Stock Trading Action Plan: Tesla, Netflix, Goldman Sachs Earnings Amid Young Uptrend

The Nasdaq limped to a narrow gain for the week, but one that included a follow-through day that launched a new confirmed uptrend in Thursday’s stock trading. The Dow industrials muscled up 1.2% to clock a fourth-straight weekly advance. Small caps also shined, with the Russell 2000 gaining 1.5%. Growth stocks dialed in some energy, sending the Innovator IBD 50 ETF (FFTY) up 2.1% for the week.

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Earnings season got underway Friday, and picks up steam in the coming week with Tesla (TSLA), Netflix (NFLX), Goldman Sachs (GS) and ASML Holding (ASML) all on the radar. Bank earnings and big oil field services names are also on the list, while a steady stream of economic reports could provide markets plenty of turbulence.

Stocks To Watch: Stocks Near Buy Points

The stock market rally continues to trade in an up-and-down fashion, but a number of stocks are setting up. Breakouts have struggled at times, so investors should be looking for early entries when possible.

Samsara (IOT) has a new base after a big run-up and earnings gap, trading just below an early entry. Cloudflare (NET) is holding up nicely just above an early entry. DraftKings (DKNG) is just below an early entry as well, amid some solid performance among gaming stocks. AMD (AMD) has pulled back to below its 21-day line, not far from a buy point and its 50-day line. A downtrend break could offer an entry. Finally, Floor & Decor (FND) is hovering around a cup-with-handle buy point.

 Stock Trading Calendar: Pegging The Rate Of Descent

Is the U.S. economy slowing or sinking? A handful of timely reports in the coming week could provide more clarity. On Wednesday at 2 p.m., the Beige Book anecdotal report from Federal Reserve districts around the country will provide a window into how much the banking crisis that erupted last month has altered business conditions.

Initial jobless claims, out Thursday at 8:30 a.m., could signal recession when claims top 250,000, economists say. Claims have averaged 240,000 over the past four weeks, up 26% from the September trough. On Friday at 9:45 a.m., S&P Global flash U.S. composite index will provide fresh survey data on the state of factory and service-sector activity in the first half of April. The Fed’s 4 p.m. ET Friday weekly release will provide an update on the falling deposit levels at small banks that may contribute to a small-business credit crunch.

A batch of housing data also is due: The NAHB Housing Market Index (Monday at 10 a.m.); housing starts and building permits (Tuesday at 8:30 a.m.); and existing home sales (Thursday at 10 a.m.).

EV Markets: Tesla’s Margin Test

Tesla reports first-quarter financials Wednesday with gross margins expected to be in focus. Analysts predict earnings falling 19% to 86 cents per share with revenue growing 27% to $23.78 billion in Q1. Wall Street forecasts gross margins around 21% in the current quarter. A year ago Tesla’s gross margins were about 29% while in the fourth-quarter of 2022 gross margins were 24.3% for the EV giant. Tesla has reduced vehicle prices multiple times throughout the year to bolster demand. Those price cuts and new U.S. EV credits lifted Tesla first-quarter deliveries to a record, but fell short of FactSet views. Production outpaced deliveries once again, with Model S and X output nearly twice as high as sales. TSLA recently reduced U.S. vehicle prices once more ahead of earnings and the implementation of new battery and mineral component requirements to qualify for the full Inflation Reduction Act $7,500 tax credit for EVs. The battery criteria goes into effect April 18, when a list of models that qualify for the full $7,500 tax credit will be issued. The Model 3 contains a battery from China and Tesla’s website has a banner informing EV shoppers the “$7,500 tax credit will be reduced to $3,750 for Model 3 Rear-Wheel Drive on April 18.”

China Auto Market: The Best Of China’s New Rides

Shanghai Auto Show: China’s EV makers and their Western counterparts are set to roll out their latest and greatest products at the Shanghai Auto Show April 18-27, though a sharp slowdown looms in the world’s biggest market for electric vehicles. Chinese giant BYD (BYDDF) is likely to unveil its much-awaited Seagull, an affordable compact hatchback and potential growth driver. Warren Buffett-backed BYD’s brand-new, premium Yangwang brand will present the U9 electric supercar. Nio (NIO) plans to debut a revamped ES6 SUV, one of its most successful EVs, as well as an updated ET7 sedan, to stimulate sales. XPeng (XPEV) is likely to reveal the G6 SUV, and Polestar PSANY the Polestar 4, both seen as possible Tesla Model Y rivals. Meanwhile, premium EV startup Li Auto (LI) is set to unveil its strategy for all-electric vehicles. Thus far, Li Auto has specialized in a type of hybrid EV, which features a gas tank for charging the battery. Its so-called “EREVs,” for extended range EVs, have found big success in China, where public charging stations are in short supply.

Streaming Markets: Netflix Wants Its Groove Back

Netflix reports first-quarter results late Tuesday, with analysts looking for adjusted earnings of $2.86 a share, down 20% from the year ago period, on revenue of $8.18 billion, up 5%. Netflix is going through difficult times. The company has a commanding lead in the streaming video market but its growth has slowed. NFLX stock cratered in 2022 after the company reported two straight quarters of subscriber declines. The company received good news in late March on a Bloomberg report that said a new, lower-cost, ad-supported service tier had reached 1 million monthly active users just two months after launch. Netflix also has fulfilled its forecast deliveries to advertisers. Netflix says the new service level with ads isn’t cannibalizing its ad-free premium service level.

Financials: Getting A Closer Look At Banks

After Friday’s closely watched launch of the reporting season for banks, money lenders continue a flurry of reporting next week. Eyes will be on regionals that saw large deposit outflows during the March panic. Meanwhile, analysts expect big spikes in net interest income to offset potential losses. Early in the week, Charles Schwab (SCHW) and Bank of America (BAC) earnings and revenue are expected to jump. But Wall Street sees Goldman Sachs and Morgan Stanley (MS) top and bottom lines falling, driven by declines in investment-banking revenue. Superregionals Comerica (CMA), U.S. Bancorp (USB) and KeyCorp (KEY) also report, among others. Results from Western banks led by Zions Bancorp (ZION) and Western Alliance Bancorp (WAL) will be scrutinized, after volatile performances during the panic.

Dow Earnings: Low Expectations For Blue Chips

UnitedHealth Group (UNH) and JPMorgan Chase (JPM) launched the Dow’s  reporting season on Friday. The pace picks up in the coming week with Goldman Sachs, Johnson & Johnson (JNJ), IBM (IBM), Travelers (TRV), American Express (AXP) and Procter & Gamble (PG) all set to report. None are forecast to post an earnings gain, but about half are targeted for revenue increases.

Stock Trading Earnings Calendar

Tuesday

Lockheed Martin (LMT) earnings are expected to slide 6% to $6.05 per share Tuesday while revenue inches up to $15 billion. Lockheed earnings and revenue both rose the past two quarters. LMT stock is trading in a flat base with a 499.05 buy point.

Intuitive Surgical (ISRG) will report its first-quarter earnings late Tuesday. Analysts polled by FactSet expect the robotic surgery giant to earn $1.19 per share on $1.59 billion in sales, climbing a respective 5% and 7%.

Wednesday

Baker Hughes (BKR) announces first-quarter financials before Wednesday’s start of stock trading. Analysts predict earnings for the oil field service firm to grow 73% to 26 cents per share. Revenue is forecast to increase 14% to $5.53 billion. Wall Street sees BKR profits growing 71% in 2023 with the surprise production cut by OPEC+ and U.S. crude prices back up around $83 per barrel.

Lam Research (LRCX) launches a busy week of chip sector reporting late Wednesday. Analysts project a 12% earnings slip, following three quarters of acceleration. A 6% revenue slip would be the equipment maker’s first since 2020. The stock is struggling to hold 10-week support below a cup-with-handle buy point.

Chip equipment making leader ASML Holding also reports Wednesday, facing much higher expectations. Consensus views peg an earnings increase of 141%, and a 78% revenue gain. The would mark ASML’s best quarter since March 2021, capping almost two years of spotty performance. The stock is riding firm technical support, within a cup-with-handle base.

Thursday

AT&T (T) weighs in early Thursday with first quarter earnings expected to drop 25% and sales poised for a 21% drop. That would snuff a modest two-quarter earnings recovery. Shares have rebounded almost 10% from a mid-March low, retaking key technical support.

D.R. Horton (DHI) is bouncing between short-term support and a cup-with-handle buy point as it heads for its fiscal Q2 report Thursday morning. Consensus views see earnings falling by more than half, and revenue down 19%. But order activity and outlook will be key, along with guidance for a housing market dogged by interest rate hikes.  

Friday

HCA Healthcare (HCA) reports Q1 results before Friday’s start of stock trading. Analysts expect EPS to slip 5% to $3.93 as revenue rises 2% to $15.3 billion. However, HCA stock climbed into a buy zone starting at 269.19 on April 5, with non-Covid patient volumes returning to pre-Covid levels.

Freeport-McMoRan (FCX) has Q1 earnings due early Friday. EPS is seen falling 59% to 44 cents for the copper giant as revenue falls 24% to $5.02 billion. However, FCX stock cleared an early entry point on Thursday with a move past its 50-day moving average and break of its trendline from its January highs.

Software giant SAP (SAP) reports first-quarter results Friday morning The consensus estimate on adjusted earnings is 78 cents a share, vs. 77 cents last year. The consensus on revenue was $8.28 billion, up 5% to $7.87 billion.

SLB (SLB) reports first-quarter earnings before stock trading starts on Friday. Wall Street expects EPS will grow 76% to 60 cents with sales increasing 25% to $7.44 billion. Analysts see earnings jumping 38% to $3.02 per share in 2023 with profits increasing 164% by 2028 compared to 2022 levels.

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