Dow Jones futures fell Monday morning, along with S&P 500 futures and Nasdaq futures. The stock market rally paused last week, allowing some handles and buy points to develop on Microsoft stock, Visa stock, Boeing stock and many others. Apple earnings are due this week, but Apple stock is still bottom of the barrel choice. Fellow Dow stocks Microsoft (MSFT), Boeing (BA) and Visa (V) also report in a huge week for earnings and other market-moving news.
Apple earnings are due Tuesday night. Boeing earnings are due Wednesday morning. Microsoft earnings and Visa earnings are out Wednesday night.
Microsoft stock and Visa stock boast IBD Composite Ratings of 96 out of a best-possible 99. Boeing stock has a good-not-great 89 Composite Rating. Apple stock rates a mediocre 54 CR.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures lost 0.4%. Nasdaq 100 futures sank 0.55%. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session. Suffice to say that Apple earnings, Microsoft earnings, Visa earnings and Boeing earnings will have an impact on Dow Jones futures in the coming week.
In addition to hundreds of earnings reports, China trade talks resume on Wednesday-Thursday. The Federal Reserve announces its first policy decision of 2019 on Wednesday while the January jobs report is due Friday. Meanwhile, President Trump already is signaling a willingness for another government shutdown.
Stock Market Rally
Last week the stock market rally paused after four solid weekly gains. The major averages tested their 50-day moving averages but rallied late in the holiday-shortened week. The Dow Jones and Nasdaq composite closed up 0.1% while the S&P 500 index dipped 0.2%. This stock market mini-pullback allowed many top stocks to form or extend handles, shaking out some weak holders and setting up lower buy points.
Apple earnings per share likely rose 7% to $4.17 in the fiscal first quarter, with sales down 5% to $84 billion. That’s an abrupt end to three quarters of accelerating Apple earnings growth and eight quarters of bigger sales gains. Apple already warned on Jan. 3 of weak iPhone sales, especially in China. That missed a cautious holiday sales forecast issued on Nov. 1.
Given the warning, the focus will be on Apple earnings and revenue guidance. CEO Tim Cook touts growing, high-margin services revenue. But can that move the needle enough as the pricey Apple iPhone struggles in an era of declining global smartphone sales and fierce competition, especially in China?
Apple stock plunged 10% on Jan. 4, hitting its worst levels since April 2017. That followed a huge sell-off in November and December. Since Jan. 4, Apple stock has risen somewhat, but only in line with the market. Shares rose 3.3% in Friday’s stock market trading, but the relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is still basically at lows. (The RS line is the blue line in the charts below.)
Apple stock has bottomed, but only because the stock market is rallying. It’s an Apple bobbing along, but doesn’t have any momentum of its own.
Microsoft Earnings, Microsoft Stock
Microsoft earnings are expected to rise 14% to $1.09 a share in fiscal Q2. Revenue should climb 12% to $32.5 billion, ending a three-quarter string of faster sales growth.
On a weekly chart, Microsoft stock has a handle with a 108 buy point. But last week was just four days. On a daily chart, Microsoft’s “handle” is only four days, just shy of the minimum five.
Investors could treat 108 as an aggressive buy point, with 113.52 as the conventional entry. If Microsoft stock holds in its current range through Monday, 108 will be the entry.
Boeing Earnings, Boeing Stock
Analysts expect Boeing earnings to fall 5% to $4.58 a share with revenue up 6% to $26.87 billion. But Wall Street sees Boeing earnings growth of 13%, 30% and 34% in the next three quarters.
Boeing stock is in an awkward double-bottom base with a 373.80 buy point. Like Microsoft stock, Boeing also has a four-day handle that looks like a handle on a weekly chart. Treat 367.42 as an aggressive entry on Monday. If Boeing stock holds in the handle for one more day, 367.42 will be a proper buy point.
Boeing’s RS line is at a new high already, a bullish sign.
Visa Earnings, Visa Stock
Visa earnings are expected to rise 16% to $1.25 a share with fiscal Q1 revenue up 11% to $5.41 billion. That would mark the second straight quarter of slowing Visa earnings and revenue growth.
Visa stock, like Microsoft stock, has a cup base that starts on Dec. 3, after a failed double-bottom base breakout. Unlike Microsoft stock or Boeing stock, Visa stock has a proper handle with a buy point of 139.58. Shares cleared that entry intraday Friday, but closed at 138.67.
Visa archrival Mastercard reports earnings on Thursday, Jan. 31. Mastercard stock has a double-bottom base, though one could see it a cup base starting from Dec. 3, like Visa stock and Microsoft stock. Either way, Mastercard stock has a 210.01 buy point.
Apple stock has months of repair work to do, while Dow Jones peers Visa stock, Microsoft stock and Boeing stock are all on the cusp of buy points. But buying a stock just before earnings is risky.
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