International Business Machines (IBM) and Netflix (NFLX) both reported earnings after the bell Monday, and both left traders with a crummy taste in their mouth. NFLX was particularly hard hit, dropping as much as 12% during the after-hours session, although it rallied to an 8% loss. IBM shed 5% after hours.
I'll leave it to others to opine on the fundamentals of both NFLX and IBM, but from a trading standpoint, I'd be careful with both names in the short term.
The after-hours selling in IBM, while frustrating for anyone gambling on better-than-expected earnings, is not so severe that I'd label the stock as broken. As discussed in past Trader's Notebooks, initiating IBM bulls want to see closes above $150 for between five to 10 days before buying the breakout, while responsive dip buyers want bearish excess in the vicinity of $143 to $144.
NFLX, on the other hand, looks pretty sketchy. Forecasts for the second quarter are tepid. You should avoid it unless you're a daytime scalper, at least for a few days. Assuming the stock opens Tuesday's regular session between $96 and $100, any pop should find sellers between $101 and $102.50. A drop toward $92 would likely attract responsive buyers. A closing price above $107 would be a major victory for bulls since that is the approximate location of the 200-day simple moving average.
Shares of Inovio Pharmaceuticals (INO) rallied 6% Monday, and from what I can tell, the excitement centered around news that a director purchased roughly 70,000 shares. Notwithstanding that insider buy, the daily chart looks strong, and I remain long the stock.
If the market's reaction to the OPEC meeting in Doha, Qatar, didn't convince you to pay more attention to price action and less to the talking heads on CNBC, nothing ever will.
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