Post-earnings trade setups: HSBC, Ford, and Apple
With Q3 earnings season in full swing, HSBC, Ford, and Apple provide us with potential trading opportunities.
This article looks at some of the big movers off the back of recent earnings announcements, as we try to find stocks that provide potential trading opportunities. Typically, earnings announcements and trading statements 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 into current prices.
Asia-focused bank HSBC has posted an impressive 74% rise in third quarter (Q3) profits, with the return of $659 million worth of bad loan funds helping to boost the balance sheet.
Meanwhile, the bank has also announced a $2 billion share buyback scheme. Looking at the share price, we have seen price ease back since Wednesday’s peak of £4.48. However, we are up on the week, as price pushes onwards after breaking trendline resistance this month.
A break through the £4.56 peak from May would signal a continuation of this recent uptrend. While the stochastic is overbought, there is a good chance we are setting ourselves up for a period of strength to recover ground lost during the pandemic.
Ford beat on both the top and bottom line, with earnings coming in almost double the market expectations. The firm also upgraded their annual guidance for the second time in 2021.
The stock has been a consistent performer over the course of the past year, with this week seeing fresh record highs come into play. That push through $16.58 resistance brings expectations of further upside, with a drop below $15.50 required to negate this bullish outlook.
Apple posted disappointing earnings for Q3, with sales missing expectations and the company expecting supply issues to cost roughly $6 billion. The share price has turned lower as a result yesterday, raising the risk of a more protracted pullback.
That being said, we would need to see $138.27 broken to bring about that wider retracement of the rally from $121.45. Ultimately we are looking at long-term performers, with short-term downside bringing potential opportunities for bulls.
A break below the likes of $121.45-115.76 would be required to signal a potential market top. However, that seems unlikely.