Travel stocks could hit the headlines this week’s spate of earnings reports, say two traders.
In the second busiest week of the earnings season, companies from a variety of industries will publish their quarterly results. Twenty-eight percent of the S&P 500 is supposed to report.
Uber, Take-Two Interactive, Square, Eli Lilly, Beyond Meat, General Motors, Alibaba, Booking.com and DraftKings are just a few of the few names that report.
A dealer has an eye on Marriott International, who reports on Tuesday before the bell.
“This will be a good indication of how reopening trading is really going and whether this Delta variant is really starting to affect travel plans for the end of summer,” Piper Sandler’s senior technical research analyst Craig Johnson told Trading Nation “by CNBC” on Friday.
The stock is in a strong position that goes into the report, Johnson added.
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“You can see that a lot of optimism is built in,” said the chart analyst. “You can see the beautiful downtrend reversal that has taken place. You can see the stocks pull right back to their 200-day moving average.” [and] immediately recovered properly. “
Since the options market implies a 4% move up or down for the stock after earnings – it’s hovering 2.7% in the past – the action could predict what is to come in similar reopening deals, Johnson said.
“This will be an important stock to understand that reopening and [how] The mood changes with the Delta variant and the travelers, “he said.
While earnings are well above expectations on several metrics, travel, entertainment and grocery stocks are still worth a look, given concerns about the Delta variant, said Steve Chiavarone of Federated Hermes.
With the tightening of the Centers for Disease Control and Prevention’s mask guidelines: “Will this affect behavior or will consumers somehow enforce it?” Chiavarone, a portfolio manager, equity strategist and vice president of his firm, said in the same interview with Trading Nation.
“If we think about some of the guidelines that are coming out of these companies over the next week, we will look very carefully,” he said.
He can also take advantage of pullbacks should the opportunity arise.
“There could be a little weakness and we would try to buy that,” said Chiavarone. “I don’t know if we would do it right now, but we would definitely put these names on our buy list.”
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