Everything’s alright, or so it seems.
This market continues to climb, officially entering a new bear market.
But don’t let the headlines fool you.
We have a long way down to go.
And it’s the same old song, the Federal Reserve has yet to slash interest rates.
The economy simply won’t hold up and we will eventually see this pain in earnings for major companies like Adobe (ADBE) and Lennar (LEN) that are on my watch list today.
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Lennar Corporation (NYSE: LEN)
Earnings: June 14. After the Close.
Consensus: EPS $2.32, Revenue $7.17B.
Avg. Analyst Rating: 2.4 (Buy), Price Target $115.41.
Lennar, a major US homebuilder, is months away from this all falling apart.
I’m not going to lie; higher rates are the Achilles heel of the housing sector. It hasn’t crashed yet, may not even in the next few months. But the pain is coming. It’s the number one driver and weight on the housing market.
And I think interest rates are simply not sustainable at the moment. Every quarter, from now until rates are much lower than today, housing stocks are a must watch.
Lennar’s stock has a clear resistance just above its current price. A breakout above this gives the stock room to run higher, even if it gaps on earnings.
But failure to break this resistance this week, shares are going to slide back down to that rising support level.
It’s a broad pattern, which resembles the broad moves in the market, but we are not out of the woods in this bear market just yet.
Stay focused on what matters, and earnings will be key.
Adobe Inc. (Nasdaq: ADBE)
Earnings: June 15, After the Close.
Consensus: EPS $3.79, Revenue $4.78B.
Avg. Analyst Rating: 2.2 (Buy), Price Target $392.86.
Adobe is trying to hold onto being a leading software provider.
Shares have struggled over the past two years, suffering a similar fate to the overall market. But, it has been on a tear the past few weeks and Friday’s pop caused it to breakout of a broader resistance which will now become support.
It was in a rising megaphone pattern, but that push higher was very bullish.
We just don’t want earnings this week to erase the move. It needs to hold above that green line for you to stay bullish.
I don’t see it very likely that we get another big move, at least not on earnings, but it will set the tone for the stock the rest of the year.
So big things to watch this week even for a slow week of earnings.
That’s all for today.
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE