The SP 500 Has Broken To the Downside of a ShortTerm Rectangle

The S&P 500 Has Broken To the Downside of a Short-Term Rectangle

On Tuesday, Nike (NKE) is awaited to post first quarter EPS of $0.42 compared to $0.86 a year ago on sales of $9.0 billion vs $10.7 billion last year. The Co designs and manufactures sportswear, and on September 9th, Bloomberg disclosed that the Co failed in an attempt to get the U.S. International Trade Commission to put an import ban on certain shoes from Skechers and New Balance on accusations of trademark infringement for it's Converse brand. Technically speaking, the RSI is above 50. The MACD is positive and below its signal line. The stock could retrace in the short term. Moreover, the stock is above its 20 and 50 day MA (respectively at $114.24 and $105.64). We are looking at the final target of $128.60 with a stop-loss set at $110.70.

On Wednesday, General Mills (GIS) is likely to unveil first quarter EPS of $0.87 vs $0.79 last year on revenue of $4.2 billion compared to $4.0 billion a year ago. The Co operates a global packaged food business and on September 15th, the Co announced the launch of its new ketogenic friendly product line ':ratio' in order to help consumers find ways to cut back on their carb and sugar intake. From a chartist's point of view, the RSI is trading below 30. This could mean that either the stock is in a lasting downtrend or just oversold and that therefore a rebound could shape (look for bullish divergence in this case). The MACD is below its signal line and negative. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at $61.5 and $63.08). We are looking at the final target of $52.90 with a stop-loss set at $60.00.

On Thursday, Costco Wholesale (COST) is expected to announce fourth quarter EPS of $2.82 compared to $2.69 a year ago on revenue of $52.1 billion vs 47.5 billion last year. The Co operates a chain of warehouse stores and its current analyst consensus rating is 20 buys, 14 holds and 2 sells, according to Bloomberg. In other news, on August 28th, the Co committed 25 million dollars to a new investment fund that will help fuel Black-led financial institutions and community development efforts. From a technical point of view, the RSI is below 50. The MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the share stands below its 20 and 50 day MA (respectively at $344.57 and $336.79). We are looking at the final target of $312.00 with a stop-loss set at $350.00.

Also on Thursday, CarMax (KMX) is anticipated to release second quarter EPS of $1.01 vs $1.40 last year on sales of $5.1 billion compared to $5.2 billion a year ago. The Co operates a car and light truck retail chain, and its stock price is anticipated to move up or down by 8.4% based on options volatility. The stock dropped 6.2% after they last reported earnings. Looking at a daily chart, the RSI is below 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is below its 20 day MA ($105.69) but above its 50 day MA ($100.68). We are looking at the final target of $95.20 with a stop-loss set at $108.10.

Today, Etsy (ETSY), Catalent (CTLT) and Teradyne (TER) were added to the S&P 500 index, replacing H&R Block (HRB), Coty (COTY) and Kohl's (KSS).

Looking at the S&P 500 CFD on a 30 minute chart, the index has broken out to the downside of a short-term rectangle pattern that price has been holding within since the second week of September. Price will likely continue downward and hit 3,200.00, a level last reached in late-July. The index could then bounce off of 3,200.00 and test its 3,280.00 resistance level, where price will probably halt before turning back down. Price will likely break below its 3,200.00 support level and fall further to 3,155.00. If price manages to get above 3,280.00 then it will mostly likely be stopped at 3,310.00. However, if price gets above 3,310.00, we could witness the index recover some ground and grind higher.

Source: GAIN Capital, TradingView

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.