Forex News 24

Earnings on Tap for BA, INTC and AMZN
Chipotle Earnings: CMG Stock Gains on Strong Q1 Profit, Sales Chipotle Earnings: CMG Stock Gains on Strong Q1 Profit, Sales
Why Investors Should Buy the Dip in MRK Stock
Japanese Yen Eyes Upcoming BOJ Rate Decision
7 Dividend Stocks That Could Double Over the Next Five Years
April 24, 2019 : EUR/USD Intraday technical analysis and trade recommendations.
Why the DoJ Rhetoric Might Actually be Good for T-Mobile and Sprint Stock
Gold Price Forecast Could Turn Bullish Above This Key Level
Why Competition Won’t Stop Spotify (SPOT) Stock
Relative Strength Index (RSI) Offers Bearish Signal

Posted: 24 Apr 2019 02:00 PM PDT

BA, INTC and AMZN Talking Points:

Stock Market Update: Earnings on Tap for BA, INTC and AMZN

The Dow Jones steered lower on Wednesday after upbeat earnings from Boeing (BA) were unable to drag the index higher and recoup losses from other constituents like Caterpillar (CAT). Although Boeing missed on revenue figures, the stock's price climbed – suggesting analysts were expecting worse as the 737 Max 8 issue continues. Consequently, Boeing announced it has abandoned its 2019 financial forecasts as it deals with the aftermath of two deadly crashes.

Conversely, Caterpillar weighed on the index after warning of strong competition in China and questionable demand in the rest of Asia. The negative outlook seemingly overwhelmed the impact from strong revenue and EPS, both of which beat out analyst expectations. Unlike Caterpillar, the tech giants Facebook (FB) and Microsoft (MSFT) delivered reassuring results after the closing bell.

Check out our Second Quarter forecasts for the S&P 500, Dow Jones, Gold and more.

Facebook beat on all fronts. Apart from the financials, daily and monthly active users came in above expectations and sent the stock 4% higher immediately after the data was released. The company reported $1.89 earnings per share on $15.08 billion in revenue compared to expectations of $1.63 and $14.97 billion respectively. Despite a possible $3 to $5 billion Dollar fine from the FTC regarding privacy, investors were eager to gain exposure to the social media giant.

Not to be outdone, the world's second largest public company also outperformed Street estimates. Microsoft reported $1.14 EPS on $30.6 billion in revenue and traded nearly 2.5% higher. The stellar performance from both tech giants should spur bullish momentum for the broader Nasdaq and S&P 500 in Thursday trading.

INTC, AMZN Earnings Implied Volatility

As for future reports, option traders are expecting relatively muted price action for Intel (INTC), even after recent earnings from Texas Instruments (TXN) suggested that the semi-conductor sector may not be out of a cyclical downturn. Intel's report should offer further insight into the matter when they report after Thursday’s close.

Intel Corp (INTC) Price Chart: Daily Time Frame (July 2017 – April 2019) (Chart 1)

That said, implied volatility for INTC in the weeks to follow is noteworthy at 15.6%. Price action in the days to come could see Intel test the 78.6% Fib level – from the stock's high in 2000 to its low in 2009. While $62.24 is outside the 1-day implied volatility, it is comfortably within the 20-day implied range and would mark the first resistance level in an attempt higher.

For support, INTC will look to the swing high from June at $57.48 which also marks the high on April 16. The level is well within the implied price range and would likely come into play should earnings disappoint.

Amazon (AMZN) Price Chart: Daily Time Frame (September 2018 – April 2019) (Chart 2)

Alongside INTC, FAANG member Amazon will offer their fiscal findings. The online-retailer has a 1-day implied volatility of 4.6% which could see it break beneath both the 78.6% Fib level at $1,891 and short-term trendline support around $1,875. From a technical perspective, the topside looks to be the path of least resistance with the next Fib level at $2,049 – outside of the 1-day implied volatility.

Although other notable quarterly reports are due Friday, the broader S&P 500 and Dow Jones will likely look to US GDP to drive price action. As earnings season progresses, follow @PeterHanksFX on Twitter for equity insight.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you're looking to improve your trading approach, check out Traits of Successful Traders. And if you're looking for an introductory primer to the Forex market, check out our New to FX Guide.

2019-04-24 20:30:00

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Chipotle Earnings: CMG Stock Gains on Strong Q1 Profit, Sales Chipotle Earnings: CMG Stock Gains on Strong Q1 Profit, Sales

Posted: 24 Apr 2019 01:45 PM PDT

Chipotle (NYSE:CMG) unveiled its latest quarterly earnings figures after hours Wednesday, raking in revenue and earnings that handily topped what Wall Street called for, boosting CMG stock slightly late in the day.

The Mexican food fast casual chain — based out of Newport Beach, Calif. — announced that for its first quarter of its fiscal 2019, it brought in net income of $88.1 million, or $3.13 per share. The figure marked a 48.3% increase when compared to its profit from the year-ago quarter, which amounted to $59.4 million, or $2.13 per share.

Chipotle added that for its first three months of the year, it brought in adjusted earnings of $3.40 per share. The Wall Street consensus estimate predicted that the company would bring in adjusted earnings of $3.01 per share, according to a survey of analysts conducted by Refinitiv.

The restaurant operator added that its revenue for the period tallied up to $1.31 billion, marking a 13.9% increase when compared to the company's sales during the same period in its fiscal 2018. The amount was also a beat over what Wall Street called for as analysts who were surveyed by Refinitiv saw Chipotle bringing in revenue of $1.27 billion.

It was also a positive period on the company's same-store sales, which grew 9.9% when compared to the year-ago quarter, ahead of the 7.29% growth that analysts polled by Refinitiv predicted.

CMG stock gained 0.3% after hours after the report. Shares had been up 1% during regular tradin ghours.

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Why Investors Should Buy the Dip in MRK Stock

Posted: 24 Apr 2019 01:09 PM PDT

The collapse of healthcare stocks, especially drug companies, may have finally abated. Merck (NYSE:MRK) has fallen 12% from its April 3 high. But the MRK freefall seems to have finally leveled off.

Source: Shutterstock

The instinctive reaction would be to buy the dip. Merck's five-year gain is now half that of the average S&P 500 stock, but it's still up 24% in the last year. And what initially sent MRK stock down was fear of politicians, not changes at the business.

But Merck stock is still not cheap. Its trailing P/E ratio is 32, and the dividend of 55 cents per share still yields just 2.65% — lower than many other dividend stocks. That dividend was just hiked in December, and thus isn't due to rise again for 8 more months.

Merck is due to report first-quarter earnings on April 30, with $1.05 per share expected on revenue of $10.36 billion. That's a big jump from last year's earnings pace, albeit on less revenue. But if MRK stock keeps growing like this, it would justify both a big dividend hike and an increase in its stock buyback, now at $10 billion on a market cap of $192 billion.

The Keytruda Miracle

There are also reasons to find the earnings momentum sustainable.

Keytruda, a cancer drug best known for having kept former President Jimmy Carter alive a few years ago, continues to score big with regulators. It's now a first-line drug against advanced kidney cancer, in conjunction with Inlyta from Pfizer (NYSE:PFE).

Keytruda is one of three so-called PD-1 inhibitors on the market, alongside Opdivo from Bristol-Myers Squibb (NYSE:BMY) and Libtayo from Regeneron (NASDAQ:REGN). These are monoclonal antibodies that keep cells from attacking one another. Turning off this chemical "off switch" boosts the immune system response to cancer cells. While Opdivo is heavily advertised, it is Keytruda that has been scoring the bigger wins in late-stage studies. The most recent one is Keynote-426, which gave 861 patients two years of the drug, which can cost over $100,000 per year.

Keytruda was worth over $7 billion to Merck last year.

The Price Backlash

It's Keytruda's price, which doesn't apply in countries that bargain directly for drugs, that caused the healthcare sector's fall from grace this month.

That pushback takes many forms, from cost-effectiveness studies to state and national legislation. But the industry's lobbyists still stand strong in Republican Washington.

This includes Merck CEO Ken Frazier, who recently agreed to stay on past his normal retirement age for a $20.9 million pay package.

Frazier is charged with defending the industry against attacks on its profits and diversifying the company's $42 billion in sales beyond Keytruda, which represents 17% of Merck's total revenue.

Merck recently won approval for Mavenclad, a potential blockbuster drug for multiple sclerosis, and it made 60 acquisitions during 2018. These include expansion in animal pharmaceuticals and immunotherapy. Its current late-stage drug pipeline has been valued at $13 billion.

The Bottom Line

Merck is due to bounce back at least 10%, as the recent downdraft in health care stocks fades from memory, just as the December fall of tech stocks faded.

Of 18 analysts now following the stock, 13 now have it on their buy lists and confidence is up over three months ago.

A beat on the quarterly earnings estimate should be the catalyst to take Merck to new highs, and its pipeline should keep it profitable no matter what Congress decides to do. This is a dip both speculators and investors will enjoy buying.

Dana Blankenhorn http://www.danablankenhorn.com is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family https://www.amazon.com/Reluctant-Detective-Finds-Her-Family-ebook/dp/B07FSRDR4Y/, available now at the Amazon Kindle store. Write him at [email protected] or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article.

Japanese Yen Eyes Upcoming BOJ Rate Decision

Posted: 24 Apr 2019 12:46 PM PDT

JPY CURRENCY VOLATILITY – TALKING POINTS:

Overnight volatility measures tick higher across JPY currency pairs in anticipation of tomorrow's rate review and monetary policy update from the Bank of Japan
The BOJ will also release its latest outlook for economic activity and prices which looks to accompany a slew of data points such as industrial production and retail trade
Check out the free DailyFX Q2 JPY Forecast for comprehensive outlook on the Japanese Yen

USDJPY overnight implied volatility jumped to 5.61 percent, a multi-week high, as forex traders gear up for potential price swings in response to the Bank of Japan's interest rate decision expected during Thursday's session.

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

Forex implied volatility USDJPY Currency Market Volatility Price Chart

BOJ monetary policy is expected to remain unchanged after its April meeting, however, considering the central bank already announced a reduction to its bond purchase program by 20 billion Yen per month last week. That being said, commentary from BOJ Governor Kuroda – particularly on inflation – will likely be closely examined by markets.

FOREX ECONOMIC CALENDAR – JPY

Japanese Yen Forex Economic Calendar

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Aside from the BOJ taking the spotlight in Thursday's session, several economic data points may potentially weigh on the Yen's performance. Forex traders could turn to Japan's inflation and jobless rates in addition to year-over-year changes in industrial production and retail trade if no surprises come from the BOJ and Governor Kuroda.

USDJPY PRICE CHART: DAILY TIME FRAME (OCTOBER 31, 2018 TO APRIL 24, 2019)

USDJPY has formed an incredibly tight trading range which has largely contributed to the collapse in currency market volatility. Spot prices appear to have coiled between resistance at the 112.00 handle and support provided by the upward-sloping trendline formed from the low recorded during the Yen flash crash at the beginning of the year.

Tomorrow's high-impact event risk could easily serve as a catalyst for overdue volatility and spark a sizeable move outside of current technical levels. That being said, the trading range derived from overnight implied volatility estimates that USDJPY will trade between 111.45 and 112.11 with a 68 percent statistical probability.

USDJPY TRADER SENTIMENT PRICE CHART: DAILY TIME FRAME (OCTOBER 26, 2018 TO APRIL 24, 2019)

Currency Volatility: Japanese Yen Eyes Upcoming BOJ Rate Decision

Check out IG's Client Sentiment here for more detail on the bullish and bearish biases of EURUSD, GBPUSD, USDJPY, Gold, Bitcoin and S&P500.

According to client positioning data from IG, 38.8 percent of USDJPY traders are net-long resulting in a short to long ratio of -1.58 to 1. However, the number of traders net-long is 15.5 percent higher than yesterday and 10.2 percent higher than last week.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

2019-04-24 19:14:00

7 Dividend Stocks That Could Double Over the Next Five Years

Posted: 24 Apr 2019 12:30 PM PDT

I saw article recently that caught my attention. The subject was dividend stocks, and it highlighted 32 that could double in value over the next five years.

Who wouldn't want to read this kind of article? Heck, ya. Where do I sign?

Using the Rule of 72, to double in value in five years a stock's got to deliver an annualized total return of 14.4%. That sounds easy enough.

Care to guess how the S&P 500 performed over the past five years? I'll save you time.

The SPDR S&P 500 ETF (NYSEARCA:SPY) had an annualized total return of 11.3% over the past five years through April 22. The Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP), the equal-weight version of the S&P 500, generated an annualized total return of 9.6%, 170 basis points less than SPY and 480 basis points less than a 14.4% total return needed.

So it's going to be difficult to find seven stocks that pay a dividend and can appreciate at a double-digit pace. And to make the task even more difficult, I'm going to find seven dividend stocks that doubled in price over the past five years and look ready to do it again over the next five.

Here's goes nothing.

Domino's Pizza (DPZ)

Domino's Pizza, Inc. (DPZ) Has Become the Top Name in Pizza

Source: Shutterstock

5-Year Annualized Total Return: 29.4%

Dividend Yield: 0.9%

Domino's Pizza (NYSE:DPZ) is having an off year. It's only up 7.5% year to date (including dividends) through April 22. It hasn't had an annual total return of less than 19% in the past decade, let alone the past five years.

What's wrong with DPZ stock, I ask somewhat facetiously? Not much. Domino's reports Q1 2019 earnings April 24 and they're expected to be good.

Over the past four quarters, DPZ had beaten the consensus estimate on three occasions, averaging a beat of 5.1% per quarter. In Q1, analysts expect earnings per share of $2.08, eight cents higher than a year earlier.

On the bottom line, analysts see Domino's increasing sales by 7.7% in the first quarter to $846 million. A growth rate on par with last year's first-quarter report. In terms of same-store sales, it's expected to deliver 6.5% growth, 90 basis points higher than in the fourth quarter.

The first quarter will be Domino's 101st consecutive quarter of same-store sales growth.

With technology driving Domino's business in the years ahead, I'm confident that DPZ will make my list of repeat offenders.

Microsoft (MSFT)

5-Year Annualized Total Return: 26.7%

Dividend Yield: 1.4%

I don't think there's any question Microsoft (NASDAQ:MSFT) is a much-improved company since CEO Satya Nadella took the helm in February 2014. I recently said as much, suggesting Microsoft is a much more focused company than it was five years ago. And what shareholder can forget the fact a $10,000 investment in 2014 is worth $32,650 today?

Unfortunately, if Nadella doesn't get the company's workplace culture under control, it might be all for naught.

"Microsoft's lawyers have denied that the company systematically discriminates against women, and pointed out that the federal government has conducted nearly two dozen pay discrimination audits based on the company's work as a contractor. The audits only resulted in one violation, according to evidence provided in court records," wrote Vox contributor Alexia Fernandez Campbell April 11.

I'm inclined to believe that Nadella's smart enough to know how important it is to make women comfortable enough to want to work at the company.

I'd be shocked if we don't hear more in the coming months about the company's moves to eliminate the boy's club culture that currently exists.

If it does this, I don't think there's going to be a problem with MSFT stock doubling for the second time in ten years.

S&P Global (SPGI)

Source: Shutterstock

5-Year Annualized Total Return: 24.0%

Dividend Yield: 1.0%

It's only appropriate that S&P Global (NYSE:SPGI), the people behind the S&P 500, more than doubled in price over the past five years. It's got a great business that's about more than stock indexes.

Last October, I recommended investors consider SPGI and six other fintech stocks I thought were going to benefit from the digitization move in financial services. I've liked SPGI for a couple of years now because it's got diversified revenue streams

"Regarding profits, its indices business delivered a 65% operating margin, significantly higher than any of its other three operating segments, so it's not time to write that business off just yet," I wrote October 24, 2018.

In S&P Global's latest quarter, its 2018 year-end, the indices business generated just 13.4% of its overall revenue. However, it generated 18.6% of the company's operating profits.

Meanwhile, although its ratings business — the company's largest by revenues and profits — saw little growth in 2018, the other three segments (Indices, Market Intelligence, and Platts) all had healthy gains on both the top and bottom line.

As long as the digitization of financial services doesn't suddenly come to a grinding halt, I continue to see a long runway of growth for S&P Global.

Apple (AAPL)

Source: Apple

5-Year Annualized Total Return: 23.3%

Dividend Yield: 1.4%

By now you've probably heard that the long-running feud between Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOM) is officially over. The companies came to a settlement agreement April 16.

Apple agreed to pay Qualcomm an undisclosed amount up front and has signed a six-year global patent licensing deal with the San Diego company with a possible two-year extension. Also, Qualcomm will supply Apple with chips for its 5G iPhone modems.

Questions remain why the two companies suddenly settled after barking at one another for the last two years. However, it's never good to have legal issues hanging over your head, so the news should be viewed as positive for shareholders of both companies.

Apple reports earnings April 30 after the markets close.

InvestorPlace contributor Nicolas Chahine put it best recently when addressing the company's weakness in 5G and how it might affect Apple's stock price:

"The fundamental reason to own Apple stock is easy. This is the premier company on the planet and it has the financial statements to back it up. And it sells at a price-to-earnings ratio of 14, which is the cheapest of the technology mega caps," Chahine wrote April 22.

I could not agree more.

Apple provides investors with a rock-solid balance sheet, robust free cash flow, and products and services that consumers want to use. It might not be the fastest to market, but they'll do enough to deliver a double over the next five years.

Constellation Brands (STZ)

Source: Shutterstock

5-Year Annualized Total Return: 21.4%

Dividend Yield: 1.4%

Ever since Constellation Brands (NYSE:STZ) acquired 9.9% 0f Canopy Growth (NYSE:CGC) for CAD$245 million in October 2017, I've argued that investors would be wise to hedge their bets by taking half of what they could afford to lose investing directly in Canopy Growth and put that into Constellation stock.

Nineteen months later, Constellation has invested an additional $4 billion in Canopy for a 38% stake in the company with exercisable warrants that could take its ownership to 50%.

On April 18, Canopy Growth announced that it had signed a definitive agreement that gives it the right to buy 100% of Acreage Holdings (OTCMKTS:ACRGF), a New York City-based company that owns licenses to grow cannabis in 20 states with a total population of 180 million — or about five times the entire population of Canada.

Acreage Holdings' shareholders will receive $300 million immediately.

Once cannabis becomes legal on a federal basis in the U.S., Canopy will exercise its right to buy Acreage, issuing to the company's shareholders 0.5818 of a common share of Canopy Growth stock for each Acreage share held for a total value of $3.4 billion.

The deal gives Constellation further reason to happy about its multi-billion investment in Canopy Growth. Between beer, wine, spirits, and cannabis, Constellation has four ways to grow over the next five years. I'd be shocked if it didn't double its stock price by April 2024.

A.O. Smith (AOS)

5-Year Total Return: 20.2%

Dividend Yield: 1.4%

It's great to see Wisconsin-based A.O. Smith (NYSE:AOS) having a fantastic bounce-back year after suffering a rare down year in 2018. Up almost 32% year to date (including dividends) through April 22, it's recovered most, if not all, its losses from last year.

I've been on the A.O. Smith bandwagon for almost seven years now.

I first covered the company in July 2012. I liked the fact it practiced globalization the right way. It manufactured products in China that it sold in China; the same applying to the North American and India markets.

"Regardless of what happens in North America, which is doing just fine, China and India will continue to represent a more important part of Smith's overall business. At present, the two countries account for 24% of sales. Once India ramps up, I could see that easily doubling within five or six years. The world is its oyster," I wrote at the time.

How's it worked out?

Its China business accounted for 34% of its $3.2 billion in overall revenue in 2018, up significantly from 2012. That said, it expects its sales in China to fall in 2019.

Although a majority of its business comes from water heaters and boilers, A.O. Smith got into the water treatment business in 2012. It's grown revenues in this segment from $35 million to $400 million, a compound annual growth rate of 42%.

I like this dividend stock doubling in the next five years.

ResMed (RMD)

Source: Shutterstock

5-Year Total Return: 17.5%

Dividend Yield: 1.5%

ResMed (NYSE:RMD) stock is down 11.9% year to date (including dividends), its worst performance on an annual basis since 2015.

If you have trouble sleeping, ResMed's products could save your life. They manufacture and distribute medical devices such as sleep apnea machines that help you breathe at night. In recent years, it's taken its products and utilized technology and data to make them that much more useful for patients in need.

Obstructive sleep apnea is the collapse of the upper airway making it difficult to breathe. For every 100 U.S. adults, only four out of the 26 that have sleep apnea know that they have it, providing a significant runway for growth.

Patients suffering from strokes, heart failure, Type 2 diabetes, and other chronic conditions, often also suffer from sleep apnea.

Another growth area for the company is the treatment of chronic obstructive pulmonary disease, commonly known as COPD; it's the third leading cause of death worldwide affecting more than 380 million people and costing the U.S. healthcare system $50 billion annually.

Since making its first software-as-a-service (SaaS) acquisition in 2012, ResMed's built a smart connected ecosystem to provide in-hospital quality of care in your home through the use of technology and data.

It's a company that continues to keep up with technological change. I encourage you to learn more about this dynamic business.

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

April 24, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Posted: 24 Apr 2019 12:06 PM PDT

On January 10th, the market initiated the depicted bearish channel around 1.1570.

Since then, the EURUSD pair has been moving within the depicted channel with slight bearish tendency.

On March 7th, recent bearish movement was demonstrated towards 1.1175 (channel’s lower limit) where significant bullish recovery was demonstrated.

On March 18, a significant bullish attempt was executed above 1.1380 (the upper limit of the Highlighted-channel) demonstrating a false/temporary bullish breakout.

On March 22, significant bearish pressure was demonstrated towards 1.1280 then 1.1220.

Few weeks ago, a bullish Head and Shoulders reversal pattern was demonstrated around 1.1200. This enhanced further bullish advancement towards 1.1300-1.1315 (supply zone) where recent bearish rejection was being demonstrated.

Short-term outlook turned to become bearish towards 1.1280 (61.8% Fibonacci) followed by further bearish decline towards 1.1235 (78.6% Fibonacci).

For Intraday traders, the price zone around 1.1235 (78.6% Fibonacci) stood as a temporary demand area which paused the ongoing bearish momentum for a while before bearish breakdown could be executed two days ago.

Conservative traders were advised to wait for a bullish pullback towards the newly-established supply zone around 1.1235 for a valid SELL entry.

On the long-term, bearish persistence below 1.1235 enhances further bearish decline towards 1.1170 then 1.1115 if enough bearish momentum is expressed.

Trade recommendations :

A valid SELL entry was suggested around 1.1235 upon Yesterday’s bullish pullback.

TP levels to be located around 1.1170 and 1.1115. SL should lowered to 1.1197 to offset the associated risk.

The material has been provided by InstaForex Company – www.instaforex.com
2019-04-24 17:57:23

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Why the DoJ Rhetoric Might Actually be Good for T-Mobile and Sprint Stock

Posted: 24 Apr 2019 11:54 AM PDT

It has been a tough week for telecom giants T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S). Both firms saw their share prices drop dramatically after reports that the U.S. Department of Justice wasn't optimistic about the firms' proposed merger. Over the course of just a few days, Sprint stock lost more than 6% while TMUS shed about 4% of its value.

Why the DoJ Rhetoric Might Actually be Good for T-Mobile and Sprint Stock

Source: Shutterstock

The news certainly doesn't cast a favorable light on the future of their merge, but it may not be quite as bad as the market thinks, according to some analysts.

What Happened

Sprint and T-Mobile have been working to join forces for a few years now — the two have been at the bottom of the wireless totem pole in the U.S. and proposed a merge in order to pool their resources in order to keep up with cash-rich bigwigs like Verizon (NYSE:VZ) and AT&T (NYSE:T). TMUS CEO John Legere has been outspoken about his opinion that the merge would level the playing field within the wireless industry and disrupt the duopoly that VZ and T currently enjoy. He claims that adding a third equally sized player would ultimately be best for customers.

It appears, however, that the DoJ doesn't quite agree — at least not with the deal that's on the table right now. The Wall Street Journal reported that DoJ staff have said the merger looks like a no-go with its current structure. According to the WSJ, antitrust regulators are questioning whether the deal would actually be beneficial to competition in the industry and that the deal will likely be rejected unless the two amend the merger to address those concerns.

Bad News for TMUS and Sprint Stock?

The news rocked both firms' share prices, as investors who'd been speculating that a deal would be made sooner rather than later started to panic. The CEOs at both Sprint and T-Mobile responded to the WSJ article saying it was "simply untrue," but the damage had already been done — investors were questioning whether the deal would eventually be shut down.

If the DoJ comments are accurate, it might not be as bad as it looks. Guggenheim Partners analyst Mike McCormack pointed out that communication between the DoJ and the two firms is actually a good sign. It was unlikely that regulators wouldn't tweak the agreement at all, and the fact that they're willing to discuss it might actually increase the odds of approval. The sides have come together again this week to discuss it further.

From that standpoint, it's worth bearing in mind that the deal could still move forward.

Don't Hold Your Breath

However, even if the WSJ article is as untrue as Legere says it is, TMUS and Sprint stock are still a long, long way from seeing any benefits from a merger. That's because a merge anytime in the foreseeable future is very unlikely. Aside from the obvious antitrust concerns that the WSJ article highlighted, the merge is likely to be under the microscope because of the telecom industry's rising importance to consumers.

Telecoms hold the keys to a growing proportion of everyday life in America and regulators recognize that and want to protect it. 5G is gaining momentum and connectivity is playing a much larger role around the world, so regulators want to get it right when it comes to how the telecom industry operates. That means a merge of this size is unlikely to be rushed through.

So if you're betting on T-Mobile or Sprint stock because of their merger potential, you'd better get comfortable because you're going to be here awhile.

Buy on the Dip?

So is this a buying opportunity for TMUS or Sprint stock? Perhaps if you want to pick up T-Mobile, but for Sprint, I'd say no. The bottom line is that the merger is a long way off, if it happens at all, and this DoJ report is likely the first of many bumps along the way.

T-Mobile looks better positioned to go it alone if need be, and the company will also see a boost from a merger, so you're better protected buying TMUS right now.

However in either case, I wouldn't get too wrapped up in their potential future together.

As of this writing, Laura Hoy did not hold any positions in the aforementioned securities.

Gold Price Forecast Could Turn Bullish Above This Key Level

Posted: 24 Apr 2019 11:31 AM PDT

Talking Points:

– Gold prices fell to a fresh yearly low yesterday as the US Dollar (via the DXY Index) pressed a breakout attempt to a fresh 2019 high.

– However, even as US Dollar gains persist, Gold prices have reversed back to the topside.

– "Something has to give" – it's rare to see Gold prices and the US Dollar rally together. The exception? During periods of extreme risk aversion.

Looking for longer-term forecasts on Gold and Silver prices? Check out the DailyFX Trading Guides.

Gold prices broke through symmetrical triangle support last week, on the way to fresh 2019 lows in recent days. While the Easter holiday-week may have offered reprieve, the factors that led to a deterioration in Gold's appeal as a safe haven, have started to return to the field of play. If anything, the fundamental picture for Gold prices is mixed for the very near-term.

For Gold bulls, a sharp deterioration in risk appetite seems unlikely, given that US equity markets continue to press forth to fresh all-time closing highs. Similarly, the upcoming Q1'19 US GDP report looks like it should shake off fears of an imminent recession. Finally, with the DXY Index pushing to a fresh 2019 high, a strong US Dollar makes for a difficult environment in which Gold prices could rally.

On the other hand, as was noted in the weekly Gold fundamental forecast, global growth expectations are front and center once again (particularly out of Europe), while Brexit headlines have started to reemerge in the newswires. An EU-US trade war revolving around agriculture may be brewing. Gold bears may not be able to press their luck much further given these lingering concerns.

Gold Price Technical Forecast: Daily Chart (April 2018 to April 2019) (Chart 1)

Earlier this month it was noted that "A move below the April low of 1280.80 would be a significant development in the days ahead and suggest that Gold prices may see a deeper setback towards the rising trendline from the August, September, and November 2018 lows near 1260 by the end of the month."

Yesterday, Gold prices bottomed out near 1266, or about 0.5% away from the aforementioned trendline support; further downside appears to be limited, particular as the end of the month approaches. Only a breach of 1260 would suggest that the technical structure has turned increasingly bearish.

If the Gold technical outlook is going to revert from its bearish bias following the symmetrical triangle breakdown last week, the first necessary condition would be to get back above one key level: the daily 8-EMA at 1279. In the process of doing so, Gold prices would return back above the early-January/initial 2019 low around 1276.51.

IG Client Sentiment Index: Spot Gold Price Forecast (April 24, 2019) (Chart 2)

Spot Gold: Retail trader data shows 72.7% of traders are net-long with the ratio of traders long to short at 2.66 to 1. The number of traders net-long is 7.8% lower than yesterday and 2.0% lower from last week, while the number of traders net-short is 2.5% higher than yesterday and 6.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Spot Gold price trend may soon reverse higher despite the fact traders remain net-long.

FX TRADING RESOURCES

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

2019-04-24 16:30:00

Why Competition Won’t Stop Spotify (SPOT) Stock

Posted: 24 Apr 2019 11:12 AM PDT

Spotify (NYSE:SPOT) stock started off 2019 red-hot, as the music-streaming giant gained momentum amid improving economic and financial market conditions. Spotify stock rose more than 30% through the first two and a half months of 2019. Then, the rally hit a wall in late February amid rising competition concerns.

Source: Spotify

The concerns were sparked by a number of factors. The Wall Street Journal reported that Apple's (NASDAQ:AAPL) Apple Music had more U.S. paid streaming subs than Spotify and was growing faster. Amazon (NASDAQ:AMZN) did a soft launch of a free streaming tier of Amazon Music. Moreover, Barron's came out with a scathing article on Spotify, basically saying that the company needs to become the Netflix (NASDAQ:NFLX) of music in order to justify its valuation, and Sirius XM (NASDAQ:SIRI) rolled out a music-streaming-only subscription plan at below-market prices.

All in all, the news flow related to Spotify stock has turned sharply negative over the past two months. Consequently, Spotify stock has dropped roughly 10% during that stretch.

Spotify's Earnings Will Have a Major Impact on Spotify Stock

SPOT's earnings are due to be released on Monday, April 29. This report is important. It will either confirm recent competition concerns or put them to rest, consequently causing Spotify stock to either drop or pop.

I think the numbers will put the competition concerns to rest and cause Spotify stock to pop. Although competition in this space is building, SPOT has a big lead, is making the right moves to preserve its lead, and has benefited from some international growth catalysts over the past few months which should positively impact its results. As a result, I think the earnings report should be good, sparking a rally by SPOT stock.

The Competition Won't Affect the Numbers

Spotify stock has been hurt by competition concerns over the past few months, but those competition concerns likely won't impact the company's first -quarter numbers.

That's because these concerns aren't new. Apple Music has reportedly been bigger than Spotify in the U.S. since mid-2018, so that isn't exactly revolutionary news.

Meanwhile, Amazon Music has been around for a while, and it's hardly made a dent on Spotify's growth trajectory. Sure, the new free tier may do some damage, although it probably won't. But the new tier didn't launch until April, and the service was only made available to U.S. customers with an Alexa-enabled device. Thus, the impact on SPOT's first-quarter numbers and second-quarter guidance will be muted. The same is true of the new Sirius XM streaming offering, which launched in April.

Overall, then, all these competition concerns that have weighed on Spotify stock won't show up in the company's first quarter numbers or its second-quarter guidance. But two other things will impact its results.

One, Spotify launched in India during the quarter, and had a big debut there, attracting 1 million users in its first week. Two, Spotify has doubled down on original podcasts, and Google Trends indicate that global interest related to these podcasts is building.

So SPOT's numbers should be pretty good. They will reflect international strength and investments in original content, not heightened competition.

The Long-Term Outlook of Spotify Stock Is Bright

Spotify is doing everything possible to ensure that it does become the Netflix of music.

Most importantly, the company is investing in original content. Today, it's original podcasts and playlists. Tomorrow, it might be original songs and albums. Regardless, the company is leveraging its size, resources, and unprecedented listener data to produce quality original content which will get customers to stick to the service, regardless of how the competition looks.

Also,SPOT continues to leverage social networks to enhance its stickiness. For instance, it has made a partnership deal with Instagram which allows Spotify's songs to be put into Instagram Stories. SPOT is also innovating its ad technology to build a moat against ad competition, and testing out new subscription bundles to appeal to different crowds.

Given SPOT's effective strategies, I think SPOT remains on track to get nearly 300 million paying subs by 2025.As a result, I think that Spotify stock should trade close to $170 by the end of the year.

The Bottom Line on SPOT Stock

Spotify stock was a big winner in early 2019, and it should get back to its winning ways following what will likely be a strong first-quarter earnings report that will put concerns about its competition to rest.

As of this writing, Luke Lango was long SPOT, AAPL, AMZN, NFLX, and SIRI.

Relative Strength Index (RSI) Offers Bearish Signal

Posted: 24 Apr 2019 10:57 AM PDT

Euro Rate Talking Points

EUR/USD remains under pressure as data prints coming out of the euro-area point to a slowing economy, and the break of the March-low (1.1176) brings the downside targets on the radar as the bearish momentum appears to be gathering pace.

Image of daily change for major currencies

EURUSD Forecast: Relative Strength Index (RSI) Offers Bearish Signal

Image of daily change for eurusd rate

EUR/USD struggles to hold its ground following the fresh updates to Germany's IFO Business Confidence survey as the index narrows to 99.2 from a revised 99.7 in March, and fears of a looming recession may continue to produce headwinds for the Euro as the European Central Bank (ECB) sees 'slower growth momentum extending into the current year.'

Image of DailyFX economic calendar

In response, the Governing Council may adopt a more dovish tone at the next meeting on June 6 as the central bank struggles to achieve its one and only mandate for price stability, and President Mario Draghi & Co. may show a greater willingness to implement a negative-interest rate policy (NIRP) as 'the persistence of uncertainties, related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets, is leaving marks on economic sentiment.'

Image of ecb interest rate

The ongoing shift in U.S. trade policy may force the ECB to adopt a more accommodative stance as U.S. President Donald Trump pledges to 'reciprocate' the tariffs imposed by the European Union (EU), and the Governing Council may further insulate the economy over the coming months amid the weakening outlook for global growth. However, the ECB may keep monetary policy on auto-pilot as the Targeted Long-Term Refinancing Operation (TLTRO) is scheduled to launch in September, and the central bank may refrain from adjusting the forward-guidance for monetary policy as President Draghi's term is set to expire at the end of October.

With that said, it remains to be seen if President Draghi & Co. will endorse a wait-and-see approach ahead of its next quarterly meeting in June as ECB officials insist 'underlying inflation is expected to increase over the medium term,' but recent price action brings the downside targets on the radar for EUR/USD as the exchange rate snaps the opening range for 2019. At the same time, recent developments in the Relative Strength Index (RSI) suggest the bearish momentum is gathering pace as the oscillator snaps the bullish formation carried over from March.

EUR/USD Rate Daily Chart

There appears to be a broader change in EUR/USD behavior as the exchange rate threatens the wedge/triangle formation from earlier this year, with the near-term outlook mired by the failed attempt to test the 1.1340 (38.2% expansion) hurdle.
At the same time, recent developments in the Relative Strength Index (RSI) offer a bearish signal as the oscillator snaps the upward trend from earlier this year.
Close below the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement) brings the 1.1100 (78.6% expansion) to 1.1140 (78.6% expansion) region on the radar, with the next area of interest coming in around 1.0950 (100% expansion) to 1.0980 (78.6% retracement).

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss key market themes along with potential trade setups.

For more in-depth analysis, check out the 2Q 2019 Forecast for EUR/USD

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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