Earnings season continues to provide both pre- and post- announcement trading opportunities from the charts. Today’s three big stock charts look at charts for Bristol-Myers Squibb Co (NYSE:BMY) and Visa Inc (NYSE:V) as both companies’ stocks are seeing strong technical reactions to their earnings. In addition, we’ll check in on the chart of Fiserv Inc (NASDAQ:FISV) ahead of their earnings announcement Wednesday after the close.
Bristol-Myers Squibb Co (BMY)
Shares of Bristol-Myers Squibb shot more than 12% lower after news that the company would not be moving forward with an accelerated regulatory pathway for a combination of Opdivo plus Yervoy in first-line lung cancer in the U.S. BMY shares fell another 5% ahead of its earnings announcement, which followed the initial drop.
Bristol-Myers’ earnings report, which missed expectations and included lowered guidance from the company, was almost lost in the massive decline that BMY shares had already seen, allowing the stock to rally from an oversold situation to their current price of $51.
Now, Bristol-Myers shares are facing technical resistance from the charts as the $51- to $52-level has held as both support and resistance for Bristol-Myers in the past.
In addition, volume on BMY shares took a drop last week, indicating that buying interest in the stock died-off as the week ended. This suggests to our charts that the stock may see a vacuum left behind by a lack of buyers that will easily be filled by short-term fast-trading sellers.
Any selling pressure at this point should be easily able to turn BMY shares lower with a target of $46.
Visa Inc (V)
Visa shares surged higher last week as the company beat expectations and raised their guidance, despite potential foreign exchange headwinds. The number was well received as V stock jumped more than 5% to new highs.
Visa shares are now breaking through to new all-time highs with investors and traders chasing them higher.
The one-day rally in Visa rang the overbought bell, indicating that we are likely to see some selling pressure hit V stock on any market weakness. This is since the traders will 1) look to cash in some profits and 2) look for an opportunity to buy the shares back at a lower price.
In addition, Visa stock broke above its top Bollinger Band on Friday’s rally. A very key point that the traders will watch is V stock’s ability to remain outside of this band in order to gauge the likelihood of a continuation of the rally. A break back below, which we see as likely, will turn a short-term selloff into a buying opportunity.
This sets up a potentially easy play for Visa chart watchers.
- V stock spent a number of weeks consolidating at the $83.50-level in October and November
- The stock’s 20-day moving average is currently sitting at $83.78
- A move to $83 would bring the stock back with the mean reading of its RSI, indicating that the shares were once again a relative “value”
Fiserv Inc (FISV)
Fiserv announces their earnings later this week as the company’s stock moves into a must-win situation with its chart.
Since Jan. 12, shares of FISV have dropped by more than 5%, putting the stock in position to benefit from its 100- and 200-day moving averages. These trendlines are currently housed at the $104 price level.
A similar combination of these trendlines in December provided support for Fiserv stock and allowed it to rally from $103 to $112 over a month, but the situation is a little different this time around.
Currently, FISV shares’ 50-day moving average is hovering above the stock at $107.50 and has been in the process of transitioning into a bearish pattern. This has the potential to add some resistance to any rally that may happen after the stock’s earnings announcement.
From a bullish perspective, Fiserv stock did just hit an oversold reading from its short-term RSI, which could help the shares bounce a bit ahead of the earnings announcement. The bad side of that is that we tend to notice stocks that see this type of setup ahead of earnings tend to see a “sell the news” reaction to their earnings results more often.
The latter of these situations could break support for Fiserv by moving below the 100- and 200-day moving average, which would increase selling interest from the technicians that are watching the stock test these important trendlines.
Bottom line for the FISV bulls is that this earnings announcement may be worth sitting on the sidelines for as the stock’s downside risks appear to outweigh the upside potential.
As of the time of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
