Do Big Tech Earnings Show A Rally Ahead?

2020-07-30 | Simpler Trading Team

Shocking GDP news sent stocks reeling early Thursday before expectations of major tech earnings reports boosted tickers into the close.

Economic results showed the U.S. GDP dropped 32.9 percent in the second quarter — the largest decline ever reported. Markets sold off on the news with the Dow dropping as much as 500 points in early trading. Oil dropped and big tech traded lower.

Tickers moved higher midday and tech stocks ticked up to boost Nasdaq performance. Expectations increased as the session neared after-hours earnings reports from Facebook, Amazon, Alphabet (Google), and Apple. These four companies’ combined worth pushes $5 trillion.

Before the earnings reports, the market worked to recover the day’s early losses.

The Dow crept back to 26,313.65 points, falling .85% over the course of the day (dropping 225.92 points). The Nasdaq bucked the downtrend to gain .43% to 10,587.81 points. The S&P 500 fought its way to almost flat, losing .38% to settle at 3,246.22 points.

The big four second quarter earnings reports stoked positive expectations after hours.

Facebook, Amazon, Alphabet (Google), and Apple all reported strong earnings and revenues that met or beat estimates.

Positive reports from the tech leaders also boosted the Nasdaq ETF after hours.

It was a flurry of action in the market pre-close and into the extended trading.

What does the follow-on day hold?

A word of caution: follow Simpler’s standing trading rule of not losing your “behind” on a Friday and don’t mess up a strong month. There’s no need to push into the market without clear signals and a well thought out trading plan.

Even though the “action” can be fun, being comfortable not participating and keeping cash can be fun, too.

Expectations are a rally could be building that offers less volatile opportunities.

We Saw: market leaders setting the pace, despite down news — 

  • Four of biggest tech companies surpassing earnings expectations
  • Nasdaq boosted by positive tech stock earnings reports
  • Power of tech sector shifting momentum

We’re Watching: possible rally following big tech earnings —

  • Temptation to chase action and lose on a Friday
  • Non-tech stocks showing upticks at month’s end
  • Active setups and letting ideas play out

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