S&P500 is up 1% but if you scratch the surface, the market continues to witness selling at the highs. It just proves the idea that most of the events are noise and they do not set the trend in motion.
The Good news is that there are stocks breaking away from the pack and making a decisive bullish move. The time has come to keep a close eye on such stocks for opportunities.
Earnings Play ~ Ciena Corporation CIEN + Arista Networks ANET
The Price Action is quite compelling.
The stock opened with a big Gap in Dec 2021 and then the stock pulled back and filled the Gap. It took support at 100 dma and today post-earnings the stock has bounced with intensity. It makes the stock attractive trading buy with a stop loss below 62.
What about Arista Networks
ANET also has a compelling chart. The stock gapped up in Nov at 120 and sustained above it despite market chaos and today post-earnings the stock is making a decisive bullish move.
The company has beaten expectations by a huge margin but with muted guidance. Even then the stock is up. Everything looks good and in a normal market environment, they would have been no brainer buy.
But in the current market environment, I will not trade it.
Earnings Gap up that worked ~ American Express
The market communicates in no uncertain terms what it likes and what it does not like. Home Away stocks are doing great and so no wonder when American Express CEO communicated how its card customers are traveling everywhere and it’s helping the company.
American Express AXP stock made a bullish move post-earnings and gave a buy call at 170. Now 3 weeks later, the stock is up 16%. Home Away theme is the new market fav. This was the reason yesterday I turned bullish on Expedia.
Even Mastercard Q4 earnings surprised the market thanks to strong consumer spending but the stock has yet to clear the resistance.
When it comes to earnings, the reaction matters
Avis Budget CAR has come out with a brilliant earnings report but the stock price reaction has been weird. That’s why its so important to keep an eye on reaction and buy only if the market likes it.
I will still keep a close eye and if there is late-day buying, I would consider buying as this is part of Home Away pack.
So far so good
Yesterday I covered stocks like ASAN – today up 3.36% and Zillow +10%
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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