Good morning! Benzinga.com has been
Good morning!
Benzinga.com has been reaching out lately to mavens to comment on stocks about to release earnings. Yesterday”s request was for BABA, which reported yesterday and is indicated to gap down this morning. My comments are below. Today”s request is for GOOGL and AMZN, also below. That”s all they get, they”re not a subscriber. But you are, so ask away…
The decline from November”s peak has extended into January. It is a classic downtrend, defined as a series of alternating lower lows and lower highs. Earnings are no being greeted from a position of strength.
// Meanwhile, January”s price action has formed an “inverted Head &Shoulders.” The pattern often reverses the trend, but only temporarily. Measurements of this pattern indicate that an initially favorable knee-jerk reaction up to the 108 area would be vulnerable to reversing back down. Maybe earnings impress enough for the blip-up, before attention turns to recent news of China”s government meddling in BABA”s operations.
// Not all Head &Shoulders patterns reverse the trend, not even temporarily. Extending down first should test 92.50. Still holding 92.50 through the first hour would likely react up to 97 or 100 before the downtrend resumes.
AMZN — Last week”s bounce peaked just shy of reversing momentum back up, but it might have created a buffer to help absorb a negative knee-jerk reaction down. The 55-point drop since November rallied 30 points last week until testing the drop”s last relative high around 315. Recovering it before earnings would have greeted the news from a position of strength. At least holding above 302 since then has avoided reversing momentum back down, but an initially favorable reaction must exceed 320 to actually reverse the trend back up. Greeting the news from under 302 or 296 could easily resume the last downleg which would next target 263.
GOOGL — The 79-point drop from November bounced back 55 points into last week”s high. Its prior high was tested, but held. The 40-point reaction down since then may be only defensive posturing, constructive pessimism which is potentially bullish from a contrarian perspective. But greeting earnings from under 502 would be vulnerable to reacting down sharply.