Earnings will take a lot of the spotlight not only on the news wire, but also on the screens of technical traders as this once quarterly event always has the potential to change the trajectory of a stock.
Today’s three big stock charts look at three companies who’s earnings results hit the tape this morning, Intuitive Surgical, Inc. (NASDAQ:ISRG), Abbott Laboratories (NYSE:ABT) and Huntington Bancshares Incorporated (NASDAQ:HBAN) and the effect of their results on the charts.
Intuitive Surgical, Inc. (ISRG)
Intuitive Surgical came out with earnings numbers that beat analyst expectations last night after the close. The company beat earnings-per-share estimates by $0.11 and handily beat their revenue target while showing 13% year-over-year growth.
Shares of ISRG are surging more than 7% this morning on the good news, sending the stock on a new bullish trajectory.
Intuitive Surgical shares spent much of the first quarter in a low volatility rally that set the tone for an intermediate-term bullish move in the future. This morning’s rally shifts this rally into high gear driven in part by upgrades from the analyst community.
This shift is marked by the stock’s rally straight through the $800-price and into new high territory. From a long-term chart perspective, ISRG stock has yet to match other long-term overbought readings, meaning this rally has room to run higher.
Helping the rally is the catalyst of Intuitive Surgical moving above its top Bollinger Band on the morning trade. This is causing an increase in trading volume as the market is now trying to catch-up with the new valuation suggested by the earnings beat.
For now, we may see shares cool as some profit-taking is likely to take place, but as long as this stock is outside of its Bollinger Band range, we expect it to continue its short-term surge.
Abbott Laboratories (ABT)
Abbott Labs beat expectations with its earnings report, but the stock’s reaction is less than ensuring as the stock is trading back into the red. There’s a reason in the charts for the price movement that suggests that lower prices are on the horizon.
First, ABT stock headed into earnings registering an oversold signal from its RSI.
Our studies on S&P 500 companies shows that a stock is more likely to rally (about 75% of the time) after their earnings release when this is the case.
The bad part, the clear majority of these rallies turn lower in very short order. Abbott Labs is following that game plan today.
Looking at the trends, Abbott Labs shares are positioned between their 50-day moving average which is overhead and the 100- and 200-day moving averages that are converging at $42-below current prices. This makes reading the next big move easy.
The rollover in the 50-day suggests that ABT shares are likely to start seeing more selling pressure.
The $42-price-level is turning critical for Abbott Labs stock. A break of this price will encroach the 100- and 200-day, while the stock would be breaking the consolidation level from early February trading. Breaking this triple technical threat level would result in a trip to $38 for this well-known health care name.
Huntington Bancshares Incorporated (HBAN)
Financials have had a mixed earnings season so far, though it is still very early. Huntington Bancshares released their earnings to a cool reception from traders.
HBAN stock sits at a dangerous spot on the chart.
Currently at $12.58, Huntington Bancorp shares are teetering on the brink of a technical breakdown that could surrender 10% to 15%.
First, HBAN stock is preparing to break below its lower Bollinger Band. This will result in a volatility selling situation that will pressure shares lower.
Second, the stock’s 50-day moving average is preparing to cross below its 100-day. While not as sexy sounding as the “Death Cross” (when the 50-day moves below the 200-day), it does confirm an intermediate-term bearish trend for the stock.
Finally, as indicated by the red horizontal line, the $12.50-price has been historical chart support as traders have used crosses above this price as a catalyst for buying and selling.
All-in-all, traders need to watch for a bounce from $12.50 on Huntington Bancorp shares. Failure for this level to hold will target a rapid decline lower.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.