Post earnings trade setups – Dixons Carphone, Balfour Beatty & Bellway
With a host of earnings this week, Dixons Carphone, Balfour Beatty and Bellway provide us with interesting trading opportunities from a technical analysis perspective.
This article takes a look at some of the big movers off the back of the recent earnings announcements to try and find stocks that seem to provide a good trading opportunity.
Typically, earnings announcements will drive a shift in market sentiment, allowing for a long-lasting trend to hold off the back of the announcement. However, we can see earnings figures drive a stock into particular reversal points, once again providing us with an opportunity to fade that initial market move based on technical. As such, the aim is to reflect on the impact of these announcements from a technical perspective rather than a fundamental one. After all, the price is expected to reflect all the relevant knowledge currently available.
Dixons Carphone has been on the decline throughout the past six months, with the price having dropped into a six-year low earlier this week.
Interestingly, while we saw that rapid decline on the release of their earnings on Tuesday, there has been a subsequent rebound in the subsequent days. However, with the price having closed the initial gap and reached trendline resistance, it looks likely that we are set for another leg lower from here. To the upside, we have two forms of trendline resistance to look out for. Yet, we would ultimately need to see a break through the 165 level to bring about a less bearish view.
Today, Balfour Beatty has continued the gains seen throughout the week, bringing about a move into the 50% retracement level. Much of the weakness seen in the share price will be associated with Brexit and the potential knock-on effect it could have on investment in the UK.
With the price breaking below the 247 level for the first time in two years, it makes sense to look for another bearish shift before long. As such, another bearish reversal is likely before long, with a rally through the 281 level required to negate that bearish view. Bear in mind that we are likely to see a further upside over the near term, and it therefore could make sense to await a deeper retracement before looking for the price to turn south.
This week’s trading update from Bellway has done little to help the share price of a firm which has been under pressure throughout 2018, with the current price 29% down from the January peak.
The recent rebound provided us with a deep retracement, with the price now tumbling after peaking out with a doji candle at trendline resistance. This points towards a further downside to come, with a rally through the 2660 swing high required to negate this bearish view.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
“Managing risk, size and strategies” seminar
Join our free seminar on Tuesday Dec 10 at 6:00pm and get a better understanding of how to utilize size management when opening a trade and how to find the ideal risk/reward balance.
Live prices on most popular markets