Post-earnings trade setups: Microsoft, Apple and TalkTalk

After a week where earnings reports and trading statements helped dictate market sentiment, Microsoft, Apple and TalkTalk provide us with interesting trading setups for the weeks ahead.

Microsoft Source: Bloomberg

This article takes a look at some of the big movers off the back of 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 take hold off the back of the announcement. However, we can also see earnings figures drive a stock into particular reversal points, once again providing us with an opportunity to trade that initial market move based on technicals. 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 relevant knowledge currently available.

Microsoft

Microsoft shares have been declining this week, with Wednesday’s earnings report clearly doing little to reverse the wider downtrend in play since the fourth quarter (Q4) of 2018. This second consecutive week of downside points towards the wider bearish picture coming back into prominence, as the firm gives back more ground after years of outperformance. This points towards another leg lower from here, with a break through the prior peak of 11,409 to negate this bearish outlook. This wider picture allows us to show the existence of the ascending trendline, with that support line providing a notable area to watch for should we see further downside come into play.

Microsoft weekly chart

Microsoft weekly chart

Apple

Apple shares have turned sharply higher this week, following on from what looks like a period of base building over the past month. The Q4 sell-off took the tech giant down below the crucial 14,865 swing low, yet that move failed to last. Instead we have seen the share price rally sharply, indicating a likely period of bullish sentiment coming into play. As such, this looks like a good time to buy Apple shares, with improved sentiment around the company’s earnings coupled with gradual signs of improvement in relations between the US and China.

Apple weekly chart

Apple weekly chart

TalkTalk

TalkTalk has had a torrid time of it over the past three years, with the price currently 73% off the 2015 high of 387. Interestingly, this week’s earnings have done little to change that bearish rhetoric, instead sending the share price down towards a critical level of support. The 86-100 zone provides a critical area, which has always been respected since the company was listed as a single entity back in 2010. With that in mind, a break below this zone could bring about a fall into no-man’s land for the share price.

TalkTalk monthly chart

TalkTalk monthly chart

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