Forex News 24

4 Reasons to Sell Chipotle Stock While It Still Is Riding High
For Long-Term Investors, Kellogg Stock Looks Mighty Tasty
3 Big Stock Charts for Friday: ConocoPhillips, Caterpillar and Morgan Stanley
3 Simple Reasons You Need to Start Buying VNQ ETF
Why Alibaba (BABA) Stock Can Rally Much Further
Simplified wave analysis and forecast for April 12 (EUR/USD, USD/JPY, GOLD)
Trade of the Day for April 12, 2019: Advanced Micro Devices, Inc. (AMD)
Why April is a Great Month for Stocks
US Dollar Looks to Earnings, Economic Data to Shape Growth Bets
USD Searches for Direction Amidst Wedge

4 Reasons to Sell Chipotle Stock While It Still Is Riding High

Posted: 13 Apr 2019 01:31 PM PDT

Shares of fast casual Mexican eatery Chipotle (NYSE:CMG) have been on a tear since February of 2018. At that point in time, Chipotle stock bottomed at $250 before former Taco Bell executive Brian Niccol took over as CEO.

Source: Shutterstock

Ever since, Niccol has executed flawlessly on multiple growth initiatives, the sum of which have driven Chipotle to report its best numbers ever since the infamous E. coli outbreak. Consequently, CMG stock has nearly tripled over that same stretch, and today finally trades near its pre-E. coli highs.

Although the Chipotle turnaround is very real, and the company is firing on all cylinders, this mega-rally in CMG stock may be on its last legs.

Why? Many reasons, ranging from valuation to slowing growth concerns. Put together, all these concerns paint an outlook for CMG stock that isn't all that great.

With that in mind, let's take a look at four reasons to sell CMG stock on this big rally.

Too Far, Too Fast

Broadly speaking, CMG has simply come too far, too fast.

The stock has nearly tripled over the past fourteen months. That's a big rally on its own, but a big portion of this rally has happened recently, with the stock up 85% since Christmas 2018. That's a near 100% rally in just over three months.

Because of this big rally, Chipotle stock is now in technically overbought territory, with a Relative Strength Index that is as high as its been pretty much ever and a stock price that is nearly as far as its ever been above its 200-day moving average.

All of these overbought conditions, and the stock is heading into earnings season. That means the numbers need to be really good in order for the stock to hold onto its gains. If they aren't really good, the stock could drop in a big way.

Valuation Friction

I follow a lot of stocks, and Chipotle is now close to being the most richly valued restaurant stock I've ever seen that isn't growing revenues at a 20%-plus rate.

Chipotle stock trades at nearly 60-times forward earnings. The giants in this space, like McDonald's (NYSE:MCD), Yum (NYSE:YUM), Jack in the Box (NASDAQ:JACK), and Domino's (NYSE:DPZ), trade around 20- to 30-times forward earnings. The sector average forward multiple is 24.

To be sure, the fast growers like Shake Shack (NYSE:SHAK) and Wingstop (NASDAQ:WING) trade around 100-times forward earnings, but both of those companies are projected to do 20%-plus revenue growth this year. Chipotle is projected at a much more mundane 9% sales growth this year, which is pretty much the same as McDonald's and Domino's.

True, there is a big margin expansion narrative at play here, but even if you model that narrative out, there still isn't enough long term profit power here to justify a $700-plus price tag.

Economic Slowdown and Chipotle Stock

Although stocks are rallying to all time highs, the economy is still slowing, U.S. consumer sentiment is still below where it was for most of 2018, and sales across the restaurant industry haven't been all that great to start 2019.

Inevitably, this slowdown will catch up to Chipotle. The company is firing on all cylinders right now thanks to digital business expansion, menu innovations, and a new marketing campaign. But, those tailwinds will cool in 2019 as they mature and come against tougher laps. When that happens, a slowing economy will start to show up in Chipotle's numbers, and that could have a materially negative impact on the stock.

Mysterious E. coli Outbreak

To be clear, there has been an E. coli outbreak in the United States, a source has not been identified, and Chipotle hasn't been mentioned by any reports. It's also highly unlikely that Chipotle is the source of this outbreak.

Having said that, there is an E. coli outbreak happening right now, and the last major E. coli outbreak in the U.S. was Chipotle's fault. I don't think consumers have entirely forgotten that. Consequently, when consumers hear E. coli outbreak today, they naturally get a little bit worried about Chipotle. This worry may have a negative impact on the numbers in April and May, and that could provide a drag on Chipotle stock.

As of this writing, Luke Lango was long MCD and DPZ.

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For Long-Term Investors, Kellogg Stock Looks Mighty Tasty

Posted: 13 Apr 2019 12:54 PM PDT

Shares of Kellogg (NYSE:K) haven't been "Grrreat" for a long time, declining more than 13% over the last five years as demand for its core ready-to-eat cereal business has failed to "Snap, Crackle & Pop" as consumers increasingly ditch processed foods for products they consider to be "fresh and natural." K stock now sits a couple of bucks above its 52-week low.

Nonetheless, there are reasons for investors to be optimistic about the Battle Creek, Mich.-based company.

Cereal Sales Less Soggy

For one thing, the six core cereal brands — Frosted Flakes, Froot Loops, Rice Krispies, Special K, Mini-Wheats and Raisin Bran — are holding their own in a declining market. According to Kellogg, the brands "collectively bounced back to share growth in 2018." Its Kashi natural cereal brand, which has withered for years, also is on the rise. Bear Naked has become the country's top granola brand, and Eggo frozen waffles also are rebounding.

"Consumers are rediscovering the benefits of cereal brands like Raisin Bran and Mini-Wheats," said Kellogg CEO Steve Cahillane during the company's latest earnings conference call in early February."We've invested in and improved our innovation capabilities and pipeline, and in 2019 we have our strongest innovation pipeline in years, much of which hit the shelves in January and are off to strong starts.''

Selling Crumbling Cookie Businesses

Deals Kellogg has made in recent years, including its $420 million purchase of a stake in Tolaram Africa Foods and its $600 million acquisition of protein bar maker RXBar, are starting to pay off. The company also is benefiting from the reorganization of its North American division and its increased investment in e-commerce. The food maker also aims to boost its business in Latin America, Asia, Africa and Europe.

Earlier this month, Kellogg announced plans to sell its cookie, fruit snacks, pie crust, and ice cream cones businesses to Italy's Ferrero for $1.3 billion. It was a smart move given Keebler's weak number-two position in cookies and number-three position in fruit snacks. Both businesses have performed poorly of late. Sales of Kellogg's cookies, including Famous Amos, fell 5.4% in 2018 compared with 2017. The company's fruit snacks fell 20.1% on a year-over-year basis.

The company is still keen on its snacks business thanks to brands like Cheez-Its, Pringles, Rice Krispy Treats and Pop-Tarts.

Shares of K stock have barely budged this year and Wall Street analysts aren't optimistic that any rebound is near. The average price target on the stock is $59, about 3% higher than where it trades now. Kellogg stock guidance calls for 2019 sales to rise 3% to 4% and for organic growth to return. EPS will fall 5% to 7% for the year as it continues to increase spending to grow its business.

I recommend K stock for long-term investors because management is doing all the right things to reduce complexity, cut debt and position the company for future growth, which will come gradually. K's dividend also yields a rate of 3.98%, well above the average for the S&P 500 index which is 1.86%.

As of this writing, the author did not own any shares of K stock.

3 Big Stock Charts for Friday: ConocoPhillips, Caterpillar and Morgan Stanley

Posted: 13 Apr 2019 12:16 PM PDT

Stocks were back and forth all day on Thursday, and by the time the closing bell rang, the game ended in a tie. The S&P 500 only mustered an 0.11 point gain yesterday, which wasn't even enough to register a percentage change. Underscoring the lack of conviction behind the action is the fact that yesterday's was the lowest-volume day in months.

Caesars Entertainment (NASDAQ:CZR) wasn't fazed by the broad lethargy. Its budding recovery effort was bolstered by whispers that it would soon be putting itself up for sale, sparking a 3.9% advance. At the other end of the spectrum, UnitedHealth Group (NYSE:UNH) fell 4.3% on the heels of growing political uncertainty regarding the future healthcare. Thursday's jaw-dropper was the 10% tumble Weight Watchers (NASDAQ:WTW), now called WW, took after JPMorgan analyst Christina Brathwaite rang the alarm bells about the company even louder than she had been.

Headed into the week's final trading session, the stock charts of Morgan Stanley (NYSE:MS), ConocoPhillips (NYSE:COP) and Caterpillar (NYSE:CAT) are worth the closest looks. Here's why, and what's about to happen.

ConocoPhillips (COP)

Most oil stocks are doing reasonably well, catching a tailwind driven by the rising price of oil. That dynamic, however, hasn't applied universally. The oil names that aren't being picked up by that rising tide stand out — and do so for the wrong reason.

ConocoPhillips is one of those names, and worse, is knocking on the door of a major breakdown. One more poor day could push COP over the edge.

Click to Enlarge • The line to watch is right at $65, plotted with a red dashed line on the daily chart. That's where ConocoPhillips has made lows since February, and where it found support before the December drubbing.

• There may be even more to that technical floor than readily meets the eye. Plotting Fibonacci retracement lines from the well-established floor at $42 from 2017, the $65.60 area is also a key 38.2% Fibonacci retracement line. Notice the other Fibonacci line at $56.60 has also been a key support level.

• It's subtle, and perhaps means little. But, yesterday's small pullback took shape on huge volume. There could be a lot of sellers just waiting in the wings for a triggering event.

Caterpillar (CAT)

Last year was a tough one for Caterpillar, and by extension, for CAT shareholders. After a fantastic 2017 that served up promise of a major earnings revival, fears of rising steel prices and a tariff war put Caterpillar shares back in a downtrend. From its January-2018 peak near $173 to October's low of $112, CAT stock lost a total of 35% from high to low.

Over the course of the past few months, however, we've seen hints that the downtrend has been snapped. The new uptrend isn't fully formed yet, but the lines in the sand are very well defined.

Click to Enlarge • The key from here is getting above $142.80, where Caterpillar peaked a couple of times since October's capitulatory low. That resistance level is plotted in yellow on both stock charts.

• At the same time, since October's bottom, the bulls have managed to form a clear rising support line, plotted in red on both stock charts.

• While a move above $142.80 is still the make-or-break event, the possibility of that happening is bolstered by the golden cross that formed on Thursday. That's where the purple 50-day moving average line crosses above the white 200-day line.

Morgan Stanley (MS)

When we last looked at Morgan Stanley back on April 5, we were impressed by the breakout thrust that attacked the 200-day moving average line, but were concerned about a gap that had been left behind in the process. It was a perfect setup for the bears to push back.

And they did, as would be expected with any fresh encounter with a major moving average line. It's what happened in the meantime and what's about to happen that makes MS worth a refreshed look.

Click to Enlarge • Morgan Stanley danced with the 200-day moving average line for a day, but slipped back under it. That slide, however, was just enough to almost close the gap that had been left behind on the April 3.

• At the same time, the technical ceiling around $45, marked with a yellow dashed line on both charts, still stands and augments the potential resistance made by the 200-day moving average line.

• Though not yet over that one last hump, if Morgan Stanley shares can clear that line, there's little left to hold a rally back.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.

3 Simple Reasons You Need to Start Buying VNQ ETF

Posted: 13 Apr 2019 11:28 AM PDT

In a quarter when the S&P 500 delivered double-digit gains. If you're looking for a Vanguard U.S. REIT fund to outpace the index, look no further than the Vanguard Real Estate ETF (NYSEARCA:VNQ). VNQ ETF just keeps looking better.

3 Simple Reasons You Need to Start Buying VNQ ETF

According to Nareit, the FTSE All REITs Index delivered a Q1 2019 return of 16.7%, 300 basis points higher than the S&P 500. Doing even better than the broadest U.S. REIT index in the first quarter, VNQ had a return of 17.4%, 70 basis points higher than the country's broadest REIT index.

How do I get me some of that? Seriously, though, there's a lot to like about this particular Vanguard U.S. real estate fund.

Here are three big reasons to have VNQ in your portfolio.

1. Significant Exposure to U.S. Real Estate

The beauty of ETFs is that they allow you to buy a wide swath of businesses in a particular sector without breaking the bank. Everyday investors with $10,000 portfolios can feel like big wigs without it costing them an arm and a leg.

The VNQ gives you an investment in 188 stocks or funds involved in real estate. Diversified across many different segments of the real estate industry, it's top ten holdings, 41% of VNQ, are a who's who of the best owners of real estate in the country.

Believe in office space. It's got it. Residential? Same thing. In total, it has at least some weighting in 12 different areas of the real estate industry.

Tracking the MSCI US Investable Market Real Estate 25/50 Index, VNQ is the largest U.S. REIT fund with total net assets of $61 billion. Not only is it the largest real estate ETF it's also the 21st largest ETF in the country of any kind.

Liquidity is not an issue.

2. VNQ ETF Is a Great Deal

If I told you that you could own 188 real estate companies for just $1.20 in fees per $1,000 invested, you'd say to me I was crazy. With all the commission-free trading available today, DIY investors have no excuse missing out on VNQ.

Not only is this ETF cheap, but it also provides excellent protection against inflation. Plus, it tends to do okay in volatile markets. Sure, we haven't seen any in 2019, but they're bound to visit investors soon enough.

VNQ is especially useful for anyone who rents rather than owns. That's because you don't have a home, what's considered a non-correlating asset to the stock market, to fall back on. If you're a renter at any age, this ETF is entirely appropriate.

3. VNQ ETF Performance

In September, VNQ ETF will be 15 years old.

If you bought $10,000 of VNQ at the start, today you'd have $35,582. If you purchased $10,000 of the SPDR S&P 500 ETF (NYSEARCA:SPY), you'd have $873 less. I know that's not much of a difference. However, if you take the last 11 calendar years, VNQ outperformed SPY in seven out of the 11 years.

As the bull market finally comes to an end after more than a decade, you're going to be very glad that you own an ETF that invests in hard assets.

Furthermore, VNQ ETF is outperforming SPY in 2019, an excellent sign after three years lagging it. Reversion to the mean is setting in. I'd expect VNQ to continue to beat throughout 2019 and into 2020.

Own this and SPY, and you're set for equities.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

Why Alibaba (BABA) Stock Can Rally Much Further

Posted: 13 Apr 2019 10:51 AM PDT

In late 2018, all hope seemed lost for Alibaba (NYSE:BABA) stock. The Chinese e-commerce giant was fighting a plethora of headwinds.

3 Reasons to Buy Alibaba Stock Right Now

Source: Shutterstock

Its growth was slowing, and its margins were falling. The global economy was cooling. China's economy was even weaker, thanks to escalating trade and foreign-exchange headwinds. As a result of these trends, BABA stock dropped from its $200-plus highs in mid 2018 to $130 in late 2018.

That was a dip worth buying. Things have improved for BABA and BABA stock in 2019. BABA's revenue growth rates have remained healthy, while the declines of its margins have moderated. The global economy has stabilized. China's economy has bounced back. The trade and foreign-exchange headwinds it was facing have become less severe. Consequently, BABA stock has rallied from $130 in late 2018 to $188 today.

The rally of BABA stock will continue. Indeed, I think BABA stock may once again exceed $200 relatively soon.

The logic is simple. Alibaba stock was really beaten up in late 2018 on short-lived headwinds and weaknesses that are now fading. As they continue to fade in 2019, BABA should be able to reclaim its previous highs, and then some, given that BABA's fundamentals are improving, while its valuation is reasonable.

All in all, BABA stock looked great in late 2018, but even after its big early 2019 rally, it still looks pretty good at this point. Consequently, BABA can reach $200 in the near future.

The Fundamentals Look Great

The long-term bull thesis on BABA stock is supported by three big growth drivers.

Alibaba is the king of the world's largest e-commerce market. China is the world's largest e-commerce market by a mile, and it's growing at a 30%-plus pace in a retail market that is expanding at a high-single-digit-percentage rate.

Meanwhile, China's GDP is expanding at an annual rate of at least 6%. In other words, China's e-commerce market is one of the healthiest, strongest growth markets in the world. BABA is the undisputed king of that market, whose core domestic revenues are expanding at a 35% clip. For the foreseeable future, BABA's China revenues should continue to increase at least 20% annually.

Alibaba is positioned to become the king of one of the world's fastest growing e-commerce markets. Southeast Asia is the world's fourth largest economic region by GDP. It also has an anemic, low-single-digit-percentage-online-shopping penetration rate, versus a global online-shopping penetration rate of 15%.

This combination of huge GDP growth and low e-commerce penetration suggests that the region's e-commerce sector can expand tremendously over the next several years. BABA is capitalizing on this growth potential by expanding into a number of Southeast Asian countries. Consequently, the company's international businesses should grow at least 20% for the foreseeable future.

Alibaba has a small but rapidly growing cloud business that has tremendous long-term potential. Alibaba's cloud business is relatively small (it generated only 6% of the company's total revenues in Q4). But it's growing very quickly (it expanded more than 80% in Q4) in a market that is expanding at a compound annual growth rate of around 15%,. Moreover, it can continue to grow quickly because only 20% of enterprise workloads have migrated to the cloud. As a result, Alibaba's cloud business should grow at least 30% for the foreseeable future.

Overall, this company's long term growth fundamentals look great. The only concern, then, is its near term fundamentals. But those are improving, too. China's economy is picking back up. A trade deal appears likely to be in the cards in the near future. Recession fears have receded. BABA's margins are showing signs of bottoming.

All together, the fundamental outlook of BABA stock is about as good as ever.

The Valuation of BABA Stock Supports Further Upside

BABA's long-term growth fundamentals imply that BABA stock should trade well north of $200 in the near future.

Over the past several years, BABA's revenue growth has been at least 50%. Its growth is cooling now, and it will inevitably continue to cool over the next several years as China's economy matures, global e-commerce penetration rates rise, and the growth of the cloud slows.

But, assuming that BABA still gets 20%-plus growth from China commerce, 20%-plus growth from international commerce, and 30%-plus growth from the cloud over the next several years, then Alibaba's top line should reach roughly $200 billion by fiscal 2025.

During that stretch, I think that the growth of BABA's cloud business will help stabilize its margins, and that its adjusted profit margins could reach about 25% by the end of 2025. That combination of $200 billion of revenue and 25% profit margins should produce earnings per share of about $18.

Applying a forward multiple of 20, which is average for growth stocks, along with EPS of $18, I arrive at a fiscal 2024 price target for BABA stock of $360. Discounted back by 10% per year, that equates to a fiscal 2019 price target north of $220.

The Bottom Line on BABA Stock

Alibaba is a big growth company with healthy long term growth fundamentals. Investors simply forgot about those healthy long-term fundamentals in late 2018 as the company's near term headwinds mounted.

Now those near term headwinds are fading, and as they continue to fade in 2019, the market's focus will shift back to the healthy fundamentals of Alibaba stock. Ultimately, that shift will keep BABA stock on a healthy uptrend.

As of this writing, Luke Lango was long BABA.

Simplified wave analysis and forecast for April 12 (EUR/USD, USD/JPY, GOLD)

Posted: 13 Apr 2019 10:29 AM PDT

EUR/USD

On the chart of the pair, the last incomplete wave is descending, dated March 20. In a larger model, it forms a correction. In the structure, an intermediate rollback is nearing completion.

Forecast:

In the next trading session, it is expected to complete the rise and the formation of signals reversal. The lower limit of daily volatility is the support zone.

Recommendations:

When trading within the day, the current purchases of the pair are more reasonable to complete upon reaching the calculated reversal zone. Attention should be paid to the sell signals of the instrument.

Resistance zone:

– 1.1300 / 1.1330

Support zone:

– 1.1210 / 1.1180

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USD/JPY

The rising wave of March 25 in a larger structure of scale H4 forms the final part (C). The wave continues its formation. After the correctional phase that ended 2 days ago, the price rise was expected to follow.

Forecast:

A preliminary calculation of the target zone of the current price increase gives the final reference in the area of the 114th figure. In the coming sessions, a short-term pullback is not excluded, not further than the lower level of the support zone.

Recommendations:

At the next session, sales of the pair are not relevant. Counter kickbacks are recommended to use for entry or gain of instrument purchases.

Resistance zones:

– 112.90 / 113.20

– 112.00 / 112.30

Support zone:

– 111.60 / 111.30

xjmUgR5CEL_0CfK-wtJCzEfr3hf6StgDIcMrJlK8

GOLD

The direction of short-term fluctuations in the gold rate is given by the upward wave of March 3, which is formed in the form of a standard plane. The first 2 parts (A + B) are completed, the final part (C) has been developing since April 4.

Forecast:

The intermediate price reduction close to completion. At the next sessions, a reversal and a change in the course of movement is expected. The target area is the resistance zone.

Recommendations:

Sale of gold is possible on the smallest TF reduced lot. In the area of calculated support, it is recommended to track the reversal signals in order to find the entry point to long positions.

Resistance zone:

– 1315.0 / 1320.0

Support zone:

– 1285.0 / 1280.0

R7Nt7i_RlOltD3fOLFs0duAItLmUuFgbttaa1asu

Explanations for the figures: Waves in the simplified wave analysis consist of 3 parts (A – B – C). The last unfinished wave is analyzed. Zones show areas with the highest probability of reversal. The arrows indicate the wave marking according to the method used by the author, the solid background is the formed structure, the dotted ones are the expected movements.

Note: The wave algorithm does not take into account the duration of tool movements over time.

The material has been provided by InstaForex Company – www.instaforex.com
2019-04-12 10:52:34

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Trade of the Day for April 12, 2019: Advanced Micro Devices, Inc. (AMD)

Posted: 13 Apr 2019 10:12 AM PDT

To receive further updates on this Advanced Micro Devices, Inc. (NASDAQ:AMD) trade as well as an alert when it's time to take profits, sign up for a risk-free trial of Power Options Weekly today.

This morning, I am recommending a bullish trade on Advanced Micro Devices, Inc. (NASDAQ:AMD), the global semiconductor company.

My indicators are giving neutral readings this week, a slight downgrade from last week's bullish readings.

After staging a massive 23% jump since the lows on Christmas Eve, the S&P 500 is now within less than 2% of its all-time high. I am expecting the index to test its highs again in the coming weeks or months, but I don't think it will be able to break through that level on the first try.

If that key resistance level holds, I would expect to see a pullback followed by a longer period of consolidation before the market has a real chance at breaking out. But I am still in the bullish camp. April has been an up-month for the past 13 years in a row, and I've seen a positive development on the S&P 500 and the Nasdaq.

The "Golden Cross"

For readers who haven't heard of this before, a "golden cross" occurs when a shorter-term moving average crosses above a longer-term moving average. The most common moving averages traders look at when analyzing charts are the 50-day and 200-day moving averages. The golden cross on the S&P 500 is circled in blue in the chart below, and it has also appeared on the tech-heavy Nasdaq.

Daily Chart of S&P 500 Index (SPX) — Chart Source: TradingView

While those moving averages are commonly used, golden crosses don't happen too often. In fact, the last times a golden cross formed were in 2016, 2015, 2012, 2011 and 2009. Nearly all of these instances have preceded strong, long-term, bullish runs in the market.

It has also been a good indicator of short-term performance as well. Since 1980, the market has risen over the following month about 75% of the time after a golden cross forms.

The Nasdaq is full of technology stocks that could benefit from this bullish technical indicator, and one area in particular has caught my eye…

Semiconductors Have Turned Around

Last year the trade dispute between the U.S. and China had put pressure on the semiconductor industry, but stocks like AMD have turned around. If we turn to the chart below, we can see there AMD has been in a steady upward channel since December's lows last year.

Daily Chart of Advanced Micro Devices, Inc. (AMD) — Chart Source: TradingView

Part of the boom in semiconductor stocks is due to increased optimism surrounding the U.S.-China trade deal. I still have my doubts about that situation, but if the market is pricing that optimism in to AMD's price, we can collect a profit while it rises.

The golden cross on the Nasdaq is also a good sign that the tech sector will continue to head higher. Since both the technical and fundamental picture look good, I am recommending a bullish call option on AMD.

Buy to open the Advanced Micro Devices, Inc. (AMD) July 19th $32 Calls (AMD190719C00032000) at $1.80 or lower.

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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.

Why April is a Great Month for Stocks

Posted: 13 Apr 2019 09:36 AM PDT

Friday started another earnings season with JP Morgan Chase, Wells Fargo and PNC Financial all posting results.

JP Morgan reported record profit and revenue, Wells Fargo beat expectations on quarterly earnings. PNC was the laggard in that it only met analyst expectations, but reported higher expenses and provision for credit losses.

Of course, it's much too early to tell what will happen the rest of this earnings season, but the anticipated story for the quarter does seem to have changed in recent weeks.

Earlier this year the conventional wisdom around Q1 2019 earnings was about how bad they would be. Mostly this is because last year's first quarter was so outstanding that this year can't help but look bad in comparison.

But lately, we are seeing some signs that the quarter will not be as bad as previously thought. And, as my colleague Jeff Remsburg explained recently, it's often the surprises against expectations that move the market.

There is no arguing that the market's performance in 2019 has been outstanding. Stocks are up nearly 15% year to date, as tracked by the S&P 500 Index. To help put into perspective just how good that is, last year from the start to the top in September, the S&P 500 Index was up only 9.62%.

So, what's driving all the buying?

Neil George, Editor of Profitable Investing attributes it to 4 factors.

No. 1 is fear of missing out, (also known as "FOMO").

The idea that if you don't get in and buy that you'll miss out on the big rally is getting more investors to unpark their cash and get it into the market.

No. 2 is that the Federal Reserve Federal Open Market Committee (FOMC) finally got its messaging right.

The FOMC laid out the plan to watch core inflation, as measured by the Personal Consumption Expenditure Index (PCE). It wanted to see the PCE reach 2% or more before it would act. Then the FOMC acted anyway, reducing its massive bond portfolio and stoking fears of more aggressive actions alongside raising its target range for the federal funds rate.

Then, with the stock market slipping and political pressure mounting, the FOMC punted. Now it's going to be passive for a while. And with interest rates still not far from post-crisis levels, the credit market supports a buoyant stock market.

No. 3 is the bond market.

The US 10-year Treasury is sitting near 2.5% and remains well bought in the market. This is helping boost the housing market since this is the benchmark for mortgage rates. A strong housing market helps a lot of US sectors.

And with lower Treasury yields, corporate and municipal bonds look even more attractive for the same bond investors. Low yields also reduce funding costs for corporations, which helps the economy and the general stock market.

No. 4 is the US dollar.

The dollar, as measured by the Bloomberg US Dollar Index, is up nearly 7% over the past year. That makes the US a prime destination for global investment.

But he does see some potential downside for some stocks – especially for one sector. As earnings roll in, Neil is watching the tech sector very closely and notes that big earnings disappointments in those stocks could drive everything lower.

Neil is recommending defensive and income stocks to his Profitable Investing subscribers, and you can get all his analysis and picks right here.

Neil is continuing to track these factors and remains bullish overall.

Another one of our advisers also is feeling bullish – especially about April.

Louis Navellier, editor of Growth Investor, pointed out that at least one of the signs he tracks is pointing to more stock market gains.

Historically, April is one of the seasonally strongest months of the year. In fact, it is often the third strongest month of the year, lagging only November and December. Interestingly, the bulk of April's gains come in the second half of the month, as Tax Day passes and the first-quarter earnings announcement season gets underway.

This year, though, April is lining up to be a strong month overall.

A recent report from the folks at Bespoke revealed that a positive start to the month of April is a good omen for the rest of the month. Since 1945, when the S&P 500 kicks off April with at least a 1% gain, the index is up an average 4.2% in April.

And as you can probably guess, the S&P was up more than 1% in the first week of April. That translates into a very positive sign for the market, and Louis expects it to climb higher in the upcoming weeks and months.

And one of Louis stocks just hit another 52-week high.

We've written before about VMWare, a software company that develops computer programs used to create and manage virtual machines. In other words, they help make cloud computing possible.

Back in March I noted that it had reached a 52-week high and had officially doubled in Louis's portfolio.

Let's look at an updated chart.

When I wrote about it before, it was trading at $176.66, and as you can see it's now trading at $192.44, an increase of just under 9 percent just since early March.

Here is part of Louis's latest update on a stock he has held in his Growth Investor portfolio for more than two years.

On February 28, VMware reported better-than-expected earnings and sales for its fourth quarter. Revenue rose 16% year-over-year to $2.59 billion, slightly better than forecasts for $2.5 billion. And earnings jumped 25.3% year-over-year to $823 million, or $1.98 per share, which topped estimates for $1.88 per share.

For the first quarter in fiscal year 2019, VMware is expected to achieve earnings of $1.28 per share on $2.24 billion in revenue, which represents 11.8% annual revenue growth and 1.6% annual earnings growth. VMW is a Conservative buy below $195.

Picking stocks that will double in your portfolio is never easy, but it does seem as if the market is poised to make bigger gains in the weeks and months ahead.

As always, we advise investors to stay focused on their plan and the fundamentals of their investments. Neil sees some possible danger signs in tech stocks and Louis still believes the market is going to narrow.

To a richer life,

Luis Hernandez, Editor in Chief

US Dollar Looks to Earnings, Economic Data to Shape Growth Bets

Posted: 13 Apr 2019 09:33 AM PDT

US DOLLAR FUNDAMENTAL FORECAST: NEUTRAL

US Dollar still mired in 2019 range, global growth bets next in focus
Q1 earnings reports, economic data deluge to inform slowdown fears
Thin pre-holiday liquidity may translate into kneejerk price volatility

Check out the latest US Dollar forecast and see what is expected to drive prices through mid-year!

Looking for a technical perspective on the US Dollar? Check out the Weekly USD Technical Forecast.

Another week of seesaw price action left the US Dollar mired within the same choppy range that has contained price action since the beginning of the year. The uptrend from early-2018 lows is nominally intact, but the currency has not made meaningful upside progress one way or another since mid-August.

Still, last week's developments offered a couple useful tidbits. First, the markets still respond to reminders about cooling global growth. The IMF's grim outlook update had a sobering effect. Second, price moves on the release of US inflation data and March FOMC minutes showed Fed policy speculation continues.

EARNINGS REPORTS, ECONOMIC DATA TO INFORM GLOBAL GROWTH BETS

Looking ahead, a focus on the macroeconomic narrative seems likely as trade war and Brexit negotiations recede to churn on in the background. A steady stream of high-profile corporate earnings reports and ample economic news will inform jittery investors eyeing a business cycle downshift.

US banks including Goldman Sachs, Citigroup and Bank of America are due to report first-quarter results. Upbeat announcements from JPMorgan and Wells Fargo buoyed market-wide risk appetite on Friday, sapping demand for haven assets and weighing on the anti-risk US unit.

This need not necessarily repeat however. The FOMC minutes painted the tone on the rate-setting committee more neutral than markets expected, boosting USD. A steady stream of Fed-speak due next week might reiterate that point, diluting scope for weakness on purely "risk-on" grounds.

The data docket is packed. Eurozone PMIs, Chinese GDP, and US industrial production are just some of the noteworthy activity indicators set to cross the wires. If the recently disappointing trend in macroeconomic news flow holds, the outcomes may weaken risk appetite on net. That bodes well for the Greenback.

LIQUIDITY TO SHRINK IN PRE-HOLIDAY TRADE

Finally, the week will be shortened by the Good Friday holiday and overall participation is likely to progressively diminish as Easter weekend draws closer in most of the world's financial centers. Thin liquidity levels may sap conviction, but they might also amplify any kneejerk volatility.

— Written by Ilya Spivak, Sr. Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter

US DOLLAR TRADING RESOURCES

Other Weekly Fundamental Forecast:

Australian Dollar Forecast – Australian Dollar Outlook Bearish on RBA. AUDUSD Eyes China Q1 GDP

Crude Oil Forecast – Crude Could Crumble if Growth Concerns Catch Fire Again

British Pound Forecast – GBPUSD Rate Defends Bull Trend Ahead of UK CPI Amid Brexit Extension

2019-04-13 16:00:00

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USD Searches for Direction Amidst Wedge

Posted: 13 Apr 2019 09:11 AM PDT

US Dollar Technical Highlights:

Big-picture wedge continues to develop
Solid top and bottom-side levels to watch

Check out the DailyFX Trading Guides page for intermediate-term forecasts, educational content aimed all experience levels, and more!

Big-picture wedge continues to develop

The US Dollar continues to be a difficult market for traders as low volatility puts a strangle-hold on the trading environment. Looking at the big-picture ascending wedge developing it is well within reason to expect more of the same for a little while longer as the pattern continues to fill out towards its apex.

This doesn't mean there won't be room for opportunities or for a surprise move as low-vol is indicative of complacency among market participants. With that said, though, patience and trade selectively will be the key until a more fertile trading environment develops.

The two primary points of interest are the top-side horizontal line crossing over peaks since November and the underside trend-line of wedge, which also happens to be in confluence with the rising 200-day MA. There is another trend-line running up from early 2018, but of lesser importance than the one just beneath it.

For now, the thinking is to look for fade-trades off one of the aforementioned levels once momentum turns in the other direction. Should one side break (top-side looking most likely) then the game-plan will pivot towards running with the breakout as volatility may finally see a pop.

What may push the DXY into resistance early this coming week, is a falling wedge on the 4-hr time-frame. It may not trigger its top-side trend-line so waiting for an actual breakout is crucial. Given its close proximity to the 97.60s this is likely to only hold a small amount of potential before price could reverse off big resistance.

Check out the IG Client Sentiment page to find out how changes in positioning in major markets could signal the next price move.

DXY Daily Chart (Wedge continues to build…)

Looking for a fundamental perspective on the USD? Check out the Weekly USD Fundamental Forecast.

DXY 4-hr Chart (Short-term falling wedge)

Helpful Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

Other Weekly Technical Forecast:

Australian Forecast– AUDUSD Flirts with 200 Day Moving Average, AUDJPY Earns Strong Break

Crude Oil Forecast – Will Pres. Trump Tweet at $65?

Sterling Forecast – GBPUSD, EURGBP and GBPJPY

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EARNINGS REPORTS, ECONOMIC DATA TO INFORM GLOBAL GROWTH BETS

LIQUIDITY TO SHRINK IN PRE-HOLIDAY TRADE

Other Weekly Fundamental Forecast:

US Dollar Technical Highlights:

Big-picture wedge continues to develop

DXY Daily Chart (Wedge continues to build…)

DXY 4-hr Chart (Short-term falling wedge)

Helpful Resources for Forex Traders

Other Weekly Technical Forecast:

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