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With the Dow, S&P 500 and, finally, the Nasdaq falling below their 50-day lines late in the week, the stock market rally moved to “uptrend under pressure.” A rebound in Treasury yields, along with Apple (AAPL) selling off on fears that China was making it a trade war target, were catalysts to the downside. Energy stocks continued to do well as crude oil prices hit a 2023 high. Software held up among tech areas.
In the coming week, earnings season slows to a crawl, although Adobe (ADBE) and Oracle (ORCL) headline the calendar. Apple introduces its new iPhone on Tuesday. And the highly anticipated IPO of Softbank‘s (SFTBY) ARM Holding unit is slated for Wednesday.
X
Stocks To Watch: 5 Ways To Handle This Market
The stock market rally is under pressure, so investors should be cautious about making new purchases. But pay attention to stocks holding support and setting up. Dow Jones stock Caterpillar (CAT), Uber Technologies (UBER), Shopify (SHOP), Amazon.com (AMZN) and Lam Research (LRCX) are all in bases near buy points. All are forging handles or something handle-like. CAT, UBER, AMZN and LRCX are all in flat bases, though investors could view UBER as being a shallow cup. Shopify has a cup pattern. CAT, Amazon and Lam Research’s bases all formed at or above 10-week support. Uber’s base closed for three weeks below that line. Shopify took a deeper dive.
Federal Reserve Watch: Testing A Hawkish Outlook
The outlook for a soft landing, amid disinflation and moderating spending, gets a big test in the coming week. August retail sales and producer prices come out Thursday. But the August consumer price index, on Wednesday, is the last big data point ahead of the Fed’s Sept. 19-20 meeting. A rate hike is said to be off the table, but eyes will be on updates to guidance currently pointing to one more rate hike in 2023, though there is little chance it will change the hawkish forecast. Economists expect a 0.5% monthly jump in the CPI fueled by higher energy prices. However, the core CPI is expected to rise a tame 0.2% for a third straight month, as deflating goods prices offset service price increases.
U.S. Economic Optimism Rebounds, But There’s A Red Flag
Artificial Intelligence: Oracle Dials In The Cloud Big 3
A late Monday report from software giant Oracle (ORCL) could provide some perspective on the impact of artificial intelligence upon cloud computing. Its fiscal first quarter report is expected to show an uptick in earnings growth, to 12%, while the recent pace of sales growth halves to 9%. ORCL stock climbed for the past two weeks on a pair of analyst upgrades. Both reports cited the potential for artificial intelligence applications to drive demand for Oracle’s cloud services. Oracle graphic processing units, made by Nvidia, could give the company a “speed to deployment” edge over the Big 3 cloud providers. The stock, up almost 50% this year, is currently in a cup pattern with a 127.54 buy point.
Apple To Unveil iPhone 15
Consumer electronics giant Apple plans a media event on Tuesday to introduce its iPhone 15 family. News leaks point to four new handsets: two basic versions and two high-end “Pro” models. The iPhone 15 Pro models will include more technology upgrades and could see price increases over the current iPhone 14 Pro. The top-of-the-line Pro Max model is said to include an upgraded camera with a periscope lens for greater optical zoom capability. Apple may also debut its Apple Watch Series 9 at the event.
Apple Stock Springs Back From Two-Day Dive On Reassuring Analyst Comments
Adobe EPS Seen Rising 17%
Digital media and marketing software firm Adobe plans to release its fiscal Q3 results late Thursday. Analysts expect earnings and revenue growth to hold steady. Adobe this year has been adding generative artificial intelligence capabilities to its software offerings, including its Creative Cloud and Experience Cloud platforms. The company’s planned $20 billion acquisition of Figma, a web-first collaborative design platform, has faced regulatory challenges in the U.S. and Europe. Still, Adobe stock is in record high territory after a breakout in June.
ARM: The year’s largest IPO?
SoftBank‘s (SFTBY) Arm Holdings unit is tentatively set to launch on Wednesday in what is expected to be the world’s largest initial public offering so far this year. The IPO involves 95.5 million American depositary shares with a target price between 47 and 51. The company aims to haul in not quite $5 billion. The launch would value the U.K.-based chip designer at as much as $54.8 billion. Reuters quoted an unnamed source saying the offering was six times oversubscribed. Japan’s Softbank acquired ARM in a $31 billion deal in 2016. SoftBank will control about 90% of shares after the offering.
Earnings Bullets
Monday
FuelCell (FCEL), a maker of fuel cell power generators, reports its Q3 results early Monday on the late-season earnings calendar. Analysts expect losses to continue, but at a narrowed pace. Views also call for the first revenue drop in seven quarters, although full-year revenue forecasts are for a mild gain. FuelCell shares have been in descent, falling a full 95% since early 2021. But, partly due to partnerships with companies including ExxonMobil (XOM), the company is seen as an important innovator in new economy technology.
Casey’s Retail (CASY) reports results late Monday. Analysts expect the Iowa-based gas station/convenience store chain to report an 18% drop in fiscal first quarter earnings and a 13% revenue decline. That would steepen the slide started in the prior quarter, after a year of big profits in 2022. Shares are up not quite 8% on the year. But the stock has given up all its gains from a June breakout, and is back below key support.
Tuesday
Mama’s Creations (MAMA), a distributor of Italian delicatessen-style foods to grocery and convenience stores, is expected to swing to profit from loss in its report late Tuesday. EPS is expected to jump 167% in its second year of profit. Shares are up 125% for the year, and just even with a cup-base buy point, though still trading below 5.
Wednesday
REV Group (REVG) delivers its fiscal third quarter results Wednesday morning. Earnings targets project an incremental earnings gain, following the triple-digit performance in Q2. Revenue growth is also seen slowing, to 5% from Q2’s 18% jump. But the maker of firetrucks, ambulances, and recreational vehicles is set for a strong year, according to analyst estimates. The stock popped out of a five-month consolidation in May and early June, and has since traded tight and flat, below a 14.25 buy point.
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