Tuesday was jam-packed with earnings reactions, most of which were negative.
Merck $MRK, one of the largest drug manufacturers in the world, led the way lower after releasing terrible guidance. This is after the stock had its second-worst earnings reaction ever in Q3 2024.
On the bright side, Palantir Technologies' $ PLTR earnings report was outstanding. The stock had its second-best earnings reaction ever after crushing expectations and raising guidance.
Let's talk about what else happened 👇
Here are the latest earnings reactions from the S&P 500:
*click the image to enlarge it
The second-best earnings reaction came from Xylem $XYL, which beat its expectations and rallied over 5% with a reaction score of 3. They've successfully integrated Evoqua into the company, which delivered cost synergies 18 months ahead of schedule.
The market loved it.
Another report the market hated came from PayPal $PYPL which beat its expectations but fell over 13% with a reaction score of -6.74. It was really bad.
PYPL even announced a new $15B stock repurchase program, which wasn't enough to offset the growth concerns.
Another stock with a nice earnings reaction was Fox $FOXA & $FOX, which rallied over 5% with a reaction score of 2.92. They also beat the earnings per share estimate by 50%, an absolute home run.
In addition, Fox has rallied after 12 of its last 16 earnings reports. This is one of the most impressive beat streaks in the S&P 500.
Now, let's look at some of the best and worst charts from Tuesday's earnings reactions 👇
PLTR is mooning to new all-time highs:
Since Palantir posted a god candle last November, the stock price has hit 2 Fibonacci extension levels. It has been a face-ripping rally!
While this would be a logical level to digest gains over the short term, we think this stock has more gas left in the tank.
If PLTR is above 108, the path of least resistance is higher towards 172.
MRK is testing a key level of polarity:
Merck resolved a .com bubble base in late 2022 and rallied above 100 for the first time. Since then, the stock has reversed and is under severe selling pressure.
The stock is retesting the breakout level, with price memory going back to the 1900s. It's a very important level that has the attention of many buyers and sellers.
If MRK slips below 90, the path of least resistance will shift from sideways/higher to much lower.
PYPL is stuck below the VWAP anchored to the 2021 peak:
PayPal was one of the hottest stocks during the last cycle and had its best earnings reaction ever at the beginning of it. Since then, things have been ugly.
The stock has suffered an 80%+ drawdown and is in a prolonged consolidation. There are a lot of baggies in this one! 🤮
As long as PYPL is below the VWAP anchored to the all-time high, the path of least resistance is sideways/lower.
