We start the holiday-shortened trading week with a round of earnings and with Bitcoin at new highs. The Daily Breakdown previews what’s next.
Tuesday’s TLDR
- Earnings season is underway
- AMZN charts remain strong
- MicroStrategy buys more BTC
Weekly Outlook
We have not had many full trading weeks over the past month due to various holidays and market closures. However, after this week, the next shortened trading week isn’t planned until mid-February when we celebrate Presidents’ Day.
Last week was pretty busy when it came to economic reports, but this week is a bit calmer. That said, earnings season is officially underway and a number of companies are set to report this week.
On Tuesday, we’ll hear from 3M Co, United Airlines, and Netflix, among others.
On Wednesday, Procter & Gamble, Johnson & Johnson, and Discover will report earnings, while Thursday’s earnings reports include GE, American Airlines, and Texas Instruments.
Once we get to Friday, there are a few economic releases to watch for, including the services PMI report and the existing home sales report. On the earnings front, companies like Verizon and American Express will report earnings.
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The setup — Amazon
The Magnificent 7 stocks are divided right now. Some are holding up quite well, like Alphabet, Amazon and Meta, while others — like Apple, Tesla and Nvidia — have endured larger pullbacks.
When we zoom in on Amazon, the recent run to all-time highs resulted in a mild and calm correction toward the 50-day moving average. Now, the stock is trying to break out of its consolidation pattern.
Consolidation of this manner is generally viewed as healthy price action. Bulls now want to see AMZN shares resolve higher out of this pattern and make a push toward $230 and beyond. On the downside, they’ll want to see support come into play near $215 and the 50-day moving average.
Bears want to see the opposite. They want shares to remain below $230 and eventually take out the recent lows near $215, opening the stock up to more potential downside.
Options
For some investors, options could be one alternative to speculate on AMZN. Remember, the risk for options buyers is tied to the premium paid for the option — and losing the premium is the full risk.
Bulls can utilize calls or call spreads to speculate on further upside, while bears can use puts or put spreads to speculate on the gains fizzling out and AMZN rolling over.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street is watching
MSTR – MicroStrategy continues to buy Bitcoin, most recently scooping up approximately 11,000 Bitcoins for roughly $1.1 billion in cash. The purchases were made between January 13th and January 20th, paying about $101,191 per Bitcoin.
SCHW – Shares of Charles Schwab are trading higher this morning after reporting better-than-expected Q4 results. The firm reported earnings of $1.01 a share on revenue of $5.3 billion, with both metrics beating analysts’ expectations.
BTC – Over the weekend, Bitcoin prices briefly cleared the $109,000 mark, setting a new all-time high for the cryptocurrency. The record was short-lived though, with BTC quickly retreating back toward the $100,000 mark before it found support. Check out the charts for Bitcoin.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
