Mega-Cap Earnings: Winners AMZN/GOOG/LLY, Losers META/MSFT
The busiest week of the quarter, and perhaps of the entire year, has concluded. Out of the six mega-cap companies that reported earnings, four beat expectations and saw their stocks rally. The net weekly moves were significant: $Eli Lilly(LLY)$ +4.5%, $Apple(AAPL)$ +2.9%, $Amazon.com(AMZN)$ +8.9%, and $Alphabet(GOOG)$ $Alphabet(GOOGL)$ +8.2%.
Conversely, two stocks failed to hold their ground: $Microsoft(MSFT)$ closed -1.1% for the week, and $Meta Platforms, Inc.(META)$ cratered -12.2%. Overall, from an earnings standpoint, the balance was positive, especially considering $NVIDIA(NVDA)$ and $Tesla Motors(TSLA)$ also rallied, as shown in the heatmap for the last five trading days:
During the last few weeks, I have been bullish on AAPL and TSLA, and I highlighted the constructive price action showing progress in $Amazon.com(AMZN)$ . Last week, I also emphasized the good opportunities provided by individual names, such as LLY, which moved into the “improving” quadrant on our momentum map (similar to AMZN and $Netflix(NFLX)$ ).
NFLX, which I analyzed technically and fundamentally last Wednesday, closed the week up +2.7%. On the bearish side, two weeks ago I highlighted the high chances for a bearish reversal in $SPDR Gold Shares(GLD)$ and $iShares Silver Trust(SLV)$ ; both securities subsequently crashed more than -10% from their highs. Another successful case was $Palantir Technologies Inc.(PLTR)$ , which printed a solid setup as highlighted last weekend, with the stock soaring +8.6% during the week.
Earnings reports can bring major surprises that override technical setups, which happened with META. Despite reporting a very negative surprise, it is worth noting that Meta took a $16 billion tax hit as a large one-time charge on deferred tax assets. Meanwhile, revenue rose above forecasts, and the company provided an upbeat outlook for the current quarter.
Meta and NFLX offer great tests for those who have been waiting for a market decline so they can buy cheaper. Both companies presented strong revenue growth shadowed by one-time hits driven by taxes in different countries, respectively. We will assess the price action below using technical indicators and key price levels. Anyway, let me ask you: Will you be ready to buy the SPX when it finally falls? Are you considering buying Meta or Netflix, given their strong fundamentals and the 10% discount provided by the tax-related sell-offs? These two companies are a great test, and to be kindly clear, as I receive questions from tens of people every week, this is a reflection for the entire community.
Of course, having the setups is key so that we don’t try to “catch a falling knife.” For that reason, I mentioned last weekend that NFLX was close to a confluence zone of supports, a thesis that is being validated so far.
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