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US market: review and forecast for September 29. Investors assess risks
US market: review and forecast for September 29. Investors assess risks The market the day beforeTrading on September 28 on American stock exchanges ended in a deep minus. The S&P 500 index dropped 2.04% to 4,353 points. The Dow Jones lost 1.63% and the Nasdaq fell 2.83%. Only the energy sector showed positive dynamics (+0.46%), despite a slight decline in oil prices. Due to the aggravation of the risks of semiconductor shortage, the IT sector fell into the outsiders (-2.98%), the company was made up of telecoms (-2.79%).Company newsAcceleron Pharma (XLRN: +2.2%) is supposedly preparing for a takeover by Merck (MRK).Kirkland Lake Gold (KL: -7.7%) has announced a merger with Agnico Eagle (AEM).Peloton Interactive (PTON: -4.6%) came under pressure due to Amazon's (AMZN) plans to release its own Halo View fitness tracker and provide a service for Halo Fitness workouts.We expectToday, global stock markets are showing moderately positive dynamics, partially offsetting yesterday's decline. However, the situation still contributes to the flight of investors from risk. The increase in US government bond yields is mainly due to a sharp increase in inflation expectations caused by rising energy prices and continued pressure on supply chains. The "hawkish" results of the September FOMC meeting also contribute to an increase in the profitability of treasuries. The growth factor gives way to the factors of reflation and economic opening. Given the large contribution of technology giants to the overall result of corporate profits and ensuring economic growth, concerns about the consequences of the rate change for the wider market are increasing. Another reason for concern is the high rate of change in the yield of treasuries: it has grown by more than 20 bps in just a few days.The uncertainty is also connected with the protracted discussion by US lawmakers of an infrastructure spending package. Serious disagreements remain between Democrats over the amount of funding and the content of the program of these reforms. Another issue on which congressmen are unable to reach a compromise is raising the national debt ceiling. Market participants are also concerned about the upcoming corporate reporting season. The dynamics of the revision of the results forecasts is weakening. There are more and more doubts that they will coincide with the expectations of the market or will be above them. The same applies to forecasts for 2022, which may turn out to be too optimistic, since they do not fully take into account the adverse impact of supply chain failures, which has already been noted by FedEx (FDX), Nike (NKE) and Costco (COST).Asian stock markets showed mostly negative dynamics following the September 29 session. China's CSI 300 fell by 1.02%, Japan's Nikkei 225 fell by 2.12%, only Hong Kong's Hang Seng rose by 0.7%. EuroStoxx 50 rose by 0.92%.Risk appetite is uncertain. The yield of 10-year treasuries is 1.52%. The price of Brent futures drops to $78.5 per barrel. Gold rose to $1,739 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4350-4400 points.MacrostatisticsThe publication of significant macrostatistics is not scheduled for today.Technical pictureOn the eve of the S&P 500 index could not stay above the 50-day moving average. The RSI also indicates a downward trend. If the negative mood in the markets persists, the benchmark may test a local minimum at around 4,300. In case of its breakdown, the S&P 500 is able to continue moving to the support zone ...
AT&T: absolutely nothing to cling to
AT&T: absolutely nothing to cling to Since the beginning of the year, AT&T shares have fallen by 6%. This happens under the condition of good forecasts from the management for the next few years, in which, apparently, market participants do not really believe. Here it is worth considering the fact that in recent years the company has suffered due to large-scale M&A deals with DirecTV and Time Warner. They not only distracted managers from the process of managing the main business, but also complicated the financial assessment of the issuer, since it became much more difficult to compare financial results with previous periods.It can be noted that DirecTV has a negative impact on financial results. While the rest of the divisions recovered from the pandemic: total revenue increased by 7.6% yoy, to $44 billion, while DirecTV's revenue decreased from $7.4 billion last year to $6.6 billion in the second quarter of 2021. AT the same time, AT&T's revenue is still below the pre-coronavirus values: in the fourth quarter of 2019, the figure was $46.8 billion.AT&T reports simply do not show any signs of strong growth in the near future. HBO Max will lose 5 million users who have subscribed to the service through Amazon. The company decided to do without intermediary services and will now encourage people to subscribe directly. Firstly, such a large reduction in subscribers will definitely affect the results. Secondly, the management plans to attract people with a 50% discount for the first six months of the subscription. In general, this strategy has a chance of success and can increase revenues, but in the medium term it is clearly impossible to do without financial ...
US market: review and forecast for September 22. "Bulls" can seize the initiative
US market: review and forecast for September 22. The market on the eveAt the auction on September 21, American stock markets showed mixed dynamics. The S&P 500 index corrected by 0.08%, to 4354 points. The Dow Jones lost 0.15%, the Nasdaq rose by 0.22%. Companies from the healthcare (+0.15%) and energy (+0.37%) sectors looked better than others. The weakest dynamics was demonstrated by issuers from the communications sectors (-0.33%) and industry (-0.70%).Company newsOil and gas company ConocoPhillips (COP: +4%) announced the purchase of Shell's shale assets in Texas for $9.5 billion, and also increased its quarterly dividend payments to $0.43 per share.Disney securities (DIS: -4.2%) are falling amid management statements about the delay in the release of some of the company's films due to the spread of the "delta"strain.The quotes of one of the largest casino chains Las Vegas Sands (LVS: -5.6%) continue to decline amid uncertainty about the prospects for a large business area in Macau.ExpectationsToday, we expect the neutral-positive dynamics on the stock markets to recover after a turbulent start to the week. European markets opened in the green zone in the morning, signaling a weakening of concern about the default of the Chinese developer Evergrande. The company stated that the issue of the upcoming (scheduled for September 23) payment on debt securities has already been "settled during over-the-counter negotiations". In addition, the market reacted positively to the injection of 120 billion yuan ($18.5 billion) into the banking system by the Central Bank of China. The regulator took this step to strengthen the country's financial sector against the background of the situation with the Evergrande debt.According to a recent Bloomberg report, the Fed's decisions will largely be determined by the following risks: the growth of infections with the delta strain, uncertainty about the "ceiling" of the national debt, as well as the possible negative impact of various events that are taking place in China. Currently, in densely populated Asian countries, the level of vaccinated citizens is relatively low, which is fraught with the possible introduction of lockdowns and, as a result, an increase in the shortage of goods and an increase in transport costs to record levels. This, in turn, leads to an increase in inflation expectations and may influence the decisions taken by the Fed.Asian stock markets continued to show mixed dynamics. Hong Kong's Hang Seng rose by 0.51%, China's CSI 300 lost 0.7%, Japan's Nikkei 225 fell by 0.67%. EuroStoxx 50 is growing by 0.87%.The risk appetite is moderate. The yield of 10-year treasuries is 1.33%. The price for Brent futures exceeds $75.5 per barrel. Gold is trading around the $1,775 mark per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4330-4390 points.MacrostatisticsToday, data on sales in the secondary housing market will be published. The consensus suggests a slowdown to 5.89 million mom compared to the previous value of 5.99 million, which can be considered as one of the indicators of a decline in economic activity.Technical pictureThe S&P 500 again broke through the support level of 4370 points and almost reached 4350 points at the moment. The next significant mark is located around 4230 points, however, we believe that the range of today's trading session will not show such a significant expansion down from the current 4350 points. We believe that the "bulls" may start buying drawdowns, which will allow the index to rise to about 4390 ...
Beyond Meat: still too expensive
Beyond Meat: still too expensive Beyond Meat shares are trading on a par with the level of the beginning of 2021 and 45% below the maximum marks. Many securities of "growing" companies that felt good during the pandemic are currently much cheaper, so you should not be surprised at the current situation on BYND. In previous months, the manufacturer of artificial meat relied on sales to fast food chains (they worked despite the quarantine), and also tried to stay afloat due to the growing demand for food. The negative dynamics of the shares is explained by unclear financial results and the fact that they remain extremely overbought even after the recent correction. It is worth highlighting several points at once that cause fears for the future of the company. In the second quarter, the market share of Beyond Meat decreased by 55 basis points in favor of other producers of ”vegetable" meat. This indicates that the company is beginning to lose its initial growth momentum. Revenue increased by 32% YoY, to $149.4 million. These figures were higher than the consensus forecast. However, if in previous years the revenue of Beyond Meat in the second quarter increased by 70% compared to the first months of the year, this time only by 38%. The slowdown, which occurs during the strongest season for the manufacturer, quite eloquently indicates a low potential for growth, while the EV/S coefficient is equal to 8.7 x. For a company whose revenue growth is slowing down and its adjusted gross margin is decreasing (-320 bps YoY, to 31.7%), this is too ...

Articles about financial markets

Lenovo shares have fallen to the lowest in 10 years
Lenovo shares have fallen to the lowest in 10 years The value of the securities of the Chinese computer equipment manufacturer Lenovo collapsed by more than 17% after the company canceled an application for listing its shares on the Shanghai Stock Exchange STAR Market. This is evidenced by the auction data.The stock drop was Lenovo's biggest daily price collapse in the last ten years.The company's representatives were going to place securities worth ¥10 billion (around $1.55 billion) on the Shanghai stock Exchange. However, on October 8, Lenovo announced that they would cancel the planned listing. This happened a few days after the STAR Market exchange approved the application for the placement of shares.On October 10, Lenovo reported that the cancellation of the listing was due to a possible error in the financial indicators indicated in the documents. No further details were provided.Lenovo is one of the world's largest manufacturers of personal computers. The company accounts for 20% of the PC market. The manufacturer's shares are listed on exchanges in Hong Kong and New York.At the close of trading on the Hong Kong Stock Exchange, Lenovo securities were trading at 7.6 ...
YETI: a promising manufacturer of outdoor goods
YETI: a promising manufacturer of outdoor goods YETI shares are trading 20% higher than the marks of the beginning of 2021. The company is engaged in the production of goods for outdoor activities: backpacks, thermoses, mobile refrigerators, folding chairs, etc. Its products are especially popular among American football fans who like to arrange large-scale picnics before games.YETI are trading at a good discount to August highs. The most attractive is the fact that there are no serious reasons for the fall of quotations. At the end of the second quarter, revenue increased by 45% yoy, to $357.7 million, while the consensus forecast assumed a figure of 33% yoy.During the pandemic, the company was able to establish effective direct sales: they increased by 48% YoY, to $196.9 million. Of course, this figure is lower than in the first quarter (+59% yoy), but it should be understood that after the easing of restrictive measures, more people started shopping in offline stores. At the same time, wholesale sales increased by 41% yoy. It is also worth noting the growth of the “drinking tableware" segment (55% of total revenue) by 69% yoy amid the resumption of mass events.The growth driver in the foreseeable future will continue to be the development of a direct sales channel, which allows to increase the profitability of the business. Also in the spring, new high-margin directions were launched: bags, backpacks, duffel bags, etc. YETI products remain popular mainly in the South and Midwest of the United States, so further expansion to the west and east coasts should stimulate revenue ...
Zepp is a promising manufacturer of fitness gadgets
Zepp is a promising manufacturer of fitness gadgets Zepp shares are trading 35% below the marks of the beginning of 2021. The shares of Chinese companies look undervalued compared to American ones, as a result of which the purchase of promising tools from China makes sense. Mainly Zepp are known for the production of consumer devices like Mi Band - budget "smart" watches that track fitness activity. They are also sold through Amazon, where they cost from $46.The main "chip” Zepp is accessibility, not quality at all. Mass-market orientation brings excellent income. In addition to watches, the company produces headphones and "smart" treadmills, which also stand out for their low price compared to analogues like Peloton.According to the results of the second quarter, revenue increased by 61% yoy, to 1.84 billion yuan (about $280 million), while the volume of shipments of devices increased by 29% yoy, to 11.5 million. Such a solid increase in income was achieved largely due to the relatively weak last year's results related to the production cycle. The Mi Band of the fifth version was launched in the third quarter of last year, while the bulk of deliveries fell just in the second quarter. In the third quarter, management expects revenue of 1.6-1.8 billion yuan, which is 2 billion yuan less than last year. However, if we combine the figures for the first half of the year and the forecast values for the third quarter, we will get the values of 4.7 billion. These figures are higher than last year's 4.4 billion yuan. New Zepp devices, such as the compact Airrun treadmill, will accelerate revenue growth in the coming ...
Drivers of growth of Nike quotes - direct sales channel and "digit"
Drivers of growth of Nike quotes - direct sales channel and On September 23, the clothing giant Nike (NKE: NYSE) published financial results for the first fiscal quarter of 2022. The company's sales for the reporting period fell short of Wall Street forecasts, which casts doubt on the impact of supply chain disruptions on the issuer's short-term revenue estimates. At the same time, Nike Inc.' s profit exceeded the consensus. In particular, the EPS for June-August was $1.16, which is 22.1% higher than last year, and also better than the consensus forecast of $1.11. Revenue increased by 16%, reaching $12.2 billion and falling short of analysts ' estimates of $12.465 billion.Sales in China increased by 11% compared to last year, to $1.982 billion, which is the worst result in geographical terms. Previously, this region was one of the most important sources of income for Nike. Sales in North America, the company's largest market, rose 15% to $4.879 billion, falling short of the projected $5.079 billion.The gross profit margin increased by 170 basis points, to 46.5%, due to an increase in the margin in the direction of Nike Direct (direct sales to customers), higher sales volume at full price and favorable changes in foreign exchange rates. Digital sales of the Nike brand increased by 29% year-on-year. The retailer invests in its own website and a set of mobile applications. The development of this direction was especially rapid during the quarantine restrictions, when many customers decided to shop without leaving home.However, the issuer has faced certain difficulties that may affect its performance in the future. Since mid-July, the company has been working with partially closed factories in Vietnam, where it produces about 50% of shoes and 30% of clothing. Nike reported that it ended the last quarter with inventories of $6.7 billion, which is almost the same as the previous year and slightly lower compared to the last quarter ($6.9 billion). The company said that its stocks are now on the way to warehouses, and the deadlines for completing orders have increased due to disruptions in supply chains.The development of digital channels is a long-term driver of business growth and reflects the traditional innovation that has always distinguished Nike among competitors. The success in the " figure" allowed the CEO to raise the goal for the share of online sales to an ambitious 50% by 2023. Previously, this figure was 30%. The CEO of the company has experience in carrying out digital transformations, so Nike may well succeed in the e-commerce market, and the pandemic has only become a catalyst for the process, changing people's habits.Nike's reporting for the first quarter showed that problems in the supply chains have already begun to affect the financial results, despite very strong sales in the previous period. Although economic activity is gradually recovering after the lifting of restrictions, the demand for sporting goods remains at a very high level. However, in the countries of Southeast Asia, the epidemic situation is worse than in other regions. As a result, quarantine restrictions at factories in Vietnam lead to an increase in the delivery time of goods. Thus, Nike does not have time to fully meet the increased demand for its products, which leads to a shortage of revenue.However, Nike's favorable profit indicators demonstrate that the direct sales channel to customers is actively developing and gives a significant margin increase. In our opinion, the difficult situation in the supply chains will continue in the second fiscal quarter, but strong demand and growth in direct and digital sales will allow the company to maintain the company's marginality at a high level. At the same time, the decline in growth rates in Greater China is of concern.Taking into account all the above factors, we leave our long-term target price for Nike securities unchanged, but we expect a slowdown in the growth of quotations in the next quarter. The target for the NKE stock is ...
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