Should you buy Amazon ($AMZN) before earnings today? What about Snapchat ($SNAP). Plus — what happened to Facebook ($FB)
In today’s podcast (https://anchor.fm/dailystockpick/episodes/What-happened-to-Facebook--Should-you-buy-Amazon-ahead-of-earnings-today--Stock-Market-update-2-3-22-e1ds9sl) I talk about how Facebook got hammered with their forecast, average daily user decline and metaverse spending. It was a triple play that caused the price of the stock to decline 25% in after hours trading. Suddenly Facebook moved from a growth stock with a PE of 23 to a value stock with a PE of 17 (the S&P trades at around 20). Here’s an analysis of the chart.
You can see in the chart that it recently triggered a buy in our algorithm. That was a false move. It set up like it was bound to move upwards, but with the earnings it had no choice but to tank. The death cross of the 50 day (blue line) moving under the 200 day (red line) back on Oct 12th on this chart was a signal. You now have a downward moving stock. I don’t think we’re done. I think this stock will be a GREAT buy at between $200 and $220, but I would wait until after the Fed raises rates in March to see how this stock reacts.
Let’s move on to the other earnings play from yesterday — Qualcomm.
Qualcomm has moved slightly lower at open around $184. I think this stock has great opportunity here. I think anything under $180 today would be a good long term move. The PE is 23 while it’s other chip makers are significantly higher (AMD — 47 — NVDA — 77 — Broadcomm AVGO — 40). I don’t include Intel because they have other issues currently. With that PE on QCOM, a stellar earnings quarter and price targets over $200 from most analysts, I think you’d be fine holding this one through the end of the year and longer for solid gains.
The 2 earnings plays today are Amazon and Snap. Let’s start with AMZN.
I think this is faking us out on a technical chart buy trigger. It has opened down 5% at $2800 level. I think with FB, Snap and other social media companies saying IOS changes have hurt them, AMZN is going to be in the same boat with their advertising business. Google was the only one insulated from the IOS changes and that’s special to their circumstances. With a PE of 51, I think AMZN could come back down to the $2500 levels after the Fed raises interest rates so the only play on this would be short term. You just had a death cross (50 day crossing the 200 day), you’ve got an overall negative trend in the stock and you’ve got inflationary cost pressures on their main business, I think you don’t play this one in to earnings and wait for a while. Patience is the key to a good investor.
Let’s look at Snap now.
If you’re going to bet on earnings, this one might be the one. It’s opened at $26 which is 52 week low (52 week high is $82), you’ve already had them say IOS impacted their business, the FB hurt has been put on them with opening 20% down and they only have a few $’s lower to go to get back to the IPO price. With all that said, this is a company with NO earnings. They will again lose money and those companies are getting crushed with just the threat of rising interest rates. it’s set up nicely with the MacD cross up, the RSI at 29 and volume shelves around $40, but let’s be clear — this is gambling. This would be investing in a business where the advertising model today is hurt, the Dec quarter for every social media company so far has been horrific and forward guidance has been horrible for social media companies. The bar is set low since the stock price has been beaten down and I may gamble based on price action today, but this IMO is not a long term investment. I say that knowing that every teenager I know LOVES, USES and would NEVER get rid of Snapchat. They all hate Facebook and only sparingly use Instagram. Tik Tok today is their #1 choice.
Finally for volatility purposes (ie — trading), let’s look at BOIL and KOLD charts for Natural Gas.
Both of these charts on our algorithm in http://www.trendspider.com are messy and have gaps all over. If you’re looking to trade, I would suggest using 1–5 min charts and play the price action. I typically use moving averages (9, 20, 50, 200), MacD, RSI and volume to do my day trading. I look for a triple bar in order to get in and a downward movement on the 9 day to get out. Scalping works with volatility — just don’t be greedy and have patience.
