Post-earnings trade setups: Taylor Wimpey, Safestore, and WM Morrison

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 also 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, price is expected to reflect all relevant knowledge currently available.

Taylor Wimpey

One of the week’s biggest movers, Taylor Wimpey, has managed to rise sharply in the wake of a more positive outlook in the face of Brexit uncertainty. The housebuilder has managed to build on the initial rebound from trendline support, and with the company trending upwards since 2008, there is a good chance that this is the beginning of the next strong upward phase for the firm. The company remains some 66% from the 2007 peak, there is certainly room for further gains. Keep an eye out for a break through the 172 resistance level as a signal of a likely impending move through the 2018 high of 195.

Safestore

This week’s earnings figures from Safestore proved exactly why this stock seems to be a safe bet for investors, with the firm seeing profits more than double from £79 million to £185 million. The company has been a consistent performer over the years, yet the period of consolidation seen over the past six months appears to be coming to an end.

With the price having failed to break into a new low below 497 last week, we have since seen a rally towards the crucial 560 peak on Wednesday. A break through that 560 level would signify the likely resumption of the wider bullish trend, yet we also need to see trendline resistance broken as part of that process. As such, watch out for a potential continuation of this strength to bring about a new buy signal for this reliable company.

WM Morrison

WM Morrison has experienced somewhat of a topsy-turvy week, with markets finding it difficult to gauge exactly whether this week’s trading update was something to celebrate or sell into. With Christmas sales higher than expectations, there is certainly some cause for positivity, and despite the intial sell-off, we have since seen the company’s share price move into positive territory for the week. The weekly chart highlights that we could be shifting into a more bullish phase after a decline into the 76.4% Fibonacci support.

This is built upon with the four-hour chart, where the challenge of the 220 high is going to be key going forward. A rally through that level would complete an intraday double bottom, providing a bullish outlook for the coming weeks.