Another reversal higher to new highs for the major markets today as stocks continue to ride a wave of speculative trading along with sector rotations and the ongoing prospects for a tax overhaul before the end of the year.
It all adds up to a rally that still has room to move higher.
Seemingly, the only test that stocks must face over the next month is the earnings season, which somewhat kicks off this week with several companies providing their quarterly results to the market. Today’s three big stock charts look at the technicals for Domino’s Pizza, Inc. (NYSE:DPZ), PNC Financial Services Group Inc (NYSE:PNC) and Citigroup Inc (NYSE:C), all of which report their earnings report on Thursday, giving you enough time to get ready for their moves!
Domino’s Pizza, Inc. (DPZ)
Domino’s Pizza is bouncing back from a close call where the stock almost broke into a long-term bear market. Now, shares are settling into a volatility rally that is likely to see a surge ahead of Thursday’s earnings and possibly beyond.
- This morning’s stock move has broken the top Bollinger Band for DPZ indicating that the stock is seeing a surge of buying interest. These signals often linger for more than a month like in May when Domino’s Pizza rallied from $185 to $215.
- The volatility rally is going to push DPZ shares above the chart resistance level of $215, which will increase technical trader’s interest in the stock and volume buying.
- Domino’s Pizza stock moved into a bullish momentum trade pattern in the first week of trading for October. DPZ stock just hit overbought readings from the stock’s RSI, which may be cause for a slight pullback, but the momentum should carry Domino’s Pizza higher.
PNC Financial Services Group Inc (PNC)
Regional banks are playing catch-up with the larger financials, but as interest rates head higher into the year-end the regionals are picking-up steam. PNC Financial stock rallied through September only to spend the month of October trading in a range as traders wait for the earnings results.
This week’s results may hold the key for the next leg in the rally higher.
- Shares of PNC are building support at $134, which has turned into a clear point of interest of the chart traders in the market. This will help the stock on a positive result or potentially buoy the stock on any disappointments.
- The 50-day moving average for PNC Financial has shifted into bullish mode as the trendline is moving higher. Currently, the stock’s target according to this trajectory is $150.
- While the trading results after earnings over the last year have been tepid, the stock has always been trading higher, 4-5 weeks after each of the reports in the last year. Current momentum indicates that a similar situation will take place after its earnings report on Thursday.
Citigroup Inc (C)
Another, larger, financial that is reporting results on Thursday is Citigroup. The company has exceeded analyst expectations for earnings results each quarter over the last two years, though year-over-year revenue growth has been volatile.
Many investors expect that the interest rate environment will boost revenue, but C and other larger banks have also had trading results that have negatively impacted revenue.
- Citigroup shares have rallied from $67 to $76 over the last month, putting the stock firmly in technically overbought territory. The last few days have seen the stock pull back a little, though it appears that C may be set-up for a “sell the news” reaction to earnings.
- The volatility rally has the daily price distribution for Citigroup stock at more than double the normal levels. This often indicates that a stock is ready to either track sideways to begin trading more “normally” or retrace a recent rally.
- Five of the last eight earnings reports have sparked a “sell the news” correction in C shares, which offered a buying opportunity for traders to get into the stock at lower prices. Right now, our analysis suggests that $72.50 could be where the stock would find this support.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.