Stock Market Investing Action Plan: CES, OPEC, Payrolls And 5 Stocks To Watch Entering The New Year
Here’s your stock Investing Action Plan: what investors need to know as the stock market launches into a new year. The market’s confirmed uptrend gathered strength in its final week of the year as the Dow industrials logged a seven-day win streak through Wednesday. The S&P 500 is just off its new highs, while the Nasdaq Composite clocked a four-day decline. The first week of 2022 promises to be busy, with labor data, EV and auto sales and regulatory issues in play. And a host of leading stocks are in buy ranges or near buy points.
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5 Stocks To Watch: Including Datadog, Endava, Harmony Biosciences
Top stocks to watch in the opening days of 2022 start with Datadog (DDOG), which has held up better than most software names through the end of 2021. The stock has a 199.78 buy point. It recently crossed a trend line (orange line below) but then hit resistance a few days later. It’s found support at the 50-day line, and could have a handle in a day or two, depending on whether it stays in its little range. But even so, 186.38, just above Tuesday’s high, would serve as an early entry.
U.K.-based Endava (DAVA), an IBD 50 stock, is working on a cup base with a buy point at 172.51. However, the software developer and IT consultant could possibly complete a handle by the end of the day Monday, potentially lowering the buy point to 170.98. The base is a third-stage pattern.
Harmony Biosciences (HRMY) is flirting with 44.49 cup-base buy point. The Pennsylvania-based biotech is carving out a portion of the narcolepsy treatment market, and potentially broadening its markets. The stock is 79% above its August 2020 initial offering price, but still 17% below its November 2020 peak.
Chip equipment maker Applied Materials (AMAT) — also an IBD 50 name — slipped just below a 159.10 buy point on Thursday. The chart pattern is a six-week flat base, according to IBD MarketSmith analysis. That pattern sits neatly above support at the stock’s 50-day/10-week moving average, and also on top of a longer, earlier base. Both of those chart elements are bullish formations.
Diversified medical products heavyweight Danaher (DHR) climbed to just below a 331.79 buy point in a cup-with-handle base. The IBD SwingTrader stock has a year-to-date gain of 48%.
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Stock Market Awaits Tesla Deliveries
Tesla (TSLA) is likely to report a sequential rise in Q4 deliveries, analysts say. The automaker shipped an estimated 261,400 Model 3 and Y vehicles, and 15,500 Model S and X vehicles during the quarter, according to FactSet. That totals 276,900 vehicles, up from 241,300 deliveries in the third quarter. Two out of every three fully electric vehicles in the U.S. are a Tesla, as sales boom despite the chip shortage. The Model 3 and Model Y are seen driving Q4 sales growth, as the Model S and X decline.
U.S. Auto Sales: Ford, General Motors, Toyota
U.S. automakers like Ford (F) and General Motors (GM) are set to report December sales in the days ahead. U.S. new vehicle sales for the month are expected to reach an annualized rate of 13 million units, according to J.D. Power and LMC Automotive. That would be up from 12.8 million units in November but down from 16.5 million units in December 2020. For the fourth quarter, Cox Automotive expects Toyota (TM) to outsell GM and finish the year as the nation’s top-selling automaker. The companies report as the omicron surge complicates what was a more upbeat outlook for the year ahead, after a chip shortage strained production and squeezed car prices higher in 2021. But pent-up demand could keep inventories lean, potentially leading to record pricing and profitability for the automakers in 2022, J.D. Power said.
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China EV Sales: Nio, Xpeng, Li Auto
Nio (NIO), Xpeng Motors (XPEV) and Li Auto (LI) are set to report December sales, after doubling or tripling electric-car sales in November. The EV war is intense in China. Both startups and stalwarts are vying to grow share in a rapidly expanding market for electric vehicles. For Nio, the so-called Tesla of China, production shutdowns due to the chip shortage have hurt recent EV sales. An aging lineup has also weighed. But with two new, high-tech models — the ET5 and ET7 electric sedans — launching in 2022, Nio could return to form. Chinese EV giant BYD (BYDDF) is also on tap. Buffett-backed BYD more than tripled November EV sales to 91,219. It will now look to top the 100,000 monthly sales milestone.
GM Stock: New Silverado Plus Mystery EV Reveals
General Motors is expected to present a new autonomous vehicle alongside its previously announced, but not yet revealed, Chevy Silverado EV on Wednesday. The company had originally planned to make its presentation at the CES technology trade show in Las Vegas but will instead do so remotely, due to the coronavirus. The new vehicle is reportedly a self-driving Cadillac that’s above and beyond the self-driving Cruise Origin introduced two years ago. It’s described as a fully autonomous vehicle with various luxury features and amenities designed to cater to wealthier riders.
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Smaller In-Person CES Show Predicted
The annual CES tech show officially kicks off next Wednesday as a hybrid event. CES 2022 will feature an in-person conference in Las Vegas and an online version for those not making the trip. An event that garners much investor attention, it does not typically have a direct impact on stock market action. This year’s physical show will be much smaller than years past after numerous exhibitors canceled plans to attend because of the resurgent Covid-19 pandemic. Companies pulling out included Amazon (AMZN), General Motors, Microsoft (MSFT), Facebook parent Meta Platforms (FB), and Alphabet‘s (GOOGL) Google and Waymo units. Hot topics at the hybrid show likely will include electric vehicles, digital health, the metaverse and non-fungible tokens or NFTs. The last show, CES 2021, was all digital because of Covid concerns.
Stock Market Watches For A December Hiring Rebound
The year starts with the monthly run-up of employment data, starting with ADP’s National Employment report on Wednesday. The Labor Department’s weekly unemployment claims and December payrolls report follow on Thursday and Friday. Both could influence how the stock market heads into 2022. The monthly hiring chart has been jagged, above forecasts in October, but far weaker than expected in September and November. However, revisions have run far above normal this year, trending about 10 times higher than 2020’s revised hirings. Also, November’s unemployment rate dipped on rising labor force participation. And the household portion of the survey, which registered a startling 1.1 million new jobs in November, will be key to watch.
Oil Prices and OPEC+ Meeting
OPEC+ will hold a virtual meeting Tuesday. The group, which includes Organization of the Petroleum Exporting Countries and top nonmembers like Russia, has steadily increased oil output by 400,000 barrels per day at its monthly meetings. But now it faces the rise of the omicron Covid-19 variant and its impact on travel and oil demand.
West Texas Intermediate oil prices staged a seven-day advance through Thursday, helping to prop up stock market action early in the week. WTI futures traded down about 1% at $76.24 a barrel on Friday. That put prices up more than 3% for the week and with a 15% rebound for December, following November’s 20.8% dive.
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Tech Stock Earnings: Acuity, SGH
IBD 50 stock SGH (SGH), formerly Smart Global Holdings, reports fiscal Q1 earnings after the market close on Jan. 4. Including acquisitions, analysts expect EPS to jump 156% to $2, with revenue rising 57% to $460 million. The memory module maker acquired the light-emitting diode, or LED, components unit of Cree (CREE) in March for $300 million. SGH shares have entered a profit-taking zone, more than 20% above a cup-base buy point.
Acuity Brands (AYI) reports first-quarter results early Friday. The consensus looks for adjusted earnings of $2.42 a share, up 19% from the year-ago period, on revenue of $880 million, up 11%, for the provider of lighting and building management solutions. AYI stock is seven weeks into a cup base with a buy point at 224.69.
Other Earnings: Walgreens, Bed Bath & Beyond, Simply
Nutritional-food maker Simply Good Foods (SMPL) reports fiscal first-quarter earnings on Wednesday. Wall Street expects the company — which makes protein bars, shakes and snacks, including those geared toward the Atkins diet — to earn 34 cents per share, up 17%. Analysts forecast revenue of $265 million, a 15% gain. The company recently raised prices on its products in an effort to counterbalance the ongoing supply-chain and labor crunch. William Blair analysts this month noted that demand for snack bars is rebounding, as people get out more after 2020’s pandemic quarantine. They added that Simply Good in recent weeks held onto its market share in salty snacks and chocolate candy, but lost it for snack bars and cookies.
Dow Jones stock Walgreens Boots Alliance (WBA) will report fiscal Q1 results before the market opens Thursday. Analysts see the pharmacy chain reporting an 11% jump in EPS to $1.35. But sales are expected to slip 10% to $32.67 billion.
Bed Bath and Beyond (BBBY) will report Q3 results before the market opens Thursday. Analysts see the home goods stores operator reporting a 75% plunge in EPS to 2 cents with sales down 25% to $1.96 billion.
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