A whirlwind earnings week saw traders jumping in and out of some of the biggest stocks in the market. In the coming days, technical experts will be watching to see whether those moves have staying power. So far, companies with negative earnings surprises are seeing their stocks slide by 2.5% on average, slightly higher than the typical decline of 2.3% for this part of earnings season, according to a note from John Butters at FactSet on Friday. Positive surprises are seeing smaller moves of about 1%, in line with their five-year average. Those macro numbers might seem small to daily market watchers, as some of the bigger post-earnings moves in either direction have affected the market’s most influential stocks. For example, shares of Meta Platforms fell 10.6% on Thursday after earnings beat expectations, but revenue guidance was weak . Meanwhile, Alphabet jumped 10.2% on Friday after reporting an earnings beat and announcing a dividend . On a chart, those big post-earnings moves can leave “gaps” that may become a key area to watch going forward. “What happens with these gaps it’s like they leave almost like a pocket on the chart where there’s no selling pressure. Think of it as almost like a little vacuum,” Katie Stockton, founder and managing partner of Fairlead Strategies and a CNBC contributor, said about some of the downside moves. A similar situation can exist when a stock opens sharply higher after an earnings beat. The gaps themselves take on extra importance if they break through a key resistance level, say, a 50-day moving average, and if they are not quickly “filled” in the next few trading days, she said. “We always make sure that the gaps are sustained, if you will. So let’s say you saw a gap above a resistance level, that’s your breakout. For the next few days, we like to see that stock hold up above the gap because that effectively confirms the breakout,” Stockton said. What’s next for Meta Meta looks like a potential example of the gap being filled after its sharp drop on Thursday. Stockton said the stock did cross some resistance areas and described the move as a “short-term breakdown.” However, shares closed above their lows on Thursday and then ticked up on Friday. For investors who still want to sell Meta, this upward trend is a sign that it might be best to wait, Stockton said. “It suggests, from a short-term perspective, it’s a little overdone. … You probably want to give it a little more room to bounce for a selling opportunity,”…
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