In my next life, stocks will stop at precise support and resistance levels and make life easier. But in this life, that's not going to happen.
We see evidence of that reality by the Invesco QQQ Trust (QQQ) continuing to trade above and beneath our resistance line at $314.55, but if you look at a volume-weighted average price anchored to the past three days of trading, you find that the average price is $314.80. While the market seems intent on testing above and beneath our resistance line, the market is telling us that the most agreed-upon price to do business is relatively close to $314.55.
Tuesday night's moderately disappointing earnings reports from Advanced Micro Devices (AMD) , Airbnb (ABNB) and Match Group (MTCH) may help to push the QQQ a bit lower, but aside from the implosion in shares of MTCH, none of the reports should be to market-moving. And it's worth noting that between Elliott Management's investment of more than $2 billion in PayPal (PYPL) and the company's better-than-expected profit guidance, it's possible the buying in that stock might balance out some of the selling shares of AMD, ABNB and MTCH.
On the earnings front, momentum traders will want to keep an eye for reports out of Datadog (DDOG) before Thursday's regular session open and from Block Inc. (SQ) , Twilio (TWLO) and Lyft (LYFT) after the session's close.
LYFT benefited on Tuesday from Uber Technologies' (UBER) report, so now it's time for the company to follow through with a strong report of its own Thursday evening. Suffice it to say, a weak report from LYFT likely sends its shares back toward $14 during Thursday's after-hours session.
I'm most interested in the earnings reports from DDOG and TWLO. Because these two companies have generated consistent and far above estimate revenue growth for many quarters in a row, I'm interested in seeing how the market responds to either slowing growth or a continued outperformance. While I won't carry any direct exposure into the reports, I'll be looking for a break of $110 on DDOG to send shares toward the year-to-date VWAP around $122 and a break of $95 on TWLO to paint a target of $110.
Strong reports and bullish follow-through will place both companies at the top of the trading watchlist as prospects to buy on re-tests of the 8-day and 21-day exponential moving averages.