This is going to be a deciding week for investors that normally adhere to the “Sell in May and Go Away” thesis. The market has not only been strong in the moves higher, it has also been resilient in the face of recent downturns.
Big Data Points
We are not wasting any time this month, with ISM Manufacturing coming out on the first day. Another important data point that has been key to the Trump Trade is construction spending. Both data points come out at 10 AM EST.
Tuesday has new vehicle sales which have been slumping of late. The April reading 16.6M was the third month in a row coming in under the estimate. The other readings were only 300K and 100K below the expectation, but in April the miss was 800K. Expectations have rebounded to 17.1M which would be a nice increase. There is another automotive event later this week, but I want to review the Tesla (TSLA - Free Report) numbers in detail.
Wednesday kicks off with the ADP employment change, which some market participants really like. I, however, only see the recent wild misses and completely discount this metric at the current time. Much more importantly is the ISM Non-Manufacturing number that comes out at 10 AM EST. The metric last month came in well below expectations yet the market was able to gain roughly 1% in the month. This metric, probably more than any other will determine if there is a wide scale “sell in May” movement.
Thursday has some unemployment claims numbers, but they will just be a tease for Friday. Expect Thursday to be somewhat slow in terms of market movement as the ISM numbers are digested and traders get positioned before the BLS Jobs number comes on Friday. The consensus is calling for a gain of 194K jobs, which would be a significant increase from the 98K reported last month but there could be some big revisions.
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Earnings season has been pretty good so far with earnings up 10% from the year ago period and 75% are beating estimates. Just as importantly about 64% are beating revenue expectations with about 40% of the S&P 500 having reported already.
On Monday Cardinal Health (CAH) leads the way but I will also be looking at Insperity (NSP) and Tenneco (TEN). After the close Advanced Micro (AMD - Free Report) will probably be the stock most investors look at but given the performance of late, Chemours (CC) that attention might be split. I will look at TrueBlue (TBI) given what we will learn from NSP earlier in the morning.
Tuesday has several large players reporting in the morning with healthcare taking center stage. Aetna (AET), Pfizer (PFE - Free Report) , HAC (HCA) and Merck (MRK) are just those on the top end. After the close we will be watching Apple (AAPL - Free Report) but given that most are looking forward to the launch of the next iPhone.
Wednesday starts with Humana (HUM( and Sprint (S). After the close, we have the big reports coming from Facebook (FB - Free Report) and Tesla (TSLA - Free Report) . I mentioned TSLA already as get new vehicle sales a day earlier, but this could be a huge report. The stock is a Zacks Rank #2 (Buy) and has been powering higher ever since the company beat delivery numbers for 1Q which was announced on March 1. Even the biggest of bears, Barclays which has a sell rating and $165 price target, said that earnings could be the start of another leg higher.
Thursdays during earnings season are the heaviest days and this one is no exception. That will make trading on a “jobs” Friday morning that much more important.
Friday has a few names in the morning and then we reload and do it all again next week.
There is one quiet period of note coming to a close this week. OKTA (OKTA - Free Report) will probably get some new reports from the brokerages that were on the deal team. A quick scan shows that the big boys and girls were on this deal so look for some good follow through buying in the name this week.