Post earnings trade setups: Marks & Spencer, Ryanair and TalkTalk

With a host of earnings this week, Marks & Spencer, Ryanair, and TalkTalk provide us with interesting trading opportunities from a technical analysis perspective.

Marks & Spencer 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 or enhancement of market sentiment. While many see earnings as a significant risk when holding a stock, placing trades in the wake of such events allows for greater confidence that all market knowledge has been factored in to current prices.

Marks & Spencer share price

A volatile week has seen sharp declines from Marks & Spencer (M&S) on Wednesday, with worries over the clothing and home ranges dragging shares lower. The Ocado deal looks like it will cost the company dearly, and many will question whether it is worth the £750 million outlay.

However, we are seeing the buyers come back in at an important level, with trendline support sparking a surge to close out the week. That rebound points towards the potential for further downside to come for the forthcoming trading days. However, with a wider bearish trend in play, such a rebound would simply look like a short-term move before we turn lower again. Ultimately, we need to see a break below this week’s low of 237 to signal a likely impending wider breakdown for the M&S share price. Until then, this bullish engulfing could point towards a recovery over the near-term.

Marks & Spencer chart Source: ProRealTime

Marks & Spencer chart Source: ProRealTime

Ryanair share price

Ryanair provided a somewhat bleak assessment of the firm’s current prospects, with a war in air fares has helped dent profitability at the airline. Unfortunately they could not draw the line under the 40% drop in profits, with 2020 profit forecasts also coming in well below market expectations.

The weekly chart below highlights the worries for easyJet investors, with the chart looking like a large multi-year head and shoulders formation. That would only come into play with a break below 967 support. Given the double top formation that was completed with a break below 1093, further downside does look likely before long. Only a break through 1270 would we see a more bullish picture come into play.

Ryanair chart Source: ProRealTime

Ryanair chart Source: ProRealTime

TalkTalk share price

TalkTalk managed to post a 17% rise in full year core earnings to this week, largely in line with market estimates. However, while the firm lauded the benefits of lower costs and greater demand for faster fibre products, the drag of depreciation and amortization means the firm ended up with a pre-tax loss of £5 million. No doubt this lack of profitability would have been one of the key reasons we have seen such volatility around the company.

The daily chart highlights the ongoing downtrend despite the rally through much of 2019. That seems to be over, with the recent decline coming from 76.4% Fibonacci resistance and a descending trendline. Given that wider bearish trend, there is a good chance that this recent period of weakness is feeding into a renewed bearish narrative. Thus it makes sense to look for further downside, with a rally through 128 required to negate this bearish outlook.

Talktalk chart Source: ProRealTime

Talktalk chart Source: ProRealTime


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