Stocks Give Back Overnight Gains

July 28, 2020

Stocks – BA, SPLK, MCD, NXPI, SHOP

Macro – SPY, QQQ

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• Recent Move Lower Likely To Continue- Midday
• S&P 500 Put Buyers + Dollar’s Gloomy Message
• Big Option Bet Suggest Market Has Seen Its Highs – Morning
• It’s All About The Risk-On Trade – The Look At The Week Ahead
• EPS Trends May Be Stabilizing, Positive For Long-Term View On Stocks
• How Low Can Markets Go If The Uptrends Break
• Trends Suggest Lower Prices Lie Ahead – Middaya

NASDAQ 100 (QQQ)

Bizarre overnight trading action with the futures surging, only to give back all the gains up and only to turn negative. The Nasdaq 100 futures traded up to 10,760 and is now trading down to 10,650. Last night I drew in a trend line in the NQ futures, and at least for now, that seems to be a new level of resistance.

Copper

Meanwhile, copper prices rose back to the uptrend, and that acted as resistance, with the metal falling to advance and retake the uptrend. A decline below $2.86 creates a series of lower highs and lower lows and likely confirms a reversal of the trend.

S&P 500 (SPY)

The S&P 500 ETF is trading down by about 20 bps, after failing at resistance at $323.60. A drop below $319 sets up a steeper decline to $311.

Shopify (SHOP)

Shopify is trading higher this morning after Goldman Sachs upgraded the company ahead of results tomorrow morning to a buy from neutral with a $1,127 price target. I tend to think the stock is heading the other way first, to around $740.

NXP Semi (NXPI)

NXPI is trading lower after posting disappointing revenue and inline guidance. The stock is hanging around support at $115. It is a significant level that needs to hold with the potential for the stock to fall to $106 otherwise.

Splunk (SPLK)

Splunk is now trending lower too, and I, as I noted a couple of weeks ago, the uptrend that had been strong since the March lows broke, never recovered. I tend to think this group of stocks is essential since the software space had been one of the hottest sectors in the market. The stock was had its price target raised today to $228 from $188 at UBS>

Boeing (BA)

Boeing is drawing closer to a break of the descending triangle and heading lower to $144 and potentially $126.

McDonald's (MCD)

Finally, McDonald's is falling and breaking an uptrend this morning after reporting weaker than expected earnings of $0.66 versus estimates for $0.76 per share. A drop below $178 could be trouble, so lets hope it doesn't get there.

Have a good day.

-Mike

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