It’s do or die time: Weeks of worry about trade wars, higher interest rates, wage-push inflation and tech stock headwinds have pushed the S&P 500 back towards super critical support at its 200-day moving average. This also coincides with the 2,600 level on the index. So the algorithmic, momentum traders have dug in on both sides of this no-man’s land.
I believe a breakdown is way overdue, with stocks ripe for at least a temporary violation of the 200-day moving average, with sentiment, valuations and investor positioning all overextended given the dynamics in play. Moreover, we are approaching the Q1 earnings season. Not only will investors have to deal with some reality (as hard numbers are reported) but share buybacks will slow because of blackout periods.
Whether a breakdown happens will depend on the performances of these five key stocks to watch in the hours and days to come:
Key Stocks to Watch: Bank of America (BAC)
Bank of America Corp (NYSE:BAC) shares have fallen to their own critical support level at $29, which saved BAC stock back in February. A breakdown here would put the November lows near $26 in play. The pattern looks very weak, with overhead congestion near $32 and a downward cross of the 20-day moving average through the 50-day average.
BAC will next report results on April 16, before the bell. Analysts are looking for earnings of 58-cents-per-share on revenues of $22.9 billion. When the company last reported on Jan. 17, earnings of 47-cents-per-share beat estimates by 2 cents on a 3.5% rise in revenues.
Key Stocks to Watch: Amazon (AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) shares were crushed below their 50-day moving average for the first time since November — before an epic 60% rally to the highs set earlier this month. At the day’s low, shareholders suffered a 12%+ decline from the highs. The catalyst is word the Trump Administration could be looking at a regulatory and/or tax-based crackdown on the company, which it reportedly blames for the plight of retailers and their workers.
The company will next report results on April 26, after the close. Analysts are looking for $1.19-per-share on revenues of $50.1 billion.
Key Stocks to Watch: Apple (AAPL)
Apple Inc. (NASDAQ:AAPL) shares look ready for a rest of the February lows below its 200-day moving average after hitting resistance once more near the $180-a-share level. The company continues to battle bad press following revelations it was purposefully slowing down older iPhones, with reports lawsuits could be forthcoming.
The company will next report results on May 1, after the close. Analysts are looking for earnings of $2.71-per-share on revenues of $61.48 billion. When the company last reported on Feb. 1, earnings of $3.89 beat estimates by 4 cents on a 12.7% rise in revenues.
Key Stocks to Watch: Netflix (NFLX)
Netflix, Inc. (NASDAQ:NFLX) shares dropped to touch their 50-day moving average for the first time since December as investors suddenly remembered that all that subscriber growth they’ve been excited about comes at the cost of ballooning production expenses. Plus, the company is caught up in the regulatory blowback against big-tech companies, with Quebec reportedly looking at a provincial sales tax against the company.
The company will next report results on April 16, after the close. Analysts are looking for earnings of 63-cents-per-share on revenues of $3.68 billion. When the company last reported on Jan. 22, earnings of 41 cents matched estimates on a 32.6% rise in revenues.
Key Stocks to Watch: Tesla (TSLA)
Tesla Inc (NASDAQ:TSLA) shares are down 8% on Wednesday and are off nearly 15% for the week amid nagging concerns about Model 3 production woes and concerns that its autonomous driving development could be slowed after news of an Uber-related pedestrian fatality and a deadly Model X crash thought to involve the use of the company’s Autopilot feature.
TSLA will next report results on May 9, after the close. Analysts are looking for a loss of $4.45-per-share on revenues of $3.39 billion. When the company last reported on Feb. 7, a loss of $3.04-per-share beat estimates by 11 cents on a 43.9% rise in revenues.