S&P 500 (SPX) Nasdaq (QQQ) Week Ahead: Equites set another record high as huge earnings week beckons


  • Equity markets set yet more record highs, big earnings week ahead.
  • Refinitiv data shows 85.4% of reported earnings so far have beaten estimates.
  • Will bears ever come out of hibernation and sell something, anything?

Another week, another record as the S&P 500 sets yet another new high. It seems at the end of every week we look ahead and wonder if this can keep going and yet it does! Will the runaway train derail or is it setting up for a serious dose of sell in May and go away? The roaring twenties beckon and the stock market is determined to get to the party early. 

Earnings season continued unabated with some misses but equities just keep on nudging or blowing past estimates. At the time of writing, 123 companies from the S&P 500 have reported and 85.4% of them have beaten earnings estimates, according to Refinitiv. The long-term average earnings beat is 65%. This 65% does make you wonder just how good the analysts are if they get it wrong so often! The financial sector is the clear winner with a staggering 121.5% growth rate in earnings from a year earlier. The industrials sector is the laggard with a negative 15% earnings growth rate in Q1 2021 versus a year earlier.

Fund flows continue to go where only they can given the record ascent of equities. Refinitiv data shows equity fund ETFs attracted $4.4 billion in fresh capital and recorded their eleventh consecutive week of net inflows. 

In terms of valuation metrics, the S&P 500 looks slightly less stretched than a week ago when the Relative Strength Index (RSI) flashed at dangerously high levels. The RSI has receded to 64 from near 80 a week ago. 

The S&P 500 continues to stretch the record for how far above its long-term 200-day moving average the index could trade.  

SPX LONG TERM

The number of S&P 500 stocks trading above their own 200-day moving average also continues near record highs.

SPX 200 STOCKS

So what could possibly go wrong? Well, we keep saying that every week and nothing does! Let us take a look at what is in store for us in inflation terms and see if that can wake up some bears out there.

Thank you to Charlie Bilello for always keeping things in perspective. Inflation it seems is everywhere except in the mind of the Fed.

House prices have more than doubled over the last ten years. 

We have previously demonstrated the huge spike in Lumber prices and how this is feeding through to house prices. However, all commodities are setting multi-year highs. Oil is up nearly 300% in a year, copper has nearly doubled and house prices are also rising sharply.

All this has to result in inflation at some stage, but is the Fed in denial or does it have some magic alchemy to break in case of emergency. Either way the S&P 500 chart indicates a few sell signals, primarily with the AB=CD Down (sell) pattern and the MACD indicator looking dangerously close to a bearish crossover. 

SPX

The week ahead sees the busiest earnings week of the season so far with 180 companies down to report next week.

2021-04-26    After Market Close      Tesla

2021-04-27    Before Market Open    General Electric

2021-04-27    After Market Close       Amgen

2021-04-27    After Market Close       Mondelez International

2021-04-27    Before Market Open    3M

2021-04-27    Before Market Open    Eli Lilly

2021-04-27    Before Market Open    Armstrong World Indus

2021-04-27    Before Market Open    BP

2021-04-27    After Market Close       Microsoft

2021-04-27    After Market Close       Visa

2021-04-27    After Market Close       Alphabet

2021-04-27    After Market Close       Alphabet

2021-04-27    After Market Close      Advanced Micro Devices

2021-04-27    Before Market Open    Centene

2021-04-27    After Market Close       Starbucks

2021-04-27    Before Market Open    United Parcel Service

2021-04-27    After Market Close       America Movil

2021-04-28    Before Market Open    Banco Santander (Brasil)

2021-04-28    After Market Close       Benchmark Electronics

2021-04-28    Before Market Open    Yum Brands

2021-04-28    After Market Close       Apple

2021-04-28    After Market Close       Blackbaud

2021-04-28    Before Market Open    General Dynamics

2021-04-28    After Market Close       Facebook

2021-04-28    After Market Close       eBay

2021-04-28    Before Market Open    Teva Pharmaceutical Indus

2021-04-28    Before Market Open    Deutsche Bank

2021-04-28    Before Market Open    Boeing

2021-04-28    After Market Close       Ford Motor

2021-04-28    After Market Close       Qualcomm

2021-04-29    After Market Close       Adtalem Global Education

2021-04-29    After Market Close       NIO

2021-04-29    Before Market Open    Northrop Grumman

2021-04-29    Before Market Open    Comcast

2021-04-29    Before Market Open    Altria Group

2021-04-29    After Market Close     Gilead Sciences

2021-04-29    After Market Close      Cousins Properties

2021-04-29    Before Market Open    Mastercard

2021-04-29    Before Market Open    Merck & Co

2021-04-29    After Market Close      Twitter

2021-04-29    Before Market Open    McDonald's

2021-04-29    Before Market Open    Bristol-Myers Squibb

2021-04-29    After Market Close       Amazon.com

2021-04-29    Before Market Open    Caterpillar

2021-04-29    After Market Close      United States Steel

2021-04-30    Before Market Open    Barclays

2021-04-30    Before Market Open    Exxon Mobil

2021-04-30    Before Market Open    Banco Santander Chile

2021-04-30    Before Market Open    Chevron

2021-04-30    Before Market Open    AbbVie

Source: Benzinga

Congratulations if you have made it down this far, I am exhausted just looking at that list and that is taking only the large companies. In total, 880 companies are down to report earnings next week. 

Monday kicks off on the economic front with durable goods, Dallas Fed Manufacturing Index, and a few T-Bill auctions. The Dallas Fed is expected to come in at 23.4 from a previous 28.9. Tesla reports earnings after the market closes.

Tuesday brings the US house price index so keep an eye on what we spoke of above. Also on Tuesday, we get US Consumer confidence data. Microsoft and Google are the highlights on the earnings front.

Wednesday sees The Fed take centre stage with an expected no change to interest rates but the press conference may provide some tradeable comments. Apple and Facebook are the tech highlights while Boeing and Deutsche Bank also report.

Thursday is as always jobless claims day with 560k expected. US GDP is the big one on Thursday with a growth rate of 6.5% expected from a 4.3% previous number. Twitter, Mcdonalds, Amazon, and Caterpillar are the earnings highlights.

Friday, phew we made it, Chicago PMI is expected to fall from 66.3 to 63 in April. Michigan Consumer Sentiment Index is due to rise from 86.5 to 88 in April. Earnings highlights include ExxonMobil and Chevron.

 

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