The earnings season continues to feed the market with fuel, allowing the broader indices to inch higher on a daily basis. While the results have been positive, there are still a few companies that our analysis is telling us to be weary of as they’re falling into the “have not” category.
Today’s three big stock charts look at Intel Corporation (NASDAQ:INTC), Qualcomm, Inc. (NASDAQ:QCOM) and Chipotle Mexican Grill, Inc. (NYSE:CMG) as three companies that the earnings season is not providing any help for as their charts continue to warn of lower prices.
Intel Corporation (INTC)
For more than a year we’ve watched Intel struggle in a changing environment for semiconductor stocks. On a year-to-date basis, INTC shares have lost almost 3% compared to the semiconductor sector’s gains of almost 20%, putting it in the bottom decile in terms of performance. The company is set to announce earnings results on Thursday after the close, but the charts aren’t showing much hope for a rally.
- The recent jump in Intel shares represents a “buy the rumor” rally as earnings approach. This signals that the market may be getting ahead of itself by pricing excessive earnings results into INTC’s price. Any failure to impress with results will lead to a “sell the news” correction.
- The rally has brought Intel shares to their respective 50-day moving average. This trendline has been relatively staunch resistance for the stock as traders have been trading off of the clearly bearish trend.
- Volume on INTC stock is on the decline as earnings approach, indicating that the market’s interest in Intel is waning as companies like Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nvidia Corporation (NASDAQ:NVDA) are the clear market and sector leaders.
Qualcomm, Inc. (QCOM)
Another technology company that continues to struggle with the chart and technical traders is Qualcomm. The company operates in some of the same circles as INTC and it is feeling the same pressures.
QCOM shares are down more than 18% YTD and they continue to see pressure from the technicals after their earnings report last week.
- Overhead, the 50-day moving average is combining with the 100-day trendline at $56.50 — the same level that rejected Qualcomm stock last week.
- Both the 50- and 200-day moving averages are trending lower, indicating that the intermediate-term outlook remains bearish for QCOM.
- From a long-term perspective, Qualcomm has broken back into a long-term bear market trend. This indicated a target of $43 for the stock over the long run.
Chipotle Mexican Grill, Inc. (CMG)
After another Norovirus outbreak and other negative headlines, Chipotle shares are breaking lower, despite another positive earnings report.
The company estimated that it has seen a 7% decline in revenue over the last week as a result of the headline scares, but the techncials appear to indicate that CMG stock has yet to see a bottom.
- After trading above their 20-month moving average, putting it in a bull market, Chipotle shares have broken back below this critical trendline and returned to a bear market. This will increase pressure on CMG stock.
- Shares of Chipotle had already broken into an intermediate-term bearish trend in mid-June as the stock’s 50-day moving average rolled over and started trending lower. This indicates that the technical traders are increasing their selling of the shares on any rally.
- CMG stock has now broken below the October 2016 lows — the point where most investors thought that the worst had been priced into the stock. This critical chart support giving way opens the sellers to take Chipotle down to the $275 target.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
