Two big cap companies will be reporting after the close with Microsoft and Alphabet slated to report their earnings.
- Microsoft EPS is expected at $2.19 on revenues of $49.05 billion. Microsoft is currently trading at $273.30
- Alphabet EPS is expected at $25.91 on revenues of $68.11 billion. Alphabet is trading at $2418.50
Looking at the price action of Microsoft, the post pandemic low bottomed at $132.52 on March 20, 2020. The high price extended up to $349.67 on November 22, 2021 for an oversized gain of 163.86% over the 14 month period.
Since then, the price has corrected lower by some 22.78% to the low price reached on March 10 at $270.00. The current price is trading just above that level and $273.30.
Technically, the move to the upside off of the March 10, 2022 low moved up to $315.95 reached on April 4. That move briefly took the price above its falling 100 day moving average (blue line in the chart above).
However momentum could not be sustained above that key moving average level, and the price has rotated lower. Failing to extend above the 100 day moving average was bearish development and contributed to the downside momentum seen since then (and indeed some of the big cap names have underperformed this month).
The low price yesterday reached $270.77. The low price today has reached $271.88.
What’s next?
Of course much will depend upon the earnings numbers and corresponding details. However, on the downside, the 38.2% retracement of the move up from the post pandemic low cuts across at $266.72. Getting below that level, and staying below would increase the negative bias technically, and open up the door for further downside potential. PS the chart also has a head and shoulder look to it. Personally, I find for every head and shoulder formation that works, there are just as many (more) that don’t. However, a move below the aforementioned levels would certainly increase the bearish bias with regard.
What would be needed to help the stock?
Looking at the hourly chart below, the falling 100 hour moving average (blue line in the chart below) currently comes in at $286.40. Getting above that level would be required to help kickstart the move back to the upside followed by a move above the 200 hour moving average at $295.54. Absent that and the sellers still hold the stronger hand.
Taking a look at Alphabet on the daily chart, the pair from the March 23,2020 low increase by 201% to the high. The high price was reached on February 3,2022 at $3037.96. The hi in February took out the November high, but only by a couple of dollars before rotating back to the downside.
The move to the downside since the all time high, bottomed yesterday at a low of 2372.53. That was a correction of 22.00% from the high. The decline is similar in scope to the Microsoft decline of -22.78%.
Looking at the daily chart, the move lower over the last few days has taken the price below the 2022 lows from January and February near $2492.97. With the current price is trading at $2403.48. A move back above that level and the March lows at $2526.89 (see red numbered circles in the chart below) would be needed to give the buyers some comfort that a low is in place.
Alternatively, on more bearish earnings or increased selling, the 38.2% retracement of the move up from the March 2020 low comes in at $2266.75. That would be the next major target and minimum retracement level for the stock given the sharp run-up from the 2020 low
Meanwhile, the largest stock indices
Indexes
Stock market indices represent an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance. The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more. Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand. How to Trade Indices Retail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs) . Each are popular ways to trade specific markets and are almost always on offer at most brokers. Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage. All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.
Stock market indices represent an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance. The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more. Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand. How to Trade Indices Retail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs) . Each are popular ways to trade specific markets and are almost always on offer at most brokers. Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage. All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.
Read this Term or moving back toward low levels into the close. The NASDAQ is now down 23% below its record high level which is similar to the declines seen in Microsoft and Alphabet going into their earnings
earnings
A company’s earnings represent its profits or net benefits as a result of its operation. Earnings are the net benefits of a corporation’s operation. Earnings can be calculated as EBIT, ie earnings before interest and taxes, and EBITDA, ie earnings before interest, taxes, depreciation, and amortization. Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share prices, while unexpectedly bad earnings can risk declines in share prices. Using Earnings to Better Inform Investment DecisionsMany analysts also use other measures such as earnings per share (EPS) as a way to compare the earnings of multiple companies.EPS is calculated by the remaining earnings leftover for shareholders, divided by the number of shares outstanding. This is a more fine-tuned measure for investors and analysts given each company has a different number of shares owned by the public. Only comparing companies’ existing earnings does not accurately indicate how much money each company has for each of its shares over a specific period. As a result, EPS is routinely used to make better-informed comparisons and forecasts. In the US, all companies are obliged to report quarterly earnings to the public, which reports on the state of any publicly traded company. These events are very monitored and important, especially for large corporations. In addition, several companies are used as barometers for the state of the overall market or US economy, lending further weight to these metrics. Ultimately, earnings are an integral element of the US stock market and ensure companies disclose their financials in ways that do not leave investors or the public in the dark.
A company’s earnings represent its profits or net benefits as a result of its operation. Earnings are the net benefits of a corporation’s operation. Earnings can be calculated as EBIT, ie earnings before interest and taxes, and EBITDA, ie earnings before interest, taxes, depreciation, and amortization. Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share prices, while unexpectedly bad earnings can risk declines in share prices. Using Earnings to Better Inform Investment DecisionsMany analysts also use other measures such as earnings per share (EPS) as a way to compare the earnings of multiple companies.EPS is calculated by the remaining earnings leftover for shareholders, divided by the number of shares outstanding. This is a more fine-tuned measure for investors and analysts given each company has a different number of shares owned by the public. Only comparing companies’ existing earnings does not accurately indicate how much money each company has for each of its shares over a specific period. As a result, EPS is routinely used to make better-informed comparisons and forecasts. In the US, all companies are obliged to report quarterly earnings to the public, which reports on the state of any publicly traded company. These events are very monitored and important, especially for large corporations. In addition, several companies are used as barometers for the state of the overall market or US economy, lending further weight to these metrics. Ultimately, earnings are an integral element of the US stock market and ensure companies disclose their financials in ways that do not leave investors or the public in the dark.
Read this Term.
www.forexlive.com
George is Digismak’s reported cum editor with 13 years of experience in Journalism