Janet Yellen’s outlook for interest rates is giving the market another nudge higher this morning, but earnings season is on the horizon and more likely to determine the market’s next 5-10% directional move. From a chart perspective, the earnings will have to impress to continue the market’s creep higher as high expectations are already baked into current prices.
Today’s three big stock charts look at Delta Air Lines, Inc. (NYSE:DAL), PNC Financial Services Group Inc (NYSE:PNC) and JPMorgan Chase & Co. (NYSE:JPM) as earnings season gets under way and their charts are already suggesting what the market’s response to their earnings reports may be.
Delta Air Lines, Inc. (DAL)
Delta shares are trading about 2% lower after disappointing earnings and outlook from the company ahead of the open this morning. DAL stock ran higher into the announcement as traders expected better than received results.
- Delta shares had traded deeply into overbought territory ahead of the earnings announcement. This typically limits a stock’s ability to rally, even after a good report, and increases the chances that DAL stock will see a “sell the news” plunge.
- Support for Delta Air Lines stock does lie at the $51.36-level, as the stock’s rising 50-day moving average is trending higher from this price.
- Last quarter’s earnings results selling lasted only 2 days as the company still represents one of the best in its sector, meaning that long-term investors are still taking opportunities to “buy the dip” in DAL.
PNC Financial Services Group Inc (PNC)
Regional banks have had a rough ride as interest rates have bounced around, affecting the market’s outlook for these interest-rate-sensitive banks.
PNC will report its results ahead of the market open on Friday, with technicals that are set-up for a potential selling spree, regardless of the results.
- PNC Financial stock has been in rally mode and is currently sitting in technically overbought territory. This suggests that the potential for a “Sell the news” event after the earnings announcement is high.
- The regional bank stock is trading in a tighter range as earnings approach and the traders that have bid shares higher are backing-off their optimistic trades. This suggests that low volume trading may affect PNC stock’s post-earnings move.
- Support for the stock is in place at $121.50 from the rising 50-day. This will be a point where we should see chart traders come in to buy the dip on any earnings-related selling.
JPMorgan Chase & Co. (JPM)
Another bank reporting results on Friday morning, shares of JPMorgan Chase have been on a run as we saw the stock rally from $86 to $94 in just a few weeks. JPM stock has leveled-off since then as earnings approach.
- The recent pullback is bullish for the potential of a post-earnings rally as the stock has fallen slightly out of its overbought readings.
- Significant chart support at $90-$92 range, which will draw traders in to support JPM stock on any unexpected earnings surprises.
- The stock is overbought from a longer-term monthly perspective, but also represents one of the strongest performers within the financials sector. Expect the market to continue crowding into the stock barring any real negative results.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.