Market condition

Each time last week when the stock market bears took over they were whacked as the market bulls quick regained control. The performance on Friday was quite impressive but does the technical outlook now favor even further gains?

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Now is a time when it is hard to be a long-term stock investor.

There is a primary task for all investors: Prepare for that time when emotions fairly scream, “Sell!” That gut feeling comes at exactly the wrong time to sell (and at exactly the right time to buy). Importantly, that scream does not come from exasperation or a feeling that, “I cannot take it anymore!” Instead its cause is the certain belief, supported by everything being written, that the worst is yet to come.

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McDonald’s (NYSE:MCD) reported a strong quarter Q3 beating consensus expectations, with revenues at $5.37 billion and earnings at $2.10 per share. Global comparable sales increased by 4.2%. The company’s long-term goal is for 95% of McDonald’s restaurants to be owned by franchisees and this is expected to be completed by the year 2021. This strategy has helped the company cut costs and thus improve margins, and consequently, their earnings. The company is expected to continue its strong performance for the 4th Quarter and finish the year strongly.

We estimate Delivery Sales to reach about 8.6% of Total Revenue as of 2021. This is on the back of the assumption that Delivery will be available in about 50% of the Total stores and it will contribute nearly 17% of the Revenue from that store. Thus, according to our estimates, Delivery Sales would be contributing approximately 9% of overall revenue by 2021.

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Talk of robots taking over Wall Street has accelerated - in boardrooms, on trading floors, on Twitter, and in Davos. However, while the impact of technology on Wall Street should not be understated, humans remain firmly in control.

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Dow Jones Technical Forecast

The Dow Jones is narrowly beneath record levels after gapping lower at Friday’s open. Still, the Industrial Average mounted a recovery effort as the session progressed as it looked to retake the 26,945 level. In the week ahead, the Average will have to surmount the prior highs around 26,945 and Wednesday’s high of 26,972 if bulls are to continue the journey higher.

On the other hand, the Dow Jones enjoys nearby support around 26,705 and subsequent trendline support slightly beneath. The ascending trendline from early 2019 was broken in May and June, but its influence on price cannot be denied – as evidenced on the 4-hour chart above.

DAX 30 Technical Forecast

The DAX 30 continued its climb higher this week, remaining comfortably within its upward channel. The upper and lower bounds of the channel will look to serve as resistance and support respectively. Alongside the channel, the German Index will take note of horizontal levels at 12,740 – marking an area of confluence with the lower bound which together should stall attempted moves lower. To the topside, a horizontal trendline around 12,715 will mark an area of resistance that must be surpassed before the DAX can look to test the topside of the channel.

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Deutsche Bank’s significant opacity means that we do not know how much counterparty risk banks, non-banks, corporations, sovereigns, central banks, and municipalities around the world have to the troubled bank. Bank regulators have the power to require banks to measure their exposure to Deutsche.

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A draft of a bill has been leaked in India inclining some to believe that the Indian government is considering prohibiting the use of cryptocurrencies in the country.

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With the Fed having locked in a rate cut, the question now is: What happens in the months to come? Is this simply a one-off, or is it indeed the start of a new easing cycle?

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All crypto businesses in Germany will have to acquire a Federal Financial Supervisory Authority (BaFin) license starting from 2020. The new rules are in connection with the Anti Money Laundering (AML) regulations that soon will come into force in the Federal Republic.

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This summer, some of the world’s biggest companies quietly abandoned one of the key tenets of US capitalism for the last half century or so – the primacy of shareholders, or the idea that companies primarily exist to serve the needs of shareholders.

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