BREAKING: Market’s Powerful Rally Makes Case For A Bottom
The Nasdaq Composite stemmed a four-week sell-off, the S&P 500 held its decline to three weeks. Both stock market indexes rebounded from lows early in the week, launching a rally attempt and cuing investors to watch for a potential follow-through day. This is the Investing Action Plan for investors building watchlists and preparing for that possible follow through, and for one of the biggest weeks of the fourth-quarter reporting season.
If you’re new to IBD, you may want to look over its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
With the market in a correction and the major indexes whipsawing, not many stocks are holding up. It’s a good time to focus on relative strength lines. Ocean shipping firm Matson (MATX), natural gas play Targa Resources (TRGP), grain processor Bunge (BG), investment bank Raymond James Financial (RJF) and medical products giant AbbVie (ABBV) all have relative strength lines at new highs. Matson and Targa are around buy points, while Bunge and Raymond James are rebounding from brief tumbles. AbbVie has held support at the 50-day line ahead of its fourth-quarter report next week. Bunge reports on Feb. 9, while Targa and Matson report later in the month.
Global supply chains are bracing as China launches its Lunar New Year celebration next week, with the Shanghai Stock Exchange set to shut down for the entire week. The exchange in Hong Kong closes Tuesday through Thursday. All major business, factories included, go dark for the weeklong holiday. Many companies are discouraging workers from returning home for the holiday, attempting to prevent labor shortages after the holiday. China’s Ministry of Transportation expects those in the country to take 1.18 billion trips during the holiday, in what is widely considered the world’s largest annual migration. The country has already reduced manufacturing schedules in order to clear the skies ahead of Beijing’s Winter Olympics, due to start Friday, Feb. 4. Covid lockdowns, attempting to limit the coronavirus ahead of the Beijing Games, were exacerbating normal holiday delays and price spikes in shipping and airfreight.
Exxon Mobil (XOM) and Enterprise Products Partners (EPD) will report Q4 results before the market opens Tuesday. Analysts see Exxon’s earnings soaring to $1.94 per share from 3 cents in the year-ago quarter. Revenue is expected to nearly double. Marathon Petroleum (MPC) is expected to swing to a profit when it reports early Wednesday. MPLX (MPLX) and Suncor (SU) will also report Wednesday. Royal Dutch Shell (RDSA) is on tap for Thursday. Analysts see the European major posting EPS of $1.36, up from 10 cents in the year-ago quarter with revenue up 52%.
Next Friday’s jobs report may flash the weakest payroll gain since December 2020’s outright decline amid that pre-vaccine spike in Covid cases. That’s the take-away from the rise in weekly jobless claims from a half-century low 188,000 in early December to a three-month-high 290,000 in mid-January. Yet the Federal Reserve will look through any short-lived softness tied to the omicron surge, which is already receding. Fed chief Jerome Powell said Wednesday that he thinks the labor market has met the central bank’s maximum employment mandate, with the jobless rate at 3.9% in December. Powell also cited « very large wage increases » amid the potential risk factors for high inflation becoming entrenched.
The stock market’s reaction may have at least as much to do with wage gains and labor force dynamics as payroll headlines. One point of interest will be whether the omicron surge has had any negative impact on labor force participation, giving those close to retirement a reason to stay home, for example.
Google-parent Alphabet (GOOGL) reports Q4 earnings late Feb. 1. Analysts estimate GAAP earnings of $27.64 per share, up 24% from a year earlier, with gross revenue jumping 27% to $72.2 billion. Net revenue, minus traffic acquisition costs, is projected at $59.39 billion. Analysts project YouTube advertising revenue of $8.8 billion and cloud computing revenue of $5.44 billion.
Amazon reports quarterly results late Thursday, with stock market analysts expected to focus on supply-chain issues that have hit a wide swath of businesses. Also, industrywide shortages in shipping containers, truck drivers, and readily available ports likely impacted delivery times and caused strained performance. Estimates look for earnings of $3.72 a share, a 74% plunge from the year-ago quarter. They look for revenue to climb 10% to $137.8 billion, its slowest growth in more than seven quarters.
Facebook-owner Meta Platforms (FB) reports fourth-quarter results late Wednesday, with analysts expected to focus on how much Apple continues to impact advertising after it changed privacy controls last year. Facebook and Instagram were adversely hit by the iOS changes, but a recent survey of advertisers by Cowen suggest Meta is regaining lost ground. The consensus estimate for adjusted earnings is $3.85 a share, vs. $3.88 a year earlier, according to FactSet. That would mark its first earnings decline in more than two years. Forecasts put revenue at $33.3 billion, up 19%.
Drugmakers Merck (MRK), Eli Lilly (LLY) and Bristol Myers Squibb (BMY) are on deck to report fourth-quarter earnings next week. Early Thursday, analysts expect Merck to report adjusted profit of $1.52 per share on $13.14 billion in sales, growing a respective 21% and 5%. Also, before Thursday’s open, Lilly is likely to report an 11% earnings dive to $2.45 per share. Sales are expected to increase roughly 3% to $7.69 billion. Early Friday, analysts call for Bristol earnings of $1.80 per share on $12.09 billion in sales. Earnings would pop 23% and sales would advance north of 9%.
YOU MAY ALSO LIKE:
These Defense Stocks Are Near Buy Points
MarketSmith: Research, Charts, Data And Coaching All In One Place
These Are The 5 Best Stocks To Buy And Watch Now
The Ultimate Warren Buffett Stock Is Near A Buy Point, But Should You Buy It?
Tech Titan Sinks Futures; Fed, Tesla Loom For Volatile Market
1/28/2022 Apple and Microsoft led Friday’s rebound, but many stocks are damaged.
1/28/2022 Apple and Microsoft led Friday’s rebound, but many stocks are…
(© Chris Gash)
Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20!
Get market updates, educational videos, webinars, and stock analysis.
Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content.
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
Ownership data provided by Refinitiv and Estimates data provided by FactSet.
© 2000-2022 Investor’s Business Daily, LLC. All rights reserved

source