The earnings season is hitting its first stride as we pass through mid-week. So far, results have been mixed as we’ve seen strong beats and misses, meaning that the stock pickers are more likely to do better this quarter.
Today’s three big stock charts look at the post-earnings charts for International Business Machines Corp. (NYSE:IBM), Netflix, Inc. (NASDAQ:NFLX) and Goldman Sachs Group Inc (NYSE:GS) and whether its time to jump on these post-earnings movers.
International Business Machines Corp. (IBM)
IBM shares are trading lower after the company posted a revenue miss and delayed their expected recovery to the fourth quarter as the company continues to develop cloud server applications to compete with peer companies. The stock is trading lower, is it a buy the dip candidate?
- IBM shares saw a little bit of buying ahead of the earnings announcement as traders appeared to think that there was a chance the company would impress. Today’s response will take the stock back below its 50-day moving average, triggering another technical sell signal.
- Depending upon the move through the day, IBM shares may break below their bottom Bollinger Band, indicating that the selloff will pick-up speed over the next week. A close below $152 will trigger this volatility selling.
- IBM stock’s 20-month moving average is sitting at $151.54. A break below this trendline will put the stock back into a bear market trend. This will likely trigger a new lower price target of $135-$140.
Netflix, Inc. (NFLX)
Once again, Netflix has impressed the street drawing in a load of buyers and giving the stock a huge one-day boost of more than 12%.
The stock is obviously one that investors would love to have in their portfolio on a longer-term basis, but is today the day to buy?
- The one-day move has taken NFLX shares well above their top Bollinger Band, suggesting that we are likely to see a prolonged volatility rally higher.
- Due to the massive move, Netflix shares are well into overbought territory. This means that we are likely to see some short-term traders take profits off of the table within the next week or so which will have the stock trade a little lower.
- Short interest ahead of the report was relatively low for NFLX, meaning that very little of the move was attributed to short covering. We’re likely to see a short-term dip as profit-takers and short sellers pressure the stock. In other words, wait for a better opportunity to get this fast mover.
Goldman Sachs Group Inc (GS)
Bank stocks are turning in a mixed bag of earnings results so far, but Goldman Sachs dropped a relatively bad report on The Street as the company’s normally strong trading business suffered last quarter.
GS stock was already trading in a neutral trend, but the coming move looks like something that intermediate-term traders may want to avoid.
- Ahead of the earnings report, Goldman shares had been pinned into a range as the stock was bouncing between its 50-, 100- and 200-day trendlines. All of these trendlines are transitioning into bearish trajectories.
- GS stock’s 50- and 200-day moving averages are preparing to execute a “death cross”. This happens when the 50-day crosses below the 200-day and is considered a bearish indicator.
- $220 has been chart support for Goldman Sachs dating back to March. The stock is preparing to break this round numbered level, which is also the site of the stock’s 10-month moving average. This will draw another round of technical traders into the pits to add to selling pressure. Bottom line is that GS is a stock to avoid for now.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
