Headlines Are Driving the Market

The Daily Breakdown looks at the current market environment as volatility remains in gold, stocks, and oil prices.

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What’s Happening?

It’s one headline after another right now, and that’s the kind of environment investors are navigating. While there is hope for peace in the Middle East, there is not yet enough conviction to believe it has truly arrived. That helps explain why we keep seeing contained, quick bounces of 0.5% to 1% in the S&P 500, only for those gains to fade into pullbacks.

That appears to be the case again today, with markets giving back some of yesterday’s gains. Cryptocurrencies are also under pressure, while oil — USO — is up 4% this morning and gold — GLD — is down 2% to 3%.

👀 S&P 500 Spotlight

While the S&P 500 only rallied 0.5% on Wednesday, a clear theme was on display yesterday as pockets within tech enjoyed a big bounce: Super Micro Computer climbed 8.2%, Hewlett Packard jumped 7.9%, Advanced Micro Devices rallied 7.3%, and Intel gained 7.1%.

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The Setup — Cintas

Cintas reported earnings yesterday, topping Wall Street’s estimates on both earnings and revenue. The stock was volatile in response, trading as high as $186.05 and as low as $173.59. In the end, shares finished the session down less than 1%, but that still left CTAS below a key support level on the chart.

For more than a year, CTAS has been rangebound, with support near $180 and resistance around $225. Its latest rally stalled near $210, and the stock pulled back into support by the end of last week. After earnings, however, shares are breaking below that floor. If downside pressure builds, the 200-week moving average could come into focus. On the upside, bulls want to see shares reclaim $180.

Cintas has strung together 16 consecutive years of gains. For a refresh on the company, check out our Deep Dive from November. 

Options

Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration. 

To learn more about options, consider visiting the eToro Academy.

What Wall Street’s Watching

CCL

Carnival Cruise will be in focus tomorrow, with the company set to report earnings before the market opens. Cruise operators like Carnival, Royal Caribbean, and c have been volatile lately, as swings in energy prices continue to influence sentiment around the group. Investors will be listening closely to Carnival’s outlook and commentary on the current environment. Dig into the fundamentals for CCL. 

IGV

Software stocks have been back under pressure, with the IGV ETF down more than 3% this week and trying to avoid its third straight weekly loss. So far, it’s down almost 10% in that stretch. Top holdings include Palantir, Microsoft, Oracle and Salesforce. Check out the chart for IGV.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.