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Upcoming Earnings Look To Cut Through The Market's Volatility

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Upcoming Earnings Look To Cut Through The Market's Volatility

With all of the activity happening in the market at the moment, it sometimes goes unappreciated that we are knee-deep in earnings season. Solid deliveries from market constituents like Facebook Inc. (NASDAQ: FB) and Apple Inc. (NASDAQ: AAPL) as well as a slew of positive earnings from financials like JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS) have primed the pump for more upside surprises as companies close the books on a tumultuous 2020.

Nevertheless, the recent volatility in the market has somewhat overshadowed the impact of these results as the market’s physics grapple with the activity of retail traders buying and selling stocks as a weapon against hedge funds and institutional traders.

Individual traders hoping to navigate this earnings season in the midst of the market’s current unpredictability would do well to not only look at the fundamentals of these companies, but also analyze their recent chart performance using institutional-quality software like that from trading research firm VantagePoint.

An upcoming free virtual demo of VantagePoint’s software will look to illustrate, using predictive charting and advanced A.I. technology, how traders can improve their accuracy and discover new opportunities in a seemingly unpredictable market.

In anticipation of the free demonstration, we’ll take a look at some of the big reports incoming through the remainder of the Q4 earnings delivery season and how those deliveries might stack up against the current earnings environment and overall market ecosystem.

High Expectation, Low Reward

This month’s early earnings themes will be dominated by results from major technology and biotechnology names.

This week alone will see incoming results from tech heavy-hitters like Amazon.com, Inc. (NASDAQ: AMZN), Alphabet, Inc. (NASDAQ: GOOG) and Alibaba Group Holdings, Ltd. (NYSE: BABA), all of which are set to deliver results at the close of Tuesday’s session. They are all also anticipated to post year-over-year revenue results of anywhere from 15%-50% over this same period last year.

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There are similarly high expectations for semiconductor companies like QUALCOMM Incorporated (NASDAQ: QCOM), reporting after Wednesday’s close, and NVIDIA Corporation (NASDAQ: NVDA), which is scheduled to report after the February 16 trading session.

While that may seem like cause for bullishness in the technology space, keep in mind that Apple Inc. (NASDAQ: AAPL) posted similarly strong results in its earnings announcement last week. It has since traded lower by -5%. Obviously fundamentals are not the overriding predictor for stock performance, and predictive charting could help incorporate some of that middling response for upcoming earnings.

One area that might show better post-earnings performance is the pharmaceutical and biotech space. Johnson & Johnson’s (NYSE: JNJ) Q4 earnings beat from last week put some pep in the company’s stock chart, and incoming results from Biogen Inc. (NASDAQ: BIIB) during premarket Wednesday and Bristol-Myers Squibb Company (NYSE: BMY) and Merck & Co., Inc. (NYSE: MRK) prior to Thursday’s open could do the same if they too are able to surprise on the upside.

Consumer And Retail Brands Could Surprise

Nevertheless, the fact remains that the market seems hesitant to reward stocks in high growth industries like tech and biotech, many of which have spent the latter half of 2020 outpacing the broad market by surging to new highs.

While those market leaders may be in a holding pattern following their impressive gains throughout much of last year, incoming reports from consumer stocks may carry the right combination of earnings optimism and upside potential to spur some new buying in the event of an excellent report.

Incoming results from consumer staples The Coca-Cola Company (NYSE: KO) and PepsiCo, Inc. (NYSE: PEP) are anticipated February 10th and 11th in the premarket sessions. While the former sustained a significant revenue loss through 2020 compared to 2019, both companies are coming off of solid Q3 numbers, and PEP is on pace for revenue growth in a year where not all companies can say that.

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Depending on  results and market reaction following KO and PEP’s reports, a similar story may play out in two other beverage staples set to report later in February, Anheuser-Busch InBev SA/NV (NYSE: BUD) and Ambev S.A. (NYSE: ABEV), which will deliver their Q4 number on February 25th during the premarket.

The consumer will take the spotlight for several retail names that report toward the back half of the month into March, including Walmart Inc. (NYSE: WMT) on the 18th, Home Depot (NYSE: HD) on the 23rd and Costco Wholesale Corporation (NYSE: COST) on March 4th.

These consumer stocks have all seen consolidation in the first month of the year, so they may have the potential to gain upside traction in the event of strong sales figures.

Of course, the current market is hard to anticipate, and traders should leverage whatever tools and data they can lay their hands on to get an advantage. VantagePoint’s software is designed to improve trading accuracy up to 87.4% using the same technology used by institutional traders. Click here to sign up for a free demonstration of the tools available on VantagePoint and see whether they might work for you.

 

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Posted-In: vantagepointEarnings News Penny Stocks Markets

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