Wall Street set for strong opening, Ford sales in China slump

2:57 PM January 13, 2020
  • US stock market futures point to a green opening

  • Sales of Ford Motor (F.US) in China declined 26% in 2019

  • Analysts at Oppenheimer expect Tesla (TSLA.US) to rally further

US stock market futures are pointing to a positive opening of today’s session. The environment seems to support risk-on tones this week as the United States and China are about to sign the ‘Phase One’ trade agreement. Having said that, there is a chance for the US indices to climb towards fresh ATH after a pullback occurred on Wall Street on Friday.

Source: xStation5

S&P 500 (US500) has been trading within an upward channel since the start of Q3 2019 and continues to do so. While the index pulled back on Friday, it still remains far off the lower limit of the channel. In fact, the lower limit of the channel coincides currently with support at 3210 pts and a lower limit of the Overbalance structure, therefore it can be considered key support for now. On the other hand, the resistance level to watch is 3310 pts. It is marked with the 161.8% exterior retracement of the short-term downward move from the beginning of a month. Traders should keep in mind that risk-on tones may prevail this week as China and US are set to sign a trade deal on Wednesday (or shortly after according to Donald Trump).

Company News

Lululemon Athletica (LULU.US), the US apparel retailer is making moves in the pre-market trading. Company raised earnings and revenue guidance for Q4 2019 ahead of the earnings release scheduled for March 27. Lululemon now sees EPS falling in the $2.22-2.25 range, up from the previous $2.10-2.13. Market consensus pointed to an EPS of $2.15 prior to guidance upgrade.

Ford Motor (F.US) reported car sales data from China. The US carmaker experienced a 26.1% decline in Chinese sales in 2019. This was the third consecutive year of deterioration in Chinese business as sales dropped 37% in 2018 and 6% in 2017. However, the carmaker said that its market share in premium class vehicles has stabilized during 2019.

Shares of Ford Motor (F.US) took a 5% dive following a failed attempt of breaking above the resistance zone ranging around 50% Fibo level of the downward move started in mid-July. However, the stock managed to hold above the 50-session moving average and the upward sloping trendline. Lacklustre sales data could exert some pressure on shares today and may trigger a pullback from the 38.2% Fibo level. Source: xStation5

Analyst Calls

Tesla (TSLA.US) is trading higher ahead of the session launch as well. Electric vehicle manufacturer had its price target raised from $383 to $612 at Oppenheimer. Investment banking company reasons its decision saying that Tesla has reached sufficient scale to support positive free cash flow generation. 

IBM (IBM.US) was cut from “outperform” to “in line” at Evercore ISI. Price target was set at $145. Analysts cited macroeconomic headwinds and challenging market during the first half of 2020 as a reason behind the downgrade.

Insane rally on Tesla (TSLA.US) shares continue. Improvement in business raised hopes that EV manufacturer could become profitable shortly. Tesla shares trade 7% higher YTD and over 100% higher against the end of Q3 2019. The closest resistance to watch can be found at $505, where the 161.8% exterior retracement of downward move launched in late-2018 can be found. Source: xStation5

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