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The Theme Of Earnings Season: Buy The Dogs And Sell The Stars

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The Theme Of Earnings Season: Buy The Dogs And Sell The Stars

Did you miss today's PreMarket Prep? Here are some of the highlights from the show.

Buy The Dogs, Sell The Stars

Co-host Dennis Dick noted a trend he's observed this earnings season.

"The theme is that [the market has] been buying the dogs and they've been selling the stars on these earnings reports, despite whatever the earnings say," he said. "Look at Seagate Technology PLC (NASDAQ: STX) as one of your stars. They absolutely murdered that stock. And then you can look at Twitter Inc (NYSE: TWTR). Twitter is one of your dogs, and they bought it. The reason is they're just buying stocks that have been weak going into earnings, and they're selling stocks that have been strong going into earnings."

He also noted Under Armour Inc (NYSE: UAA) GNC Holdings Inc (NYSE: GNC) and Ford Motor Company (NYSE: F).

Paul La Monica, digital correspondent for CNNMoney, agrees.

"I think it's definitely going to be worth watching how some of these high-tech momentum stocks in particular do with earnings coming out after the bell today," he said, noting Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN) and Facebook Inc (NASDAQ: FB) are all due to report earnings in the coming days (Alphabet and Amazon are after the bell on Thursday). "But is it the case that with high expectations come dire consequences, even if you beat, if the guidance isn't good enough or the magnitude of the beat isn't strong enough." Listen to the full interview with La Monica here.

Key Technical Levels

Under Armour: $22.34 is the major number on the upside, as it's the highest level it has traded at since it was rocked after its Q1 report. There's a huge gap or void in price until $28.74. Note the multiple highs in the $22 handle in February before it broke down to new low.

Ford: Got stuffed off the open two pennies shy of Wednesday's high at 11.68. It's currently just below the multiple highs in the $11.70 areas from late March. There's multiple lows in the $11.30 and $11.40 handles that should provide support.

Seagate: Is showing signs of life. It matched Wednesday’s panic low of $41.78. It's hard to find resistance, as Wednesday's high is not until $44.86. Major air on the downside if the low is taken down to $38.00 to fill price gap from last report.

American Airlines Group Inc (NASDAQ: AAL): Matched the April 11 low at $42.41 off the open and on the rebound. Hard to find resistance, as it has a huge gap to fill up to Wednesday’s low of $46.24. 

United Parcel Service Inc. (NYSE: UPS): Got hit off a good report and matched the April 21 low, reaching $105.58 and rebounding. It's finding resistance just above the close at $107.620.

Upcoming: On Friday's Show

Friday we'll be joined by Michelle Krebs, senior analyst at AutoTrader, who will break down auto earnings.

How To Listen And Watch

PreMarket Prep is a daily trading ideas show with a focus on pre-market volatility and technical setups. You can listen live and chat with our hosts, guests and listeners every morning from 8–9 a.m. ET here or on YouTube Live. You can listen to the podcast on iTunes, Soundcloud and Stitcher. The full recording of today's show is available below.

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