Bank of America (BAC) - the shining star of the US financials, ended the month on a fractionally positive note, settling +1cent to $28.17. This made for a third consecutive net monthly gain of 3.3%. M/t outlook is bullish, with soft target of the $33s, and secondary of the 40/45 zone within 12/18 months. Higher rates are bullish for BAC, the financial sector, and the broader US equity market.
BAC monthly
BAC daily
Summary
It was a bullish end to the month, and there is zero reason to expect the m/t trend not to continue until at least the $33s, if not $40/45. The latter will clearly require US rates at least 2.50%, if not >3.00%.
For the record, I do NOT expect rates to fully 'normalise' to around 5%. There are simple 'math problems', as higher rates will eventually cause problems in terms of debt repayments, at consumer, corporate, and governmental level. However, until rates are at least 2.50%, I don't see any significant reason to be concerned.
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Many in the mainstream recognise that higher rates are bullish for BAC and the broader financial sector...
Pete Najarian of investitute.com, regularly highlighting BAC, JPM, XLF
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yours.. bullish BAC, the financials, and the main market, into/across 2018.
Whilst the main market saw a very mixed day, there was notable strength in Disney (DIS), which settled +1.8% at $105.24. A sustained bullish break >106s is due, and that will open up first soft target of the 115/118 zone. The 140/50 zone is a valid target if the US/world economy continues to grow across 2018.
DIS daily
DIS monthly
Summary
Recent earnings were 'fine', and price action since late October has been rather bullish indeed.
Note the MACD (green bar histogram) on the giant monthly chart. At the current rate, we'll see a bullish cross/positive cycle in January or Feb'. First soft target are the previous two highs of 115/118. A move to 120/25 seems very viable by mid 2018, not least if Dow 25/26k.
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Disney owns the two biggest movie/TV franchises in the world - Lucasfilm and Marvel.
Today, Marvel released the first trailer for Avengers - Infinity War, a movie that many fans have been waiting for since 2008.
yours... bullish Thanos. Even if loses, he'll take down some of the Avengers with him.
It was a very bullish day for the financials, with Bank of America (BAC) settling +3.9% at $27.64. Many are now looking ahead to 2018, as most recognise rates are set to further increase, which is inherently bullish for all financials. M/t bullish, soft target $33s, and then 40/45.
BAC daily
BAC monthly
Summary
Across 2017 I noted the importance of the key $18 threshold, and how an upside break would have monstrously bullish implications for the mid term. We saw the breakout in Nov'2017, and that can be marked as month'1 UP.
Some 12 months later, BAC has seen the $27s. Next big target are the $33s... last seen in Dec'2008.
Higher rates are unquestionably bullish, and it looks safe to assume another 3-4 hikes next year. As things are, BAC is set for a third consecutive net monthly gain, and the $33 really do appear a given.
Micron Technology (MU) began the week on a rather negative note (intra low 47.09), settling -3.3% at $48.05. There is natural psy' level resistance around the $50.00 threshold, with last week seeing a high of $49.89. Near term offers further weakness, but m/t... still hyper bullish to $100.
MU daily
MU monthly
Summary
I'd imagine at least a few will start to tout 'the bubble has burst', but with an FPE in the 7s, Micron remains very under-valued relative to the main market.
The fact the stock has already hit the $49s, gives confidence to the original outlook. The break into the $37s in September was massively important, and the door to the giant psy' level of $100 is wide open, viable even before end 2018.
I can understand if some prefer more well known techs like INTC, CSCO, or even AAPL. To me though, MU is my favourite tech stock, and indeed, my favourite stock in the entire US market.
With gold and silver ending the week on a slightly weak note, the related miners followed. The ETF of GDX settled -0.3% at $22.85, but that still resulted in a third consecutive (if minor) net weekly gain of 0.3%. Near term outlook offers weak chop. Things would get interesting if GDX >$23.10.
With WTIC in the $58s, Marathon Oil (MRO) caught renewed interest, settling +2.5% at $14.88. Recent price action is just a retrace of the initial big wave from the key Aug' low. M/t bullish, soft target $19s. Any monthly close >19 will offer the 29/30s in 2018.
MRO daily
MRO monthly
Summary
Little to add, aside that there has been recent notable call activity in MRO.
Micron Technology (MU) continued to push upward (intra high $49.63), settling +3.7% at $49.40. The key psy' level of $50 is clearly viable within the immediate term. The m/t hyper bullish target remains $100, which is ironically rather conservative.
MU daily
MU monthly
Summary
Suffice to add, yet another day higher for Micron, as the psy' level of $50.00 is set to be hit. With an FPE in the 7s, the notion of $100 by late 2018 is very much viable.
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There has been sustained option call buying in MU for some considerable time, today was no exception...
Pete Najarian of investitute.com highlighting notable call activity.
JD.com (JD) settled -2.6% at $39.20. Recent earnings were fine, and the stock is arguably just seeing short-term chop. Things would only turn bearish if the Oct' low of $35.79 is broken under, and that is still a considerable way down.
JD daily
JD monthly
Summary
Suffice to add, recent earnings were indeed fine. Its notable the stock saw a black-fail candle at resistance Nov'13th.
Soft bullish target are the 49/50s, which are clearly out of range before year end, but look a given within spring 2018. The more cautious will stick to Alibaba (BABA), which has proven sig' profits.
It was mostly a week of chop for the gold miners, but the week did end on a positive note. The ETF of GDX settled the day +0.8% at $22.79, which made for a second consecutive net weekly gain of 1.2%. Near term outlook is bullish, and would be greatly helped if the USD remains under the DXY 95s.
GDX daily
GDX weekly
Summary
Suffice to add, with gold and silver battling upward, the related gold miners are following.
It is notable that GDX continues to lag, relative to gold. Its been a year of broad chop, with the mining ETF stuck under the Feb' high of $25.71.
Mining bulls should be seeking a break above the weekly 10MA, currently at $23.15. Things only get interesting once the Feb' high is broken and held above. Any price action in the $26s will offer a fast run to the 2016 high of $31.70.
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* the one indirect bullish for gold, silver, and the related miners is copper, which is set for the third monthly close of the past four, above the key $3.00 threshold.
Cisco Systems (CSCO) had good Q3 earnings, with the stock jumping at the open (intra high 36.67), and settling +5.2% at $35.88. M/t outlook is bullish, with first soft target of the psy' $40 level, and then the $44s.
CSCO daily
CSCO monthly
Summary
As expected, Cisco System earnings were good, and Mr Market has been reminded of the inherent quality of the company.
Not that many were highlighting Cisco ahead of earnings, but in addition to yours truly...
... Pete Najarian of investitute.com was exceptionally bullish the stock last Friday, and is now seeking $40, which is a valid soft target within the mid term.
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Seen on the bigger monthly chart, the 'natural' price thresholds are clear as crystal. Even the $44s would still be a considerable way below the March 2000 bubble high of $67.30. The 50/57 zone looks just about possible by late 2018, and that would equate to Dow 30k.. if not 35. Crazy talk? Would you rather be short?
Along with the main market, Bank of America (BAC) opened lower, but there was a powerful swing upward, with the stock settling +2.1% at $26.79. M/t bullish, with soft target of the $33s, and a grander target of 40/45 by late 2019.
BAC daily
BAC monthly
Summary
*there was notably huge option call activity in BAC today, within the Dec' and Jan' $28s.
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Suffice to add, having cooled from a late Oct' high of $27.98, today's low of $25.81 likely marks a key floor.
Most notable, today's settling daily candle was of the bullish engulfing type. This was a particularly strong one, and it bodes for renewed upside into next week's Thanksgiving break.
I have been hyper bullish BAC since the key breakout in Nov'2016. Next soft target are the $33s, with a grander target of 40/45. Clearly, the latter will require US int' rates at least 2.50%, if not >3.00%. I recognise many will be dismissive of rates reaching those levels before the next recession.
yours... bullish higher rates, and thus.. bullish financials.
Whilst the main market saw a day of moderate chop, there was further severe downside in General Electric (GE) which settled -5.9% at $17.90. There is threat of a sporadic $2-3 bounce, but next major support is not until the $13s. Bearish GE, Bearish Flannery.
GE daily
GE monthly
Summary
Flannery had a major opportunity yesterday. The plan was outlined, but it just wasn't enough. The dividend cut was significant, but other measures seem minor, if not laughably trivial. The underlying problem is that profitability has collapsed, and there seems little hope of any improvement within 6-12 months. In fact, it would not be a surprise to see things further deteriorate.
Even some within the mainstream, including the Cramer, are coming around to the realisation that its not so much about a possible recovery in 2018, but rather not until at least 2019. Cramer was borderline pissed this morning, saying 'I've been had'... no less than half a dozen times.
Flannery himself suggested that investors could buy on a 3-5 year outlook, but not short term. That kind of talk did not please Mr Market. Today's price action into the $17s, confirmed that after Flannery's appearance on CNBC, Mr Market is simply not inspired.
Technically, the next major support is not until the $13s. Sure, there will probably be a few powerful bounces along the way, but broadly, the $13s do very much look on track.
JD.com (JD) had fine earnings, starting the week on a very positive note (intra high $42.77), settling +3.4% at $41.34. Soft target are the 49/50s. The hyper bulls should be seeking $100 within 12-18mths.
JD daily
JD monthly
Summary
Suffice to add... price action in JD is very clean. We have a m/t low in October of $35.79, with a clear break of the downward trend from August.
With fine earnings, the stock is justifiably strong, with soft target of the $49/50 zone. That looks a given within a few months, and frankly, its not a stretch to see $100 in 2018.
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Pete Najarian of investitute.com, is seeking the $45s within the relatively near term. That does seem a very valid target before year end.
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*an obvious valid alternative for the more cautious is Alibaba (BABA), which is now a very profitable company.
With the precious metals seeing moderate net weekly gains, the related miners followed. The gold
miner ETF of GDX ended the week on a significantly negative note, -1.3% at $22.52,
but that still resulted in a net weekly gain of +0.4%. Near term outlook is for continued weak chop.
GDX weekly
GDX, daily
Summary
To be clear, short term price action is likely to see a further weak chop, but a major upswing is increasingly due.
The most (indirect) bullish variable/signal remains copper, which is comfortably holding well above the key $3.00 threshold. The copper miners themselves are broadly strong, and the gold/silver miners should (in theory) eventually catch up.
Alcoa (AA) has been leaning weak for a few weeks, and with the main market seeing the first sig' weakness in a few months, the stock rapidly cooled, settling -5.6% at $43.33. There is major support around $40.00, which should comfortably hold. M/t bullish to $60.00.
AA daily
Summary
Suffice to add, even after the climb from the $28s a year ago, with an FPE in the 13s, the stock is still not expensive,
Short term threat of testing the $40.00 threshold, but that should comfortably hold. M/t bullish above the Oct'24th high of $50.31, and onward to next soft psy' level of $60 by mid 2018.
SNAP posted (not surprisingly) another set of lousy earnings. The stock opened sig' lower (intra low $12.10), settling -14.5% at $12.93. The break of trend offers the $9s in the near term. M/t outlook remains 'suspect', and is only marginally less terrible than Blue Apron (APRN).
SNAP daily
Summary
Suffice to add... garbage results, for a company that is not much more than a cash hungry monster.
Just reflect on this often overlooked issue, whilst the US/world economy is growing, SNAP still can't manage even a fractional profit.
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In related news...
The same maniacs - Stifel, who were touting APRN a buy this summer, were also bullish SNAP
I'm actually more curious to see how long it takes the 'smart guys' at Credit Suisse to crawl out of their holes, and issue another target.
Whilst the main market leaned somewhat weak, there was notable strength in Disney (DIS), which settled +1.0% at $101.61. Earnings are due Thurs' Nov'9th in AH, and that will clearly have broader implications for the remainder of the year.
DIS daily
DIS monthly
Summary
There have been a trio of stories surrounding Disney in the past week...
First, Disney threatening various cinema chains that if they don't show 'The Last Jedi' for a certain amount of weeks, they won't get access to the film.
Second, Disney banning LA Times film critics - although Disney have (today) backed down on that issue, after a huge mainstream backlash.
Third, the reveal that Disney was in preliminary talks to buy part of 21st century fox.
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Earnings: I expect them to come in 'fine'. The current FPE is in the 15s, with a yield of around 1.5%. On any basis... not expensive.
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Technically...
The Sept'7th low of $96.20 now marks a washout low. Recent price action >100 gives confidence that the Sept' low is a mid term low.
First soft target is the 200dma in the 105s. M/t target is the Aug'2015 high of $118.62. In theory, if main market is strong across 2018, broad upside to 140/50 is viable. That might seem a long way up, but the same was said of AAPL when it was trading in the $90s in mid 2016.
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Whilst the main market saw a day of mostly fractional gains, there was significant strength in JD.com (JD), which settled +1.5% at $39.01. Last week's low of $35.79 marks an increasingly secure m/t floor. First big target is the Aug'8th high of $48.99, and then the psy' level of $50.00.
JD daily
JD monthly
Summary
Suffice to say, last week likely saw a key m/t floor, after choppy cooling from the Aug' high.
I am m/t bullish JD, and it is a very valid alternative to Alibaba (BABA).
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Its notable there was some call buying in JD last week...
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*Earnings are due Nov'13th (pre-market), and I expect them to come in at least 'reasonable', and it would be the natural excuse for renewed mainstream interest, with the stock to push well into the $40s.
With precious metals still leaning on the weaker side, the related miners followed. The gold
miner ETF of GDX ended the week on a negative note, -0.7% at $22.43,
resulting in a third consecutive net weekly decline of
-0.6%. Near term outlook is bearish.
GDX weekly
GDX daily
Summary
*Gold settled lower for a third week, with Silver settling moderately higher. --
The related gold miners are struggling. Regardless of the past few weeks, broader price action is choppy, with GDX remaining firmly stuck under the Feb' high of $25.71.
The 'cautious' will leave this sector alone, until a decisive break into the $26s. From there, it would be open air to the summer 2016 high of $31.70. Based on copper, oil, and a few other aspects, I expect an eventual upside break.
Tesla (TSLA) saw Q3 earnings far worse than expected, with the stock duly whacked (intra low $292.63), settling -6.8% at $299.26. Near term outlook is bearish, as the 280/70s appear briefly viable. The m/t trend is still bullish, and would only turn bearish with a monthly close under $280.
TSLA daily
TSLA monthly
Summary
re: earnings. Q3 EPS was -$2.92, even worse than consensus.
Lets be clear, the company is a cash hungry monster, as its still in the early phase of a massive production ramp for the Model'3. Even CEO Musk predicted the current 'production hell'.
Technically, you can see via the monthly chart, how the $280s are very important. The $280s used to be resistance until a breakout in April. Now they should act as support.
To be clear, any monthly close under $280 would be exceptionally bearish, and offer downside to the 200/185 zone. This is interestingly close to Goldman Sach's new target of $205.
For the record, I do NOT expect such a bearish monthly close. Instead I expect some weeks of chop, but then rebounding on the semi-truck reveal, due within 3-6 weeks.
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In many ways, I just wish Elon would stick to rockets...
Even if you have little interest in the public or private space program, the following short video is rather important to see...
The December launch of Falcon heavy will be a massively important event.
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The following is from two years ago, but it gives credence to the notion that Musk is someone to take seriously...
Yours truly does indeed consider Musk a visionary. I hope Tesla can push forward and solve its production issues, if only to take some of the pressure off the guy!
Q3 earnings for US Steel (X) were fine, with the stock jumping at the open (intra high $29.33), and settling +7.8% at $27.30. Near term outlook is for some chop. Mid term outlook is bullish, with first soft target of the $31s, and a grander target of the $40 threshold.
Suffice to add, earnings were unquestionably 'reasonable'.
Technically, today's settling black-fail dual-spiky daily candle is messy, as the stock is trapped within multiple price thresholds.
To be clear, short term price action could be pretty choppy, and lean weak. Mid term looks fine though, and US Steel's Q3 was in stark contrast to AK Steel (AKS).
