Watch XLC, XLY For Notable Earnings Next Week (28 Oct To 01 Nov)

On Thursday (24 Oct), we saw the S&P 500 Consumer Discretionary sector was a top performer, gained 3.24% thanks to Tesla (TSLA) after its positive earnings which have the stocks continued to run on Friday (25 Oct) as well.

In the chart below, you can see that there are five of the magnificent seven stocks reporting their earnings next week and they have significant (more than 10%) weightage in their respective sectors.

In this article I will be sharing the pattern on how I think the earnings of big names could impact their respective sectors.

S&P 500 Consumer Discretionary Sector Gained +0.31% As Tesla Rally Continue

On Friday, we saw that Tesla gained more than 3% and helped the consumer discretionary sector to also close +0.31% higher, and we are also seeing Amazon contributing +0.80%, and we can see than there is a significant decline from McDonald due to the e-Coli incident, though settled, it still remain an impact.

Hence, I believe it is worth looking at the S&P 500 Consumer Discretionary sector next week as we expect $Amazon.com(AMZN)$ earnings on 31 Oct after the market close.

Amazon Earnings Might Help XLY To Gain Higher Next Week (28 Oct to 01 Nov)

If we were to look at Amazon from the technical analysis, AMZN is trading comfortably above the short-term and long-term MA, and we have a potential bullish MACD crossover forming if AMZN continue to trade higher on Monday (28 Oct) before its earnings release on 31 Oct).

On the MTF (multi-timeframe) side, we are also seeing a strong uptrend given as there is positive momentum noticed in AMZN stock price movement recently.

S&P 500 Communication Services Gain +0.25% On Friday (25 Oct)

As we can see that communication services (XLC) ended with +0.25% higher as we see positive gains from names like $Meta Platforms, Inc.(META)$ $Alphabet(GOOGL)$ .

These two names will be reporting their earnings next week on 29 Oct and 30 Oct respectively, with GOOGL gaining 1.57% on Friday (25 Oct), While investors would be focusing on AI Growth and Google Cloud Revenue in its upcoming earnings, we need to understand how the market is reacting to GOOGL stock price prior to its earnings release.

GOOGL Investors Buying Sentiment Is Back

If we looked at how GOOGL have been trading over the past week, we can see that MACD has shown a bullish crossover, then we see buying strength came back and start to increase.

Using the 4 hours chart, we will be able to see how the buying volume stacked up and also help GOOGL stock price to move higher, we might see some sideway trading on 28 Oct before GOOGL earnings, but that might be a good chance to look at this stock.

And I believe the gain from GOOGL earnings should help to push XLC higher.

Other Sectors Worth Looking - XLK

There are two notable stocks, Apple (AAPL) and Microsoft (MSFT) which is also worth looking at them, though their weightage on XLK is not very high, but their performance might have some significant effect on the XLK performance.

Summary

I have position in both Amazon and Alphabet as I believe they should be benefitting from the AI wave, as demand for infrastructure service and software from these two companies cloud should help them to gain a strong stock price when they report their earnings.

In order to take advantage of the gains that might be helped by these notable names, I would think that we can look at $Communication Services Select Sector SPDR Fund(XLC)$ and $Consumer Discretionary Select Sector SPDR Fund(XLY)$ next week when trading start on Monday (28 Oct).

Currently these two sectors are in the improving quadrant, so there is room for them to move towards the leading quadrant with the notable earnings gains.

Appreciate if you could share your thoughts in the comment section whether you think XLC and XLY would continue to perform when we have notable earnings from these 2 sectors.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.