U.S. equities continued to tread water on Wednesday as investors waited for the resolution of big events later in the week, including the OPEC oil cartel meeting today and the May jobs report on Friday. The latter will impact the odds of a Federal Reserve interest rate hike later this month.
Trading in recent weeks has been a snooze fest, technical in nature but largely range bound as a three-month consolidation pattern — capping a three-year sideways crawl — continues. Traders are balancing negatives like falling earnings and the risk of higher interest rates against the positives of higher energy prices, share buybacks and a strong short-squeeze dynamic.
But the stalemate isn’t likely to last as we head into the Fed policy announcement on June 15 while oil prices look vulnerable to a accumulating inventories, a lack of cooperation among OPEC countries and waning short-term supply disruptions.
As a result, you’ll want to keep an eye on Apple Inc. (NASDAQ:AAPL), Ford Motor Company (NYSE:F) and Home Depot Inc (NYSE:HD).
Here’s why:
Apple Inc. (AAPL)
AAPL shares are being turned away from support near $100 as expectations once again start to wane for the upcoming launch of the iPhone 7, which is now widely believed to merely be another incremental update to the 2-year-old iPhone 6 form factor.
On Wednesday, IDC reported that worldwide smartphone growth is expected to slow, with AAPL facing its first down year for the iPhone in 2016 with shipments dropping from 232 million to 227 million.
And on Thursday, Goldman Sachs cut its price target on AAPL shares amid lower overall growth for the smartphone industry, which has Apple trending still lower in premarket trading.
The company will next report results on July 19 after the market close. Analysts are looking for earnings of $1.39 per share on revenues of $42.4 billion.
Ford Motor Company (F)
Ford shares tested support at their 200-day moving average on Wednesday after reporting a nearly 6% decline in sales for the month of May. While demand for Ford’s F-series trucks remain strong, a nearly 80% rebound in wholesale gasoline prices, as well as evidence of rapidly declining credit quality in new auto loans, should put a damper on that going forward.
The company will next report results on July 28 before the bell. Analysts are looking for earnings of 61 cents per share on revenues of $36 billion.
Edge Pro subscribers are holding a position in the June F $13 puts and are carrying a 10.5% gain so far.
Home Depot Inc (HD)
HD shares are drifting lower, trading back below their 50-day moving average, despite strong recent data points on housing sales, personal income and retail sales. This could reflect sympathy with a batch of poor Q1 earnings from retail sector companies suggesting the nearly 80% rebound in wholesale gasoline prices is dampening consumer spending in select areas.
Should HD shares continue to drift lower, it will reflect the market’s judgement that actual retail earnings results are the truer indication of what is really happening with the consumer (negative).
The company will next report results on Aug. 16 before the bell. Analysts are looking for earnings of $1.97 per share on revenues of $26.5 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
