Finally, a bit of a beat-down for stocks today. There's some danger here for small-caps and the S&P 500 as I don't see strong support for another 1.5% to the downside. Granted, 1.5% really isn't much, but if it happened tomorrow or before the end of the week, it may give folks pause into the rest of August.
Psychologically, these next three months tend to bring haunting memories. Easing out of earnings season, I suspect we'll regain our focus on oil and currencies in the midst of rampant political chatter. But there are still a few earnings reports to sift through.
One of my favorite names, Qorvo (QRVO) , reports this evening. I will say upfront that I don't have a position into earnings. The stock reached the targets I had in play and earnings is somewhat of a gamble here. The daily chart is struggling and looks ready to trigger bearish action, although earnings could change that. Then again, it could accelerate it.
I don't have much history on QRVO to utilize for regressional analysis. The options market is pricing in a move close to 12%. We have seen moves of at least 10% post-earnings every time thus far, but only two closes more than 10% and the last two quarters have been a big change in trend.
Big moves unfolded after the first three reports and they continued to build in the next several weeks on the initial move; however, that has not happened with the last two reports. The stock has faded the initial move almost completely over the following three weeks after the report. Furthermore, the trend has been toward lower volatility.
When I expand my review to Tableau Software (DATA) , which also reports tonight, I noticed the trend toward high-volatility expectations continues. DATA option traders see a 14% move coming by this Friday. I certainly wouldn't bet against a big move as we've seen double-digit percent closes for seven straight quarters, but one has to wonder how much February 2016 has skewed thinking.
Anytime you see a 50% move in a single day, it weighs on memory and sentiment. The best-fit line is off the charts here in relation to the projected move, but this is heavily skewed by that 50%. Even without that report, though, the expectation would still be for an 18% move with a very high R-squared in terms of earnings RA.
While I don't expect another 50% move, I see a 15-18% intraday maximum move and a close in the 13-15% range.