Our Head of North American Research, Gary Christie gives us a look at some potential earnings movers for the week of Oct 14th as we head into earnings season.
The S&P 500 has broken back above its 20 and 50-day moving averages inside a symmetrical triangle continuation pattern. Our outlook remains neutral inside the pattern. The 200-day moving average maintains support at the 2855 level. A break to record highs above 3028 would signal a resumption of the prior uptrend.
On a longer term weekly chart, the S&P 500 is trading inside a broadening wedge bullish continuation pattern. A breakout to the upside out of the wedge pattern to new record highs would have strong bullish implications. We maintain a neutral bias below record highs with support seen near the 20-week moving average around 2820.
The VIX , a measure of market volatility, has turned bearish after breaking below its 50-day moving average, a bullish short term signal in the S&P 500.
Here are some stocks on our radar this week ahead of earnings.
On Tuesday, Interactive Brokers (IBKR) is awaited to post 3Q EPS of $0.495 vs. $0.50 the prior year on revenue of $469.0M compared to $439.0M last year. The Co is a worldwide broker and they just rolled out IBKR Lite at the beginning of October, it allows for unlimited, commission-free trading on US exchange-listed stocks and ETFs with no account minimums or inactivity fees. Looking at a daily chart, the RSI is below 50. The MACD is below its signal line and negative. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at $50.55 and $48.76). We are looking at the final target of $40.70 with a stop-loss set at $49.60.
On Wednesday, Netflix (NFLX) is anticipated to release 3Q EPS of $1.05 vs. $0.89 last year on revenue of $5.3B compared to $4.0B the year before. As the streaming wars rage on the Co may actually be in a stronger position than they are given credit for as Apple TV Plus loses ground. The current analyst consensus rating is 31 buys, 10 holds and 4 sells, according to Bloomberg. From a technical point of view, the RSI is above its neutrality area at 50. The MACD is negative and above its signal line. The MACD must break above its zero level to call for further upside. Moreover, the stock is trading above its 20 day MA ($274.35) but under its 50 day MA ($289.59). We are looking at the final target of $314.60 with a stop-loss set at $254.20.
International Business Machines (IBM) is likely to unveil 3Q EPS of $2.67 vs. $3.42 the year before on revenue of $18.2B compared to 18.8B the prior year. The Co was ranked as the worldwide market share leader in Artificial Intelligence (AI) for the third consecutive year. The AI market grew 35.6% to $28.1B last year and IBM lead with a 9.2% share of the overall market as their products enable companies to integrate AI into their applications to make more accurate predictions, automated decisions and processes. From a chartist's point of view, the RSI is below 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is trading under its 20 day MA ($142.39) but above its 50 day MA ($139.41). We are looking at the final target of $131.60with a stop-loss set at $143.60.
Alcoa (AA) is expected to announce 3Q LPS of $0.398 vs EPS of 0.630 the prior year on revenue of $2.6B compared to $3.4B last year. The Co manufactures metal products and they are going to be recording a $37M restructuring charge for employee severance and termination costs for the 3Q, according to Bloomberg. Technically speaking, the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at $20.52 and $19.57). We are looking at the final target of $15.70 with a stop-loss set at $20.20.
Happy Trading ,