we find out stocks are cheaper than or more expensive than we thought. So how big are earnings and the outlooks? Very big.
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Chips
Semiconductors have been hammered over the past week, and with Intel, Texas Instruments, and Qualcomm reporting we are going to get a perfect sense if Taiwan Semi was a one-off, or if there is more pain in the group to come.
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Intel
Intel has been trending higher, and the relative strength index looks like a loaded coil, ready to pop. Meanwhile, the trend is overwhelmingly bullish, and that makes me think the stock pops higher.
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Qualcomm/NXP
Qualcomm is near the low-end of the range, and perhaps we get some good news this week on some progress regarding the NXP Semiconductor deal. The NXP deal is a massive deal for Qualcomm and is extremely important to drive future revenue growth for the company.
As a shareholder of NXP, I’d love to get my $127.50 per share, from Qualcomm. But I’m more than okay if they don’t, because I continue to love this company going forward as a standalone, especially when trading 12.5 times next year earnings.
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Starbucks
Starbucks has been trending higher, but every quarter has been met with disappointment. It will come down to same-store comps, and growth in China this quarter.
Despite all the headwinds this company has faced, an all-time is within reach.
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Exact Sciences
Although my trading channel may be to narrow, the direction of the trend seems to be one way.
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PayPal
The trend in PayPal is lower at this point, and the RSI is trending that way as well. Support at $73 is extremely important in this case, should PayPal fall.
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Visa
Visa has been in a channel now for some time, and it appears shares and the RSI have both broken out from a downtrend, with a positive setup in place.
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Exxon
Exxon shares can’t get out of a long-term downtrend, and while support at $72 held, this stock is not going anywhere until it breaks above that downtrend.
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Chevron
Chevron may have room to rise towards $135.
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Ford
I think the Ford chart is self-explanatory.
That is gonna be it. Good Luck
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Tags: #stockmarket #sp500 #amazon #facebook #amd #alphabet #microsoft #earnings
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.