Equities report: Equities form new all time highs

US stock markets formed new all time highs since our last report and in particular the Dow Jones 30, Nasdaq 100, and the S&P 500. In today’s report, we would like to address what fundamentally seems to be driving them, and then narrow our focus on  Nvidia’s earnings in addition to the implications of Disney’s recent reduction in its subsidiary’s workforce. We conclude our report with a technical analysis of Nvidia’s daily chart.  

FOMC April meeting minutes due out today

The release of the FOMC’s April meeting minutes is set to occur during today’s American session. The document is set to provide valuable insight into the decision-making process of Fed policymakers, as intentions of the bank have been a key driver for US Equities over the past months. Moreover, with the cooling of inflation last month, market expectations for the bank to start cutting rates rather earlier than later tended to increase. Therefore, should the document imply that Fed policymakers are still uncertain as to whether inflation has returned on a path towards the bank’s 2% inflation target, which could imply a delay of any rate cuts, we may see US Equities weakening. On the contrary, should the bank sound ready to start cutting rates, we may see US Equities gaining, on the anticipation of easing financial conditions in the US.

NVIDIA Earnings day

Market participants are eagerly awaiting the release of Nvidia’s earnings report. Some financial news outlets have even touted that Nvidia’s earnings could ‘make or break’ the equities rally. Therefore, it would appear that a high degree of scrutiny will be placed on the company’s earnings which are due after the bell. The current expectations are for Nvidia’s earnings per share figure to improve to 5.58 from 5.16, in addition to the company’s revenue increasing to 24.53B from 22.1B. Therefore, should Nvidia’s earnings report come in as expected or higher, it could provide support for the company’s stock price. Whereas any deviation could weigh on the company’s stock price. We would also like to highlight the importance of the company’s forward guidance. Should Nvidia’s forward guidance ‘paint’ a continuation or an improvement in their sales and revenue figure, it could by itself provide support for the stock price. Whereas, should the document ‘paint’ a gloomy picture for the future, it could weigh on their stock price and could also overshadow the EPS and revenue figures.

Disney cuts jobs from Pixar studios

 According to CNBC, Disney (#DIS) will be cutting around 14% of its staff at its subsidiary,Pixar Animation Studios. According to some sources, the reduction in the animation workforce of Pixar is allegedly in order for the company to focus on the quality of its content rather than the quantity being produced. Furthermore, the redirection of the animation studio’s focus to more quality content could reduce Disney’s overall production costs. Thus, the anticipation of a reduction in costs and a potential increase in revenue could provide support for Disney’s (#DIS) stock price.

التحليل الفني

#NVIDIA Daily Chart

• Support: 922 (S1), 884 (S2), 829 (S3)
• Resistance: 975 (R1), 1030 (R2), 1085 (R3)

NVIDIA’s stock price appears to be moving in an upwards fashion. We maintain a bullish outlook for the company’s stock price and supporting our case is the RSI indicator below our chart which currently registers a figure just above 60, implying a slight bullish market sentiment. Furthermore, the upwards moving trendline which was incepted on the 22^nd of May, tends to support our bullish outlook. For our bullish outlook to continue we would like to see a clear break above the 975 (R1) resistance line with the next possible target for the bulls being the 1030 (R2) resistance level. On the flip side, for a bearish outlook we would like to see a clear break below the 922 (S1) support level, with the next possible target for the bears being the 884 (S2) support line. Lastly, for a sideways bias, we would require the company’s stock price to remain confined within the sideways moving channel defined between the 922 (S1) support line and the 975 (R1) resistance line.

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

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