U.S. equities succumbed to some selling pressure on Thursday, resulting in the worst one-day loss in two weeks.
There was no specific catalyst for the decline, just a nagging realization that corporate earnings growth isn’t that great. In fact, it downright sucks, with the first quarter set for the worst performance since 2009, marking the fourth consecutive quarter of falling profitability.
A number of high-profile names have missed expectations and have been punished, including Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Netflix, Inc. (NASDAQ:NFLX)
The loss of faith is creating a number of opportunities on the short side. Here are three charts to watch: Boeing Co (NYSE:BA), Procter & Gamble Co (NYSE:PG) and The Coca-Cola Co (NYSE:KO).
Boeing Co (BA)
BA shares look vulnerable to a pullback here after stalling — for the second time in the last two months — at its 200-day moving average near $134. A test of support near $126 should precede a decline to $122 and below. The stock looks to be in the grips of a large head-and-shoulders reversal pattern going back to 2013.
The company will report results on April 27 before the bell. Analysts are looking for earnings of $1.82 per share on revenues of $21.43 billion. I’ve recommended the May $128 BA puts to my Edge Pro subscribers.
Procter & Gamble Co (PG)
PG looks ready to drop out of a tight, upwards-tilted consolidation pattern after being turned away, once again, from resistance near $83. Watch for a drop to the 200-day moving average below $77.
The company will report results on April 26 before the bell. Analysts are looking for earnings of 82 cents per share on revenues of $15.8 billion. I’ve recommended the May $80 puts to my Edge Pro subscribers.
The Coca-Cola Co (KO)
KO shares have been hammered since the company reported a slim earnings beat of 45 cents per share on $10.28 billion in revenue. The top-line result was a bit ahead of expectations, but was down 4% from last year. Currency headwinds remained a drag, pulling down global volume growth to 2%.
Shares have broken below the 50-day moving average for the first time since February, setting up a test of the 200-day moving average that was crossed back in October.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
