This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
Subscribe to the Monster Stock Market Commentary and join the 2,508 subscribers getting it for FREE every day!
It will be another big week of earnings with Alphabet, Apple, AMD, and Square all reporting results.
Alphabet (GOOGL, GOOG)
Alphabet will report results on Monday, and the stock is within spitting distance of its all-time high. Analysts aren’t looking for much when it comes to earnings growth, rising by just 7% to $10.17 per share. Meanwhile, revenue is expected to climb by 20% to $37.4 billion.
The options market is suggesting the stock rises or fall just 5% from the $1,270 strike price following results by expiration on May 17. The calls have about 275 open contracts, versus only 83 open puts — not an overwhelming convincing number of contracts.
The stock is in a clear uptrend with resistance at $1,292, after that it is into all-time high territory. I feel like Alphabet never rises after results, as investors worry about costs, and it probably won’t be different this time, with share pulling back to $1225.
Apple is the headliner, and the stock has had a monster comeback in 2019 from the depth of the fourth quarter sell-off. It is still all about iPhone sales because let’s face it; the iPhone still accounts for nearly 60% of total sales. Although services are the segment everyone has focused on for growth. The one segment not mentioned enough is wearable’s. Wearable’s almost overtook the MAC last quarter, for the number generator of revenue.
Analysts are looking for a downbeat quarter, with earnings slipping by 13% to $2.36 per share, while revenue is forecast to fall 6% to $57.4 billion.
The options for expiration on May 17 suggests the stock rises or fall by 5.6% from the $205 strike price. It places the stock in a trading range of $193 and $217. The calls do have an open interest of about 12,000 contracts compared to roughly 8,000 open puts, suggesting a slight bias to the stock rising following results.
The stock is approaching a level of resistance at $209 and is currently resting on an uptrend. If the stock can rise above $209, there is room for it to rise to around $217. However, my one concern is that the RSI is starting to shows signs of a bearish divergence, with the stock reaching new highs, while the RSI is going sideways.
I think the stock has an excellent chance to trade towards $217 following results.
AMD is reporting on Tuesday as well; the Intel conference call made me wonder if AMD is taking some market share. Analysts are not looking for a strong quarter, and estimate that first quarter earnings fell by 48% to $0.06 per share. Meanwhile, revenue is seen falling nearly 24% to $1.257 billion.
The options for May 17 show the stock may rise or fall 14% from the $28 strike price. It places the shares in a trading range between $24 and $32 by the expiration date. The options suggest the stock will rise with nearly 15,000 open call contracts to just 6,400 open put contracts, indicating the stock may increase following results.
The chart shows a clear uptrend, and if the stock rises above $29.50, then it is likely to climb to around $31.50. The RSI is also trending higher.
I think we find out that AMD is capturing market share from Intel this quarter and that sends the stock sharply higher towards $32.
Square – SQ
Square –good luck with this stock. Last quarter the stock fell sharply early in the session only to regain the losses and finish higher! Analysts estimate that earnings will climb 30.5% to $0.08 per share, while revenue is expected to rise by 56% to $480 million.
The options show the stock rises or falls 9% by expiration on May 17 from the $70 strike price. It places the stock in a range of $63.50 and $76.55. The calls and the puts are nearly even with roughly 9,000 a piece.
I think the chart of Square look terrible with a descending triangle which suggests the stock falls to around $65 following results. The RSI is also trending lower suggesting the stock falls as well.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.