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Post-earnings trade setups: Fresnillo, Uber, and Virgin Galactic


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With Q2 earnings season continuing apace, Fresnillo, Uber, and Virgin Galactic provide us with potential trading opportunities.

bg_fresnillo_logo_mining_company_3434523Source: Bloomberg
 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 06 August 2021 

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.

Fresnillo

A 59% jump in interim profits did little to lift the Fresnillo share price, with the stock suffering another bout of losses towards the end of the week. The world’s largest silver producer saw increased output for both gold and silver, with the company on track to meet their targets by year-end.

Nonetheless, we have seen the stock hit hard over the course of the past year, with the share down 42% in around nine months. Meanwhile, silver prices are largely flat compared with that same November 2020 date. With price having pushed up through trendline and £8.28 resistance in the wake of those earnings, the subsequent pullback looks like a potential buying opportunity.

That being said, with the dollar dragging precious metals lower, we are clearly seeing that negative pressure come back into play. A break back below £7.42 would bring about a fresh sell signal. Until then, there is a good chance we could see the buyers come back in to reflect how the share price has got a little carried away compared with earnings and underlying precious metal pricing.

Fres.pngSource: ProRealTime

Virgin Galactic

The recent successful test flight did little to help Virgin Galactic, with the share price better resembling the glide back down to earth than the initial blast into space.

However, with the company reopening sales, upping prices, and posting a surprise positive revenue figure, it seems dreams are becoming reality.

The rise through $33.89 points towards a potential surge from here and another possible period of upside for the stock. With that in mind, a bullish outlook is back in play, with a break below $29.48 required to negate that bullish view.

SPCE.pngSource: ProRealTime

Uber

Uber shares popped higher off the back of a second quarter (Q2) earnings report which beat on both the top and bottom line. They also predicted reaching profitability by the end of the year.

The subsequent rally saw the stock drive higher from the historical resistance level of $38.49. This raises the likeliness of a bullish breakout after a six-month period which saw 40% wiped off the company’s share price. That figure is now 30% given recent gains.

A rally up through the $48.16 swing-high and $48.95 Fibonacci resistance would bring a more reliable bullish signal into play. However, with the stock seemingly turning a corner towards profitability, there is a good chance this selloff has run its course.

Uber.pngSource: ProRealTime
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