Square (SQ) Small Business Exposure – April 8th, 2020

S&P 500 Market Outlook: Neutral

Bearish Trade: SQ $50.47 – Technology

The bearish DailyPlay for Wednesday, April 8th Square (SQ). As part of the Consumer Discretionary sector (XLK), SQ has rallied off its lows but recently rejected at its $52 resistance with downward pressure from consumer spending slowdowns. 

Fundamental View

  • SQ has provided earnings guidance between -$0.04 and -$0.02
  • Larger exposure to small businesses, restaurants and physical retail vs. online
  • BofA Credit Card data shows a 20-65% decline in spending in the past month for SQ merchants categories. 
  • Reports earnings on May 6, 2020 (29 days)

Technical View

  • Rejection at $52 resistance level, suggest further weakness towards $44 gap fill
  • SQ has been in a 6M bearish trend for the past month
  • Neutral relative strength score (5 out of 10)
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