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Post-earnings trade setups: Imperial Brands and Walmart


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Post-earnings trade setups: Imperial Brands and Walmart

With Q3 earnings season drawing to a close, Imperial Brands and Walmart provide us with potential trading opportunities.

BG_walmart_781971651.jpgSource: Bloomberg
 
 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 19 November 2021

This article looks at some of the big movers off the back of recent earnings announcements, as we try to find stocks that provide potential trading opportunities.

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.

Imperial Brands

Tobacco giant Imperial Brands has enjoyed a £1.1 billion jump in pre-tax profits for the year, although much of that was simply due to the sale of its cigar business.

Nonetheless, with the firm busy realigning towards the next generation of cigarette alternatives in a five-year plan, the stock has begun a more positive journey off the back of a four-year collapse.

Price has been in consolidation mode over the past 10-months, although the gains seen through the prior seven months look to have ended the long-term downtrend.

With a possible reversal in play, a break up through $16.42 would bring about a potential bullish breakout for this stock.

IMT-Weekly191121.pngSource: ProRealTime

Walmart

Walmart has suffered sharp losses over the course of the week, with increased sales and profit forecasts being overshadowed by warnings of lower margins due to higher labour and supply chain costs.

The weekly chart shows how price has slipped back towards trendline support, coming off the back of a rise into trendline resistance. That symmetrical triangle formation does highlight a period of consolidation over the past year.

Nonetheless, the wider uptrend is worth considering in all this. As such, this current pullback looks to bring a buying opportunity, with the 61.8% Fibonacci level being respected thus far.

Bullish positions are therefore favoured unless we see price fall below $134.71 support.

WMT-Weekly191121.pngSource: ProRealTime
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