Earnings Season Ahead
What to Look For and How to Play It!
The earnings season begins this week and will kick into a much higher gear next week. There will plenty of opportunities provided for trading perspectives before and after earnings as further information becomes available.
The “Trump rally” provided for a strong Q1 earnings season; and now, some very favorable economic reports recently will help continue to drive stock prices up, yet again. Bear in mind that the market indexes are at an all-time high due to the extended bull rally; and the Q2 season occurs in the summer, where trading normally sees lower volume on earnings performance which may mute some price fluctuation when companies report earnings.
Even so, there is a strong market directly ahead, likely to be stoked by positive earnings results. While the second quarter estimate is lower, it still should be a strong quarter, and the 4th quarter in a row that shows positive earnings momentum.
Tech Stocks Continue Rally
Sector Not Over-valued!
Technology stocks have been having a tough time of it in the past few weeks, despite the fact that many of them are sound, providing excellent earnings results with incredible profitability and are providers of the future direction.
Even though tech stocks are, in the main, consistent out-performers, many hedge fund managers, investors and money managers see the tech sector as being over-valued and too expensive – alluding to a much ill-perceived idea that it resembles the 2000 dotcom bubble.
Many of the major tech names have suffered such as Microsoft, Apple, Facebook, Micron Technology, but Friday saw resurgence with the tech-laden Nasdaq Composite (COMP) moving higher on Friday, up 1.1% on the day.
Looking at some of the back-facts, internet stocks have historically outperformed in the third quarter - the First Trust Dow Jones Internet Index Fund (FDN) -- a fund that includes many FAANG stocks among its top holdings -- has averaged a third-quarter gain of
5.34% over the past 10 years, with 70% of the returns being positive.
Innovation of new technologies has accelerated at an enormous rate over the past few years; data shows that the tech sector is the foremost leader in 2017.
There are many factors that show that there will be further exceptional upside in the near future…..
Delta Keeps Flying Higher !
Ready to Breakout Further - Earnings Due Thursday, July 13, 2017
Option Trade – Delta Air Lines, Inc. (NYSE:DAL) Calls
The growth in airlines has been fast and furious in recent years; boosted by stronger economic conditions, cheaper fuel, and plenty of industry merger and acquisition activity.
Sunday, July 09, 2017
The Transportation sector, as mentioned in the recent article “Stock Market Correction Completed!” due to multiple tailwinds, is expected to perform well in this earnings season; and the airline part is predicted to do extremely well.
There is plenty of optimism surrounding the airlines continued upward momentum which is reflected in:-
• solid earnings estimate revision activity for the airline industry,
• the outperformance of the S&P 500 Index during the April - June time-frame. While the S&P 500 Index has gained 3.3%, the industry added 10.9% in Q2, and
• commercial airlines have been enjoying their strongest price action so far in 2017.
The Atlanta, GA-based giant Delta Air Lines (NYSE:DAL), a provider of scheduled air transportation for passengers and
cargo throughout the United States and across the world, has managed to grab a huge chunk of the global market, enjoying its strongest price action so far in 2017. Delta Air Lines, Inc. (DAL) has benefited from this bullish turn, with the stock finally breaking out above stubborn resistance in the low $50s.
Delta Air Lines will kick off the airline sectors earnings season, when it reports on Thursday, July 13, before the market opens.
continue reading to get the trade......
Stock Market Correction Completed!
Looking at the data presented for the past couple of weeks, it appears that the stock market correction has happened – is now over – and the rally is set to continue, with stocks set to roar higher.
The past week saw the major indexes finally make weekly gains after an encouraging June jobs report where the Labor Department said 222,000 jobs were created in the U.S. These positive gains were also boosted by a rebound in tech stocks which helped off-set falling oil prices.
For the week, the Dow Jones Industrial Average (DJIA - 21,414.34) rose 0.4%.
The S&P 500 Index (SPX - 2,425.18) ended the week up 0.1%, whilst the Nasdaq Composite (COMP - 6,153.08) bounced back to rise 0.2%.
Although the jobs report was extremely positive, wage growth – an indicator measuring inflation -- was only up 0.2 percent which somewhat tempered the stock market reaction. This wage growth data is important in determining the future decision of the Federal Reserve in
raising interest rates once more this year.
Now, heading into the new week, watch for releases of some major quarterly reports – where Citigroup, Wells Fargo and JPMorgan Chase are all scheduled to report second-quarter results.
JPMorgan Chase & Co. (NYSE:JPM) should report a solid earnings report on Friday. Citigroup Inc. (NYSE:C), having shone in the Fed’s recent stress and capital tests, is also capable of presenting itself well. Wells Fargo & Co. (NYSE:WFC), with its recent scandals, is a sideline case.
Currently, earnings are expected to grow 6.2 percent; however, this figure seems to be understated and should be closer to 10 percent – and tech earnings may come to the fore again as the fundamentals are still apparent.
One area to consider on Monday is “cybersecurity”, a fast growing business; by 2021, it is estimated that the market size will reach $202 billion, a 65% increase from 2016.
Best of Trading,
Director of Stock Options Made Easy