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Post-earnings trade setups: Netflix, Johnson & Johnson, and Coca-Cola


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With Q2 earnings season in full swing, Netflix, Johnson & Johnson, and Coca-Cola provide us with potential trading opportunities.

Netflix Will Spend $20 Billion on Content This Year                                                                    image.png                                                                     image.jpeg

 

This article looks at some of the big movers off the back of recent earnings announcements to try and find stocks that seem to provide a good trading opportunity.

Typically, earnings announcements and trading statements will drive a shift or enhancement of market sentiment. While many see earnings as a significant risk when holding a stock, placing trades in the wake of such events allows for greater confidence that all market knowledge has been factored into current prices.

Netflix

Netflix shares have been on the back foot after an earnings release that saw the firm fall short on earnings.

That decline came despite the fact that the streaming service beat estimates on both revenues and paid subscriber numbers. Interestingly, this pullback brings a potential buying opportunity, with price falling into the 76.4% Fibonacci support level of $502.22.

The continued creation of higher lows over the course of the past year brings a strong potential that price will rise from here. As such, a bullish view holds unless price falls back below the most recent swing-low of $482.21.

NFLX-Daily23721.pngSource: ProRealTime

Johnson & Johnson

Johnson & Johnson managed to beat estimates for their second quarter, with a massive jump in net income coming thanks to a 27.1% rise in sales.

Looking at the chart, we can see that price is approaching the apex of an ascending triangle formation. The ongoing uptrend points towards a bullish breakout before long, with a fall back below $165.32 required to bring a more bearish short-term outlook.

Until that happens, this gradual ascent looks likely to provide a bullish breakout through the $171.44 resistance threshold.

JNJ-Daily23721.pngSource: ProRealTime

Coca-Cola

Coca-Cola shares have pushed upwards after the firm posted better-than-expected earnings and revenues figures for the second-quarter.

With revenues topping their 2019 level, investors were cheered by improved forecasts for the full-year earnings per share (EPS) and revenues. Nonetheless, the pop seen on Wednesday could represent a peak for now, with the recent trend seeing an ascending trendline limit upside moves.

However, whether we see a short-term pullback or not, the uptrend and positive earnings report highlight the fact that this stock remains attractive as long as price remains above the $53.55 swing-low.

KO-Daily23721.pngSource: ProRealTime

 

 

 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 23 July 2021

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