The Shakedown 4-25-21

LAST WEEK, S&P 500 (-0.12%)

Monday: -0.49%

Tuesday: -0.73%

Wednesday: +0.95%

Thursday: -0.91%

Friday: +1.08%

The market had a very back and forth week as we closed nearly flat on the week. We were met with some news-related selling Thursday as Biden's Capital Gains Tax Proposal hit the news wires. That weakness was promptly swallowed up by Friday strength as the market continuously refuses to pullback. We will have to pull in at some point, but timing it will prove to be quite difficult. 


This is arguably the biggest week of earnings out of the broad market as all the largest stocks report all in a few days span. Monday afternoon we have TSLA (3.5% of QQQ). After the close Tuesday we have GOOGL & MSFT reporting (together equate to 17% of the QQQ). Wednesday afternoon AAPL & FB report (18% QQQ combined) and Thursday we have AMZN who's nearly 11% of the QQQ. These names earnings reactions will likely be the catalyst for the market's next direction. There are hundreds of other names reporting as well, some I'm looking forward to: UPS, AMD, MMM, GE, CROX, V, SHOP, SPOT, EBAY, TDOC, HUM, CAT, MCD, TWTR, NIO, SWKS, ABBV among many more!


Knowing so many big names are reporting earnings this week, coupling the fact the market is on a major run at all time highs, I won't be looking to take any long term trades in the early parts of the week. I will focus solely on shorter term trades. The thinking here, is if the big boys have negative earnings reactions similar to NFLX, we will be walking into decent broad market gap downs because of their weighting on the indices, dragging many individual names with it. You'll see in the setups below there are a few names like AMZN and FB setting up for pre earnings runs, which I would look to take as quick 2-3 day trades before they report.


Though the market is at highs, remaining selective in your entries has been the key to success in this deceivingly difficult market. 


Earnings This Week

Click the above picture for a full list of the companies reporting this week




With only one day of earnings action, it was difficult to make SNAP the trade of the week. Ideally, we get a few days of sideways action before this one wants to go. However, the combination of their great technical chart along with their huge earnings report, I felt this was the best name to focus on heading into the week.

Snapchat's earnings beat on every metric the analysts threw at them. They're Average Daily Active Users surpassed expectations by 4.4 million. The more daily active users they attain, the more appealing their platform is to advertisers, with selling ad space being their largest revenue generator. The third and final piece of the earnings I loved, was this was their first quarter ever where they generated positive free cash flow as a public company. In my experience, whenever a company has surprisingly reached profitability or positive cash flows for the first time, it's been a massive buying opportunity and a catalyst to run higher for the quarter.

From an entry standpoint, I would LOVE some daily consolidation and for this one to trigger later on in the week, but I wouldn't count on it. This is the rare name this week I would buy for the longer term ahead of all the megacap earnings we have this week. 

Trigger: $63.25-64

Stop: $57.29

Target: $80-85+

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