The technical arena – recommendations for the coming week
|
Company name / securities |
Ticker |
price |
recommendation |
support |
resistance |
|
Netflix |
NFLX |
565.17 |
Strong buy |
362.2 |
647.32 |
|
Goldman Sachs |
GS |
289.39 |
buy |
175.06 |
308.14 |
|
Euro Stoxx 50 |
SX5E |
3,602.40 |
buy |
2,614.60 |
4,179.00 |
SOURCE: Tradingview
The global arena
The stock indices are soaring to new highs in hopes of an additional aid package
The major indices recorded gains during the shortened trading week (Martin Luther King Day was marked on Monday) and reached new highs on Thursday, before retreating on Friday. Shares of Communications Services led the gains in the S&P 500, supported by a sharp rise in Netflix shares that followed the surprising announcement of the number of new users in the fourth quarter.
Facebook and Google’s parent company, Alphabet, also showed strength, similar to video game companies. Energy stocks, on the other hand, lagged behind as oil prices plummeted amid a surprising rise in U.S. inventories (but closed the week unchanged). This week, again, growth stocks and technology-related ones led the gains. Of individual investors.
Hopes for a new and significant aid package from the Biden administration seemed to be the main factor driving much of the gate rises earlier this week. The former chairman of the Federal Reserve and Secretary of the Treasury, Janet Yellen, told the Senate Finance Committee that “big action” must be taken to help the economy cope with the closures and the high unemployment rate.
It is possible that investors would have been even more encouraged by her statement that President-elect Joe Biden will focus on supporting the economy and less on raising taxes. Biden’s inauguration on Wednesday took place without significant protests or violence, which also reassured Wall Street investors.
News in the corona arena seems to be another motive for sentiment. President Biden reiterated his goal of 1 million vaccines a day, for the first 100 days of his term, although it was unclear whether this meant that 50 million Americans would receive the two recommended doses of Pfizer and Moderna vaccines, or 100 million would receive a first dose. .
The head of the infectious diseases team, Dr. Anthony Pauzi, said more vaccines should be on the way soon. The number of daily deaths from the virus in the US reached the second highest level ever last Wednesday, but the number of daily infections and hospitalizations showed signs of moderation. Some health experts have warned that the situation could worsen due to the arrival of more viral strains – British and South African. It should be noted that among his first actions in office, Biden reversed the Trump administration’s decision to withdraw from the World Health Organization.
The housing stock is at a very low level
Economic indicators released last week did not play a major role in driving markets. The initial weekly claims of the unemployed fell from a record high of several months, but remained high, standing at 900,000, while the initial indices of IHS Markit, both for manufacturing and services, for January, surprised on the positive side. The housing sector remains the most impressive, with sales of second-hand homes and construction starts at the highest levels, since 2006. It seems that the market is very challenging for new buyers. If the current sales rate is maintained, then the supply of unsold single-family homes will be reset within 1.9 months – the lowest inventory level since 1982.
Stability in the government bond market
US Treasury yields remained fairly stable over the week. The positive economic data generally helped offset the downward pressure on yields as a result of the Fed’s bond purchases and extended lock-in news in Germany.
In the corporate market, there was a strong demand in the initial public offerings, when the number of shares went on the market. The optimism regarding an additional package and positive company reports regarding profit strengthened the performance of bonds in the HY segment.
In Europe pessimism and new closures into March
Governments across the European continent continued last week to expand lock-in measures amid fears of the spread of highly contagious corona virus mutations. Germany extended the lock and restrictions until February 14. The Dutch government imposed the first national curfew since World War II and banned flights from Britain to stop the spread of the virus. Although EU leaders have backed away from imposing a travel ban across the EU, they have warned that austerity measures could continue due to new strains of the virus. Ireland will close the lock, which was due to end on 5 February in another month, until 5 March. British Prime Minister Boris Johnson said in an interview that it was “too early” to say when the national lockout would end, raising concerns that restrictions could continue until the middle of the year.
China is the only major economy to grow in 2020
Authorities in China reported that the economy grew by 2.3% last year as the world struggled to contain the corona plague. However, Chinese consumers remained conservative and avoided spending, showing that retail sales contracted 3.9% this year, although online sales (25% of retail sales) increased by almost 15%. As we will see now, China is going to be the only major economy to show growth in 2020.
The technical arena
Netflix (NFLX, $ 565.17)
Netflix ended 2019 with more than 200 million subscribers, a milestone reached in light of the fact that the Corona plague has left consumers, hungry for entertainment, in an international streaming market where Netflix has an advantage, because it entered the field ahead of many of its competitors.
The steady increase in subscribers comes as the company faces stiff competition from new players in the market, including Disney +, Apple TV, AT & T’s HBOMax service and Comcast’s Peacock service, all of which were born about a year ago.
As mentioned, the company received encouragement from the Corona plague, which forced consumers to cut back on a variety of leisure activities – from meals in restaurants to vacations or visits to the theater or concert halls – following closures imposed around the world. As people spent more time at home, the demand for streaming skyrocketed.
While most TV networks continue to broadcast without much of their original content because the Corona has closed productions, Netflix has a rich content arsenal that has launched it to new heights. The company signed a record number of 37 new subscribers in 2020 and at the end of the year its total number of subscribers reached 203.7 million – more than double the number of subscribers it had, just three years earlier.
The company announced revenue of $ 6.64 billion in the last quarter of the year, up from $ 5.45 billion in the last quarter of 2019. In doing so, it exceeded analysts’ forecasts. But the company’s earnings fell to $ 542 million, or $ 1.19 a share, from $ 587 million, or $ 1.30 a share, the year before. Analysts had forecast earnings of $ 1.36 per share for the most recent period.
Technically, the stock is in a strong buying position for the coming week. The momentum indicator is positive. The support line is at the $ 362.2 level and the resistance line is at the $ 647.32 level.
Fund managers holding Netflix stock
Goldman Sachs (GS, $ 289.39)
The bank, Goldman Sachs, reported last week quarterly revenue of $ 11.74 billion, up 18% from last year. As a result, the company posted a net profit of $ 4.5 billion, an increase of 135% compared to the fourth quarter of 2019.
The company reported record revenues from its investment banking unit, thanks to growing demand for initial public offerings and an increase in activity in the area of mergers and acquisitions. In fact, GS has presented its best year in revenue from global markets in a decade, mainly due to strong trading volumes in stocks, bonds, currencies and commodities.
Goldman Sachs chairman and CEO David Solomon said in a press release that “this has been a challenging year on many fronts” and added that “we hope this year will bring the necessary stability and respite from the plague.” Still, in Solomon’s opinion, stocks are rising too fast. Solomon said recently in an interview that he is concerned about the financial markets.
Goldman Sachs said in a statement that revenue from the Consumer and Wealth Management unit grew 15 percent last year to $ 6 billion. This activity now accounts for almost 15% of the company’s total revenue and is expected to deepen its activity in this segment.
Technically, the stock is in a buy position for the coming week. The momentum indicator is negative. The support line is at $ 175.06. The resistance line is at the level of $ 308.14.
The fund managers who hold the Goldman Sachs stock
Euro Stoxx 50 (SX5E, $ 3,602.4)
It was a mixed week for major European stocks, following a fall in markets the previous week. The DAX30 and EuroStoxx600 were up 0.63% and 0.17% respectively, while the CAC40 was down 0.93%.
The week started bullish and supported by economic data from China and the US. In the second half of the week, local economic publications, the ECB and the corona led to a retreat from mid-week highs.
Private sector PMIs from France, Germany and the eurozone reflected the impact of extended lock-in measures.
A busy week of economic data is expected. The main statistics from the eurozone include business and consumer confidence in January in the first half of the week. Towards the end of the week the focus will shift to GDP data in the fourth quarter of France, Germany and Spain.
As the number of new corona cases continues to rise across Europe, fourth quarter data could be an estimate for the first quarter of 2021. Even a low immunization rate across the eurozone indicates continued weakness before recovery.
Technically, the SX5E is in a buying position for the coming week. The momentum indicator is negative. The support line is at the $ 2,614.6 level. The resistance line is at the level of $ 4,179.0.
