McDonalds, Yahoo! and Verizon Sell-Off Into Earnings
Earnings season often draws more light than heat, as traders try to determine whether earnings, revenue and forecast data will be a catalyst for buying or selling, encouraging an existing trend or signaling reversal.
Heading into trading on Tuesday, here are stocks from a trio of companies whose announcements will put this conventional wisdom to the test.
Shares of McDonalds (NYSE: MCD) traded to new, 52-week highs on Friday and traders are, predictably, taking profits and locking in gains as the week begins. Whether or not this profit-taking will continue through the company’s scheduled earnings and revenues announcement on Tuesday remains to be seen. But MCD is on pace to open closer to short-term lows than short-term highs when trading begins on Tuesday.
Note that McDonalds has not had a significant pullback since mid-November when the stock traded lower for four out of six days to reach new, 10-day lows for the second time in less than a week. Shares of MCD rallied immediately afterward, closing higher by nearly 4% in four days.
Closing lower for a second day ahead of its first earnings announcement in the post-Jerry Yang era, are shares of Yahoo! (NASDAQ: YHOO). YHOO pulled back by well over 1% in Monday’s trading, as the stock continues to trade in the same wide range that has defined Yahoo!’s price movement since late October.
After treading water for the past three days, the latest dam broke in the market for Verizon Communications (NYSE: VZ) shares. The stock dropped by more than 1% to close at new, short-term lows above the 200-day moving average. The sharp sell-off has put Verizon in technically oversold territory and contributed to the stock’s one-point ratings upgrade and a positive, short-term edge of more than half a percent.
Shares of Verizon had rallied to their highest level in more than a year at the end of 2011. The stock then sold off for four days in a row, finishing in oversold territory for three out of those four sessions. The result was a wave of buying that sent shares higher for the next six consecutive trading days.
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David Penn is Editor in Chief of TradingMarkets.com