MomentumOptionsTrading.com Midday Update for 4/23/14
Apple (AAPL)/ Facebook (FB) Earnings in Focus
We mentioned there could be some weakness today or tomorrow following the bulls push past resistance yesterday. As we head into the second half of trading, that theory has played out as the indexes have traded in a tight range but to the downside.
There are a number of high-profile earnings due out this week and the parade continues today with Apple (AAPL, $527.34, down $4.36) and Facebook (FB, $61.58, down $1.45) reporting after the close.
Apple is expected to earn $10.18 a share on revenue of $43.5 billion in revenue. Shares have been stuck in a trading range for months and could be headed lower if they miss their revenue number or lower guidance. We believe they will match estimates on earnings but we are a little doubtful they will blow away Wall Street’s numbers on the sales side.
Facebook may have a better chance of rallying as they could beat and raise guidance. The suit-and-ties are looking for $0.24 a share on revenue of $2.36 billion. Shares have made a nice run into the announcement and could be setting up for a sell the news event if they don’t dramatically beat estimates.
Their results will likely dictate Thursday’s action. Of course, we would like to think both companies are going to knock the cover off the ball that would lift the overall market but it is why we mentioned their could be some weakness today and into tomorrow.
Our current trades are holding up well and we are still playing calls options as we expect a continued run at resistance and new highs into next week and for the first part of May.
The talk of triple-tops, bear traps, elliot waves, and other technical tools have traders setting up for a “sell in May” event but we see the chance for a breakout as we have been doing some early chart work ahead of the weekend.
As we head into the final hours of trading, the Dow is down 11 points to 16,503 and the S&P 500 is off by 3 points to 1,876. The Nasdaq is lower by 29 points to 4,132 while the Russell 2000 is lower by 4 points to 1,151. The VIX is at 13.34 following a brief pop to 13.75.
Support is acting rock solid and we would like to see these levels hold to the close. Subscribers, hit the Members Area for the updates.