Phil Flynn breaks down the current fundamentals of the energy sector....
Week Ahead: Earnings & Potential Green Shoots
04/20/2020 10:27 am EST
Many technology sector stocks are reporting earnings this week, reports Joe Perry.
As each country, state, city, and town remains in its own Coronavirus reality, green shoots are emerging as discussions have begun as to when to bring life to each person’s hope. Economic data this week for March and April was, for the most part, more dismal than economists’ expectations, including another 5,245,000 initial filings for U.S. jobless claims. This brings the four-weeks total to nearly 22 million. However, with Germany discussing re-opening of schools and the United States discussing possibilities of re-opening some states as early as May 1, traders are hoping for the best. This week watch tech earnings and, more importantly, their guidance. Also, keep an eye on crude oil, as Russia and Saudi Arabia have indicated they are open to additional cuts.
The S&P 500, Dow Jones Index, FTSE and DAX all closed +/-3% last week, coming back to reality after the previous week’s 10% up moves. However, the tech heavy NASDAQ 100 closed up nearly 7% in anticipation of company earnings. A few tech giants report earnings this week, including IBM, Texas Instruments (TXN), Tesla (TSLA), Amazon (AMZN), Intel Corp. (INTC), AT&T Inc. (T) and Verizon Communications (VZ). Other standouts include Halliburton (HAL), Lockheed Martin (LMT), Alcoa Corp. (AA) and American Express (AXP). It will be more important to focus on the guidance each company reports, rather than the actual earnings themselves. Traders will be watching to see how much of an economic impact the Coronavirus is expected to take to each company.
The contract for difference on WTI crude oil was down another 21% to new lows last week and closed at $18.27, its lowest level since the Fall of 2001. The expected fall in demand is outweighing the agreement of the possibility of additional supply cuts moving forward (on Friday, front month crude oil rolled from the May to the June contract).
Currencies and metals were quiet for the most part on the week, relatively speaking, with most pairs closing within 1% of Monday’s open.
There are no major Central Bank meetings planned for this week, although most central banks are acting “as needed” with liquidity measures when markets get tight. This week is light on economic data as well, before end of month/beginning of month data arrives over the next two weeks. Some economic highlights for this week are as follows:
- New Zealand: Inflation Rate (Q1)
- China: Loan Prime Rate 1Y
- Germany: PPI MoM (MAR)
- Australia: RBA Minutes
- UK: Claimant Count Change
- Germany: ZEW Economic Sentiment Index (APR)
- Canada: Retail Sales (FEB)
- US: Existing Home Sales (MAR)
- UK: Inflation Rate, PPI, CPI, Retail Price Index (MAR)
- Canada: Inflation Rate (MAR)
- Canada: New Housing Price Index (MAR)
- Crude Inventories
- Global Manufacturing and Services PMIs (APR)
- Germany: GfK Consumer Confidence (MAY)
- UK: Retail Sales (MAR)
- US: Initial Jobless Claims (Week Ending April 18th)
- US: New Home Sales (MAR)
- Japan: Inflation Rate (MAR)
- Germany: Ifo Business Climate (APR)
- US: Durable Goods Orders (MAR)
- US: University of Michigan Consumer Expectations Final (APR)
Chart of the Week: Three-month WTI Crude Oil
Source: Tradingview, FOREX.com
A picture is worth $18.40. There really are few words to describe how weak crude oil has been in 2020. I have attempted to draw an often-reliable AB = CD pattern, however that would put price in July down at -$6.00. We know that can’t happen, as at some point, the market would start pricing in the physical equipment used in drilling the oil. The candlestick from January-March is extremely bearish. However, although it is only one month into the current candlestick, it is currently forming an inverted candle, which would be bullish. An inverted hammer shows a stall in price decline. But I wanted to show this point because it shows support at the low of 2001 and the high in 1998 in the $16 area.
Buyers may be aggressive if crude trades under $17.00. A low in oil would provide green shoots.
This week most likely will be traded off headlines. Watch for guidance from companies reporting this week. In addition, watch for more comments, and hopefully green shoots, from countries and states regarding the Coronavirus. Also, keep an eye on WTI to hold in the $16 handle. We may see additional comments from OPEC++ regarding supply cuts to boost the market.
And of course, be safe and always wash your hands!
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