The largest week of the earnings season closes out with some big names on Thursday as Microsoft Corporation (NASDAQ:MSFT), Starbucks Corporation (NASDAQ:SBUX) and Intel Corporation (NASDAQ:INTC) were among those providing their quarterly results after the market’s close.
Like so many this week, these three stocks were teetering on significant technical levels that combined with their earnings results will drive the trading activity for the next few weeks.
Microsoft Corporation (MSFT)
Microsoft shares are enjoying a bump this morning after better-than-expected results on the top and bottom line. The stock spent the past two days rallying ahead of the earnings report, breaking above their top Bollinger band.
The break above the top band is now supported by the positive earnings, which means upside volatility should accelerate as shares are now moving to new all-time highs.
In addition to the short-term acceleration pattern, momentum indicators for the share movement are now moving higher, indicating that intermediate-term strength for the shares should improve.
Slow and steady has been the pace for Microsoft as the stock is trading 24% higher over the last 12 months with lower average volatility than the S&P 500. Unlike most of the market, Microsoft was able to maintain its ascent over the past few months instead of consolidating, which has attracted longer-term investors as indicated by the increased volume.
For now, the shares are likely to take a fast track higher, but the charts indicate that the longer-term upside potential for Microsoft remains bullish.
Starbucks Corporation (SBUX)
Starbucks will trade lower this morning after the company’s earnings report fell short of expectations and the company lowered their forward-looking guidance.
Shares of Starbucks had been working toward breaking out of their recent range with momentum building towards the $60 price level, a move that will reverse this morning. Traders will see a critical test this morning with shares trading just below the $56 level.
The test comes in the form of the stock’s intermediate-term trendlines. Currently, the 100- and 200-day moving averages are trading at the $56.02 and $55.58 levels respectively. These trendlines helped to form a tradable base for the stock in early January.
A hold of this support level will indicate that the traders have an opportunity for a short-term trade from $56 back to $59. Failure to hold this intermediate support level will result in another round of selling that will target the $53.00 level.
From a longer-term perspective, Starbucks does risk passing into a long-term bearish pattern with a few more closes below the $57 mark as this is where the stock’s 20-month moving average resides. Long-term traders will be watching this as a signal to lighten-up on position in February.
Intel Corporation (INTC)
Like Microsoft, Intel provided a positive view to investors after the close as the company provided upbeat earnings and forward guidance as demand for PCs appears to be improving.
Shares have been battling with the $38 level, which they are crossing back above this morning. Intel has spent a long period lagging peer companies within the sector as the Semiconductor ETF (MUTF:SMH) has more than doubled Intel’s 12 month performance.
Nonetheless, Intel’s breakout above will improve the longer-term outlook as the company is now breaking above its 2014 highs.
Looking at the analyst recommendations for Intel, only 66% of those covering the stock have it ranked a buy. This indicates that there is a good chance for Intel shares to see upgrades from the analyst community which will accelerate the rally.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
