Analyst Upgrades/ Downgrades

Analyst Upgrades/ Downgrades
Estee Lauder (EL) upgraded to Outperform from Perform at Oppenheimer
Halliburton (HAL) upgraded to Conviction Buy from Buy at Goldman Sachs
Schlumberger (SLB) upgraded to Overweight from Equal Weight at Wells Fargo
Baker Hughes (BKR) downgraded to Buy from Conviction Buy at Goldman Sachs
BJ’s Wholesale (BJ) downgraded to Hold from Buy at Deutsche Bank
Deere (DE) was downgraded to Underweight from Neutral at JPMorgan

Consumer Discretionary Select Spiders (XLY) Stays Hot

The Consumer Discretionary Select Spiders (XLY) extended its winning streak to 4-straight sessions after tapping an intraday and fresh all-time high of $129.52. New and lower resistance at $129.50-$130 was cleared but held. A close above the latter would be an ongoing bullish signal for additional strength towards $131.50-$132, depending on momentum.

Current support is at $128.50-$128. A close below the $127.50 level would signal a possible near-term top with backtest potential towards $126-$125.50.

RSI remains in an uptrend after closing above lower resistance at 65-70 with the December peak at 75. Key support is at 60 with a move below this level signaling additional weakness towards 55-50.


Checking in on Volatility

The S&P 500 Volatility Index ($VIX) fell for the 3rd-straight session despite trading to a high of 16.32 shortly after the open. Lower resistance at 16.50-17 was challenged but held. A close back above the 17.50 level would be a bearish development with risk towards 19.50-20.

Upper support at 15.50-15 was recovered on the late day fade to 15.02 afterwards. A close below the latter and the 200-day moving average would be an ongoing bullish signal but with more important recovery levels at 14-13.50 and the 50-day moving average.


Market Update for 2/5

Bulls Extend Winning Streak to 3-Straight

5:00pm (EST)

The market was higher for the 3rd-straight session on Wednesday as private sector employment soared with additional better-than-expected economic news keeping the bullish sentiment intact. The reported number of coronavirus cases of the deadly disease continues to rise in China but didn’t dampen enthusiasm as the outbreak is still mainly contained to that country.

More importantly, there are reports of some success in treating the virus using existing drugs along with U.K. scientists reporting a significant breakthrough on a vaccine. The major indexes look poised for higher highs but volatility remains elevated and the pullback in Tech off the high was a slight concern going forward.

The Dow soared 1.7% with the late session high tapping 29,308. Prior and lower resistance at 29,000-29,200 was cleared and held with a move above the all-time high at 27,373 signaling additional strength towards 29,400-29,600.

The Russell 2000 rose 1.5% after testing a late day high of 1,682. Near-term and lower resistance at 1,670-1,685 was cleared and held with a close above the latter getting the 1,700 level back in focus.

The S&P 500 surged 1.1% following the afternoon run to 3,337 while missing a new all-time high by a quarter-point. Current resistance at 3,300-3,325 was cleared and held with upside potential towards 3,350-3,375 on continued closes above the 3,335 level.

The Nasdaq was up 0.4% after trading to a 2nd-straight all-time high of 9,574. Fresh and lower resistance at 9,550-9,600 was cleared but held with a move above the latter signaling momentum towards 9,650-9,700.

Energy led sector strength after zooming 3.8% while Healthcare and Financials rallied 2%. Real Estate was the only sector laggard after slipping 0.1%.

Virgin Galactic (SPCE) Calls Return 650%!

Virgin Galactic (SPCE, $17.21 down $1.91)

SPCE April 15 calls (SPCE200417C00015000, $4.80, down $0.70)

Entry Price: $0.50 (1/7/2019)

Exit Target: $7.50 (closed half at $2.50 on 1/15/2020)

Return: 650%

Stop Target: $5 (Stop Limit)

Action: The Stop Limit at $5 tripped on Friday’s continued weakness in the stock.


Sector Outlook: Industrials Select Sector Spider (XLI)

The Industrials Select Sector Spider (XLI) was higher for the first time in 3 sessions despite kissing an intraday low of $81.18. Current and upper support at $81-$80.50 was challenged but held. A close below the latter and the 50-day moving average would be an ongoing bearish development with additional risk towards $79.50-$79 and the December low at $79.26.

Near-term and lowered resistance is at $82-$82.50. Continued closes above the latter and the recent all-time high of $82.66 would be a renewed bullish signal for a run towards $83.50-$84.

RSI has leveled out with support at 50. A move below this level would signal additional weakness towards 45-40 with the latter representing the early December bottom. Resistance is at 55-60. A move above the latter would signal additional strength towards 65-70.