Our Selected Stocks for the US Earnings Reports

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The Q3 Earnings Reports

The US Q3 earnings season will kick off with Alcoa at the end of Wednesday’s trading session. Global markets posted moderate losses on fears of a global slowdown. The Gross Domestic Product (GDP) of China is widely expected to be lower in the third quarter and possibly in the fourth quarter, which we believe was the fundamental trigger for heavy selling and could very drive the VIX higher from its current levels.

In our market research we would like to provide a technical outlook for some of the leading stocks ahead of the earnings reports.

Alcoa Technical Analysis

We are focusing on the Aloca 4hr chart for our market analysis. The left yellow circle markets the right-hand shoulder of a possible reversed Head-And-Shoulders (H&S), which if affirmed would suggest moderate gains in the stock. In order to capitalize over the expected bullish trend, a dip must take place towards $15.57 (support level). If the support is tested and the price fails in closing below, we classify this as a decent entry for executing a long trade, stop layered below the 200-moving average (MA, in brown) at $15.30, targeting the reversed H&S neckline at $16.37.

Aloca 4hr Chart

Please click on the chart to enlarge:

Alcoa Technical Analysis 8 October 2014

Alcoa 4hr Chart 08/10/14

 We are also aware that the 55MA (in blue) acted as a strong resistance on a couple of re-tests made by the stock’s price on the 30th September and 7th October. A breakout strategy can also be exercised upon a 4hr close above the 55MA, currently at $16.12. Upon a firm breakout, we would prefer executing a long trade upon the first re-test of the 55MA, which is now acting as a key support level following the breakout. The stop for the breakout strategy would be layered at $15.80, targeting $16.80.

If Alcoa will close above the neckline when the breakout above the 55MA takes place there would be no valid entry. In such a scenario, the price would require to re-test the neckline in order to confirm a successful breakout. The target will not be altered but the stop can be placed beneath the breached neckline. This would of course dent the Risk Ratio (RR) of the long trade but nevertheless the technical outlook would remain bullish. Alcoa will be available for trading from 13:30 GMT and the earnings report will be published after the closing bell of the US market.

JPMorgan Technical Analysis

JPMorgan earnings report is due on the 14th October. We are focusing on the daily chart to produce our analysis for the stock. As oppose to Alcoa, JPMorgan daily chart has a strong potential for forming top H&S where both the right-hand and the left-hand shoulder were already confirmed. The neckline is seen at the 50.0% Fibonacci retracement level at $58.67. We also observed the hourly chart and believe corrective gains are possible in the upcoming sessions although it is insufficient to execute a short-term trade. We would prefer executing the trade at a higher price ($60.15), setting the stop at $61.27, targeting $57.45 as we would then expect the neckline to be firmly breached by the market.

JPMorgan Daily Chart

Please click on the chart to enlarge:

JPMorgan Technical Analysis 8 October 2014

JPMorgan Daily Chart 08/10/14

In a scenario where the price breaks the neckline without posting a dip towards $60.15, the RR may be insufficient to execute a short trade in the stock. Should it materialize, we will update the outlook for JPMorgan at the bottom of the page and immediately notify our subscribers. You may also review our trading strategies for European stocks in the banking sector based on the upcoming Asset-Backed Securities (ABS) program that will be conducted by the European Central Bank (ECB).

We are choosing to focus only at the above stocks at the time of this writing for the US Q3 earnings season. There is however an additional stock we believe may attract a great amount of attention within the last quarter of 2014.

King Technical Analysis

King Digital Entertainment Plc is expected to reveal its earnings at the beginning of November 2014. Investors will want to see whether King were able to successfully penetrate the Chinese market since it was launched in China at the end of August 2014.

King Daily Chart

Please click on the chart to enlarge:

King Technical Analysis 08/10/14

King Daily Chart 08/10/14

A positive divergence is noted in the Relative Strength Index (RSI) in the daily chart.  We cannot determine a support level for the stock due to lack of data and all-time low since the Initial Public Offering (IPO). Rather than taking the trade at market price, a break above $12.95 (which will also break above the 21MA, in brown) may pave the way for further gains, negating the threats of a bearish flag. The fundamental trigger for expected rally in King Digital Entertainment Plc could also be an announcement of a new game, which may boost expectations for a greater revenue.

We will update the trading strategies for the suggested stocks for the Q3 earnings report in accordance to the stock’s performance and our technical analysis.

09/10/14 UPDATE: Alcoa beats analysts’ estimates, increasing the odds of the our long trade in the stock reaching our bullish target. We exercised a dip-buying strategy in Alcoa, entering the stock from $15.57 as described in our technical analysis.

09/10/14 UPDATE II: Our take profit for Alcoa long trade at $16.37 has been triggered, earning a decent profit.

09/10/14 UPDATE III: JPMorgan is trading at $59.48 at the time of this writing. We are closing 30% of the short trade at market price and shift the protective stop to the entry.

09/10/14 UPDATE IV: JPMorgan is trading at $59.24 at the time of this writing. We are closing 15% of the trade at market price and shift the protective stop to $60.

03/11/14 UPDATE: With a minor delay, JPMorgan triggered our take profit as we have expected.

05/11/14 UPDATE: King broke above $12.95, which provided a decent long entry in the stock in accordance to our technical analysis. Currently trading at $13.95, we would look to realize profits at the opening of the US markets on Thursday.

18/11/14 UPDATE: With a minor delay, our decision to place on hold profit realization in King has paid off. The stock price is trading at 15.98 and has triggered our take profit order for the stock several days ago. We have succeeded to book profit on all trade in this analysis.

Our Selected Stocks for the US Earnings Reports

Trade alerts are also issued in the weekly update.

Our Selected Stocks for the US Earnings Reports

                                             Our Selected Stocks for the US Earnings Reports

Our Selected Stocks for the US Earnings Reports

Last Updated on August 9, 2015