US OPEN: Wall Street set to open lower ahead of tech earnings

• US futures point to lower opening as risk-off moods prevail

• US100 bounces off the support zone ranging around 9110 pts

• IBM (IBM.US) and Netflix (NFLX.US) to report earnings after session close

US equity indices are set to open lower today as fears mount over the spread of coronavirus in China. There are no major data releases from the US scheduled for today therefore investors are likely to look to Davos for clues. Traders should focus on comments on the EU-US trade relationship as Donald Trump is expected to meet Ursula Von der Leyen today. Apart from that, two closely watched tech companies - IBM and Netflix - will release earnings reports after the session closes.

Nasdaq (US100), just like other major Wall Street indices, trades in an upward channel. The index pulled back but seems to have found support at the 9110 pts handle. The closest resistance can be found at an all-time high (9190 pts area). However, should the index echo performance of indices from Europe and Asia, a break below the 9110 pts handle could be on the cards. In such a scenario, 200-hour moving average (purple line) could be in play. Source: xStation5

Netflix (NFLX.US) is set to report earnings for Q4 2019 today after the session closes. Netflix expects global subscriber additions to reach 7.6 million in the final quarter of 2019. If so, it would be the strongest quarter since Q4 2018 when the number of subscribers increased by 11.35 million. Revenue is seen rising $5.45 billion (+30% YoY) while EPS is seen at $0.75 (+149% YoY). While estimates and derived growth rates may seem high, there is a strong case for such estimates - some of Netflix’s most watched shows of 2019 were released in October-December period, like for example “Irishman” movie or “Witcher” series. Net income for the quarter is forecasted to jump to $335.3 million (+150% YoY). Netflix looks to be a top performing company but there is one thing of concern - cash from operations has been negative since Q2 2014.

Netflix (NFLX.US) has been trading in an upward channel since late-Q3 2019 when the stock managed to halt declines at support zone ranging near the $250 handle. Today’s earnings release may be crucial for the performance of a stock as it attempts to smash through the resistance zone at $340. Solid results could keep rally on track but disappointment could push price towards the local low at $320. Source: xStation5

International Business Machines (IBM.US) is another major tech company scheduled to release earnings after the market closes. Estimates for IBM earnings stand in contrast to the ones for Netflix. Revenue for IBM is expected to stay at more or less the same level as in Q4 2018 ($21.64 billion, -0.6% YoY) and net income is expected to jump to $4.18 billion - “only” 19.3% YoY higher. However, the company is still coping with the fallout of Red hat acquisition and subsequent investments in the company, that were mainly carried out in 2019. Having said that, focus will be on EPS and free cash flow guidance for 2020 as they should start improving.

IBM (IBM.US) is trading in a narrow $8 range. The stock is quoted 3.2% higher YTD and faces short-term resistance zone ahead. Break higher could call for a test of the next resistance in line - zone ranging around $145. However, it should be noted that IBM has been trading in a downward trend since the first half of 2013. Long-term downward trendline currently runs at around $145. Source: xStation5