Here’s your weekly Investing Action Plan: what you need to know as an investor for the coming day.
XAutoplay: On | OffMarkets will have a half day on Monday and will take July Fourth off, but here are five reasons why you shouldn’t tune out during the coming week: Tesla (TSLA) could drop some big news; markets will get inside the heads of Federal Reserve policymakers; a fresh set of job data come out; monthly U.S. sales figures from General Motors (GM), Ford (F) and others may bring Carmageddon closer; and President Trump comes face to face with Russian President Vladimir Putin.
Stocks To Watch
Seven of the names on the IBD 50 list are Chinese stocks, six of them internet plays. For your watchlist this week are four of them: Sina (SINA), YY (YY), NetEase (NTES) and New Oriental Education (EDU).
After exploding higher on its quarterly earnings report out May 16, Sina is now forming a flat base with a 97.89 buy point. Shares are looking to find support at the 50-day line and are currently some 13% below the entry.
New Oriental Education is seeking support at its 50-day line as well. Shares dipped below that level Thursday, closing just underneath the line. This is the first time the stock has touched that key support level since breaking out of a consolidation in mid-March.
YY remains in buy range after clearing a cup-with-handle buy point of 56.31 in late May. Shares have been hitting resistance around the 60 level.
NetEase reversed lower from a new all-time high on June 26 and on Friday completed the roundtrip, closing at 300.63, below the 301.92 cup-with-handle entry. Because NetEase wiped out a double-digit gain, the buy point is now invalid. NetEase was a late-stage breakout, which is more likely to fail. The breakout had shown questionable action previously.
Tesla’s Big Tease
Tesla CEO Elon Musk suggested in a tweet Friday that he’ll announce on Sunday when his company’s highly anticipated Model 3 sedan will arrive. Tesla recently affirmed that its Model 3 production is on track to begin in July at its Fremont, Calif., assembly plant, but did not specify when. Tesla’s goal is to ramp up production to 500,000 Model 3 vehicles a year — a huge leap from its 100,000 run rate with its Model S sedan and Model X sport-utility vehicle.
Tesla is also expected to provide Q2 vehicle delivery results in the coming days. In Q1, Tesla delivered just over 25,000 vehicles, up 69%, and has said it sees first-half deliveries of 47,000-50,000, suggesting a Q2 outlook of 22,000-25,000.
The Federal Reserve will release the minutes of its mid-June meeting that saw an unexpectedly hawkish outcome: Not only did the central bank hike rates a quarter-point, but it also declared an intent to begin gradually scaling back its $4.5 trillion balance sheet this year, on top of four more hikes over the next 18 months. The minutes may shed more light on the timing of balance-sheet changes, whether policymakers are growing worried about stock prices, and if there’s a growing contingent of doves as inflation surprises to the downside.
Job, Economic Indicators
The week will have several key reports, capped by June payroll data from the Labor Department on Friday. The unemployment rate is at a 16-year low of 4.3%, and even though people left the work force in May and job gains disappointed, the overall trends still point to a tightening labor market. Other job reports due include ADP’s private payroll numbers and Challenger’s job-cut report on Thursday.
Among nonjob data, the Institute for Supply Management’s June manufacturing index and May construction spending are due on Monday. On Thursday, ISM’s non-manufacturing index for June and the international trade balance for May will be out.
Leaders from the world’s top economies will meet in Hamburg, Germany, July 7 and 8 for a summit that is likely to include discussions on climate change, terrorism, trade and immigration. Trump will have a one-on-one meeting with Putin on the sidelines of the summit, but officials wouldn’t say if Russia’s alleged hacking of the 2016 election would be brought up. Trump will also meet with Chinese President Xi Jinping. The two were chummy at their first meeting in April, but the relationship has cooled as Trump grows frustrated that Beijing hasn’t taken a tougher stance against North Korean, while China is upset over a planned U.S. arms sale to Taiwan.
Auto Sales To Slow Further
U.S. auto sales are expected to fall again in June, marking the sixth straight month this year that sales have not grown. Edmunds sees an annualized rate of 16.6 million and Kelley Blue Book sees 16.3 million, down from 16.8 million a year ago. KBB sees a 9.7% drop at Ford, primarily due to a drop in fleet sales, while GM should see a 1.3% dip. The news may not be as bad as it sounds. Auto sales are still at historically strong levels, and June is sandwiched between two major holidays sales events, which affects buying decisions as shoppers angle for hot deals, an Edmunds analyst said.
But there are signs that demand for SUVs – so far resilient to the auto sales slowdown – is starting to soften. SUVs are sitting longer on showroom floors. Incentives on SUVs have jumped vs. a year ago, as dealers cope with growing inventories by sweetening the deal for customers.
Airline Traffic On The Runway
Delta Air Lines (DAL) will likely be the first carrier in the coming days to report June results, which will shed more light on how unit revenue — the closely watched measure of an airline’s sales in relation to its flight capacity — held up in Q2. They also come as the peak summer travel season heads into full swing. United Airlines (UAL) and American Airlines (AAL), in reporting May’s results, held to their forecast for Q2 unit revenue; Delta has said the metric was trending at the higher end of its original outlook.
When Yum China (YUMC) reports Q2 quarter results after the close Wednesday, analysts are expecting EPS of 24 cents on $1.63 billion in sales, marking its fourth quarterly report since Yum Brands (YUM) spun off the business as a public company last year. The company operates over 7,600 KFC, Pizza Hut and Taco Bell locations in China, and shares have jumped about 50% so far this year, climbing into profit-taking sell territory.