U.S. stocks saw moderate gains for the week as Wall Street digested a slew of generally positive quarterly earnings reports amid economic data.
A string of notable companies, counting Merck, Bank of America, Netflix, Goldman Sachs, Morgan Stanley and UnitedHealth Group, stated better-than-predictable first-quarter earnings report, boosting prices of those stocks.
Expectations for this earnings season are high. The most recent data from Thomson Reuters showed that the S&P 500 companies’ blended earnings in the first quarter of 2018 are predictable to rise by 20 percent year on year, while the revenues are forecast to increase by 7.5 percent.
So far, the earnings season is off to a good start. Of the 26 companies in the S&P 500 that have stated earnings to date, 70 percent have stated earnings above analyst expectations. This is above the long-term average of 64 percent.
In addition, 76.7 percent of companies have stated revenue above analyst expectations. This is above the long-term average of 60 percent.
However, the rising Treasury yield weighed on the market later this week. The 10-year Treasury note yield on Thursday broke above 2.9 percent, a level that sparked a correction in the U.S. stock market earlier this year, and on Friday it rose to about 2.96 percent, notching the highest level since 2014.
Shareholders also kept a close eye on the Federal Reserve’s Beige Book. According to the Beige Book released Wednesday afternoon, economic activity continued to expand at a modest to moderate pace across the 12 Fed Districts in March and early April.
Business activity grew at a solid clip in New York State. The headline general business conditions index, at 15.8, remained firmly in positive territory, although its seven-point decline from its March level pointed to a somewhat slower pace of growth.
For the week, all three major indices posted moderate gains, with the Dow, the S&P 500 and the Nasdaq going up 0.4 percent, 0.5 percent and 0.6 percent, respectively. (Source: Xinhua)
Top Pick for Monday: UnitedHealth Group Incorporated (NYSE: UNH)
UnitedHealth Group Incorporated (NYSE: UNH) has grabbed attention from the analysts when it experienced a change of -0.30% in the last trading session to close at $235.06. A total of 2,809,095 shares exchanged hands during the intra-day trade contrast with its average trading volume of 3.98M shares, while its relative volume stands at 0.71. Relative volume is the comparison of current volume to average volume for the same time of day, and it’s displayed as a ratio. If RVOL is less than 1 it is not In Play on this trading day and Investors may decide not to trade it. If RVOL is above 2 it is In Play and this is more evidence Investors ought to be in the name. When stocks are *very* In Play one can see a RVOL of 5 and above. The higher the RVOL the more In Play the stock is.
Day traders strive to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures, and options are traded as well), usually leveraging large amounts of capital to do so, therefore they trade on Stocks in Play. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. Most company stocks have very little volatility. They generally move extremely slowly and they only produce big price swings when the company produces good or bad trading results, which may only happen a couple of times a year at best.
In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). If a stock does not have good liquidity then it may take some time before a broker is able to negotiate a deal to buy or sell a stock and the broker may not be able to get the sell or buy price that the trader is looking for. This is a problem for day traders and it could mean the difference between a profitable and non-profitable trade.
Traders have different rules for what constitutes liquidity and a good guide is the volume of trades and volume of shares that are traded each day. 100,000 shares traded per day would be a minimum for most traders and some require 1,000,000.
Trading volume is a gauge of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume – ADTV). A high degree of volume indicates a lot of interest in a stock. Often, a boost in the volume of a stock is a harbinger of a price jump, either up or down.
Volatility is simply a measure of the predictable daily price range—the range in which a day trader operates. More volatility means greater profit or loss. After a recent check, UnitedHealth Group Incorporated (NYSE: UNH) stock is found to be 1.85% volatile for the week, while 2.31% volatility is recorded for the month.
The stock has a market cap of $227.42B and the number of outstanding shares has been calculated 967.49M. Based on a recent bid, its distance from 20 days simple moving average is 4.89%, and its distance from 50 days simple moving average is 4.27% while it has a distance of 10.74% from the 200 days simple moving average. The company’s distance from 52-week high price is -6.27% and the current price is 41.05% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 59.90 together with Average True Range (ATR 14) of 5.48.
Past 5 years growth of UNH observed at 12.50%, and for the next five years the analysts that follow this company is expecting its growth at 15.79%. The stock’s price to sales ratio for trailing twelve months is 1.13 and price to book ratio for the most recent quarter is 4.77, whereas price to cash per share for the most recent quarter are 18.98. Its quick ratio for the most recent quarter is N/A. Analysts mean recommendation for the stock is 1.50. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.
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