The S&P 500 Has Broken To the Upside of a Short-Term Bearish Trendline

Companies reporting earnings this week include MU, MKC, PEP and STZ.

USA (1)

On Tuesday, Micron Technology (MU) is anticipated to release fourth quarter EPS of $0.96 vs $0.56 last year on sales of $5.9 billion compared to $4.9 billion a year ago. The Co manufactures memory chips and on September 1st, Dow Jones revealed that the Co launched its new form of dynamic random-access memory (DRAM), the GDDR6X, in Nvidia's new RTX 3080 and 3090 graphics processing units (GPU). Looking at a daily chart, the RSI is above its neutrality area at 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at $47.78 and $48). We are looking at the final target of $54.70 with a stop-loss set at $45.60.   

Additionally on Tuesday, McCormick (MKC), a global supplier of seasonings and other flavorings, is expected to announce third quarter EPS of $1.52 compared to $1.46 a year ago on revenue of $1.4 billion vs 1.3 billion last year. The expected move based on front-month options is 7.2%, the last time the Co reported earnings the stock rose 3.6%. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $197.93 and $198.34). We are looking at the final target of $175.50 with a stop-loss set at $196.70.  

On Thursday, PepsiCo (PEP) is likely to unveil third quarter EPS of $1.48 vs $1.56 last year on revenue of $17.2 billion, in line with the previous. PepsiCo is one of the largest international beverage and food companies, and on September 22nd, Vail Resorts and the Co announced the renewal and expansion of their product distribution partnership to a total of 33 Vail Resorts locations across North America. In addition, both companies pledged to achieve a zero net operating footprint by 2030. From a chartist's point of view, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $135.5 and $135.71). We are looking at the final target of $123.90 with a stop-loss set at $135.40.   

Also on Thursday, Constellation Brands (STZ) is awaited to post second quarter EPS of $2.50 compared to $2.72 a year ago on sales of $2.2 billion vs $2.3 billion last year. The Co is the world's largest producer and marketer of branded alcoholic beverages, and its current analyst consensus rating is 15 buys, 5 holds and 1 sell, according to Bloomberg. Technically speaking, the RSI is below its neutrality area at 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $188.46 and $181.65). We are looking at the final target of $168.10 with a stop-loss set at $187.00.

Looking at the S&P 500 CFD

on a 30 minute chart, the index has broken out to the upside of a short-term bearish trendline that price has been holding below since mid-September. Price will likely continue its advance to its 3,375.00 resistance level. If price gets above 3,375.00 then it will probably reach for 3,429.00. If price gets above 3,429.00 it would a very bullish signal, because the 3,429.00 level acted as strong resistance in mid-September that price failed to get above. So if price breaks out to the upside traders could see a rally all the way up to 3,486.00. On the other hand, price could dip back to the 3,300.00 support level where a bounce could occur. If price cannot manage to bounce off of 3,300.00 then traders should look to 3,221.00 as support. If price cannot rebound off of the 3,221.00 support level, it would be a bearish signal.           




Source: GAIN Capital, TradingView

More from SPX

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.