The largest week of earnings in more than seven years takes center stage this week as 196 of the S&P 500 companies are set to report their quarterly results. This morning got us off to a start with names like Haliburton and Hasbro providing their results to a market that was amready hyped-up and ready to go after the elections in France went somewhat as planned.
Today’s three big stock charts look at Chipotle Mexican Grill, Inc. (NYSE:CMG), Hasbro, Inc. (NASDAQ:HAS) and Apple Inc. (NASDAQ:AAPL) as they either prepare, or in Hasbro’s case, react, to their quarterly reports.
Chipotle Mexican Grill, Inc. (CMG)
A classic pattern is taking place in shares of Chipotle Mexican Grill this morning as the stock is diving 2% ahead of its earnings announcement tomorrow afternoon.
The move in CMG, “sell the rumor”. The reason, traders have seen Chipotle stock move almost 8% higher ahead of its earnings report, so they would rather sell the profits than hold out for larger profits on an earnings beat.
The good: This mornings’ sell the news action is taking CMG shares to their 50-day moving average. This trendline has been staunch support for the stock of late. The selloff is also allowing shares to move out of oversold territory. This means that good earnings news for Chipotle will have more overhead room to run without becoming too overbought.
The bad: It’s hard to find a bad in the charts. If the 50-day is broken. then CMG shares will have a clear path to $450, which is the site of significant chart support back to 2012. That’s right, I typed 2012!
What to watch? Buyers coming in tomorrow or later in the afternoon on Monday will signal that the technical crowd is favoring a good earnings call. Let’s face it, this stock hasn’t been able to deliver as it used to. One good earnings call will mean a considerable move higher for Chipotle stock.
Hasbro, Inc. (HAS)
According to the earnings report from Hasbro, toys are making money. The company beat expectations on their top and bottom line, resulting in a 5% surge in the stock price this morning. This is something that traders should be able to get excited about, no?
Well, the reversal that our algorithms picked up this morning is actually a little concerning as there is a clear “sell the news” trade going on with HAS that could result in a black mark against this earnings win.
The $100-level has been very sensitive to the traders as we’ve seen this price hold Hasbro shares at-bay. Interestingly, over the last two weeks, as interest rates have fallen, this strong dividend payer (2.2%) hasn’t attracted investors the way it used to. This is somewhat concerning on the technical side.
Shares of HAS are threatening to break back below $100, which will turn the target back to $96. This is where the vacillating 50-day moving average is, which causes additional concern. Failure for Hasbro stock to make a consistent showing above the $96 to $100 range will have the technical traders dropping shares to move on to other tradable opportunities. In short, a break of that $100 over the next few days should have you looking elsewhere.
Apple Inc. (AAPL)
Apple is the stock we love to hate here, but its attracting the right kind of attention ahead of earnings.
Headlines have been stuffed with rumors regarding the development of new features for the iPhone just in time for APPL’s upcoming earnings announcement. The company is set to provide results on their operations on May 2 after the close.
The headline activity for Apple shares is going through the roof just as the stock is building a little head of steam on the chart.
This morning’s buying puts AAPL shares back above their 50-day moving average, which is trying to transition back into bullish mode. In many past quarter’s, the same pattern has taken hold of the stock ahead of earnings to form a perfect “buy the rumor” rally.
The same case appears to be building here as a move above $145 will start building momentum on Apple shares, drawing the attention and trade dollars of shorter-term traders.
Watch for the break of $145 to target a quicker move to $150 where AAPL stock will hold in a pattern until earnings. Remember folks, the earnings announcement only offers hints of the upcoming product lines, so any speculation on facial recognition and other gadgets won’t be released until the company’s next product unveil. This means that anyone buying on these headlines may be disappointed at earnings and choose to “sell the news”, that’s what we’ll be watching for.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
