It’s that time of year for corporate earnings as many analysts and active investors will balance the game of expectations and real results.
Here’s my review of 3 early movers this earnings season…
Teck Resources (TCK) Breaks Out
Teck Resources Limited (TCK), known for producing steelmaking coal, copper, and zinc, broke out yesterday. Notice that TCK has been trading around both its 10 and 50 week moving averages for several weeks. TCK broke above its March high in volume. Copper is essential in the production of almost everything. This makes the breakout of a copper producer exciting news this earnings season.
Not only are copper producers important for understanding where we are in the business cycle, but after the volatile and uncertain year we’ve had in the market, copper producers breaking out is a sign that the worst may be behind us.
Teck Resources Chart
Intel Earnings (INTC)
Intel (INTC) is expected to report earnings today after the market close. The chart of Intel stock price seems benign enough. Like Teck Resources (TCK), it has been trading sideways. Yesterday, INTC closed below the 10 day mva but remains above the 50 day mva.
So, aside from TA jargon, what do we know about chips? In this time of smart phones, smart cars, and smart houses, they represent both growth and innovation. The chip industry is a leading indicator of the business cycle, and INTC is the largest manufacturer in the industry. Chip stocks typically break out and start new trends while bears bemoan that the sky is falling (as in the winter of 2012). They also tend to top long before the sky actually starts to fall (as in the winter of 2014). Moreover, chips are manufactured worldwide, giving us another indicator to gauge the global economy. Keep an eye on Intel corporate earnings after the bell.
Ford Earnings (F)
Next week, Ford (F) is expected to report its quarterly earnings. Automakers are another leading indicator to gauge the health of US consumers. However, despite Ford reporting that domestic demand was up from the previous year in its October 2015 earnings, Ford failed to break out of the bearish channel (in pink) it’s been trading in since the Fall of 2013 because of ongoing weakness in global demand. Earlier this year, I noted that Ford was back again at the lower end of the dealer channel, and as as we have seen repeatedly, it found support there by value investors. However, like the two stocks above, Ford has been trading sideways for several weeks. So Ford corporate earnings are a must-watch.
It’s been a long year. While the market has the final word, copper producer TCK breaking out hints strongly that global demand has returned. Look for confirmation with corporate earnings from Intel and Ford. The earnings season is young, but there’s reason for optimism.
Thank you for reading.
Further Reading: Modern Day Lessons From Richard Cantillon
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.