Earnings Bonanza [3 Must-See Charts]

The major averages finally took a break this week.

Traders are now anxiously awaiting the market’s next move following the furious comeback rally.

The next week or two could prove critical for this young rally. Will stocks consolidate here and continue to push higher? Or will the bears finally take over and deny the march back to new highs?

Luckily, we don’t have to sit on our hands and wait for the herd to make up its mind. Earnings season is igniting new rallies — and punishing the companies failing to meet investors’ lofty expectations.

First up, Chipotle Mexican Grill (NYSE:CMG) shares jumped double-digits as its turnaround accelerates.

“Fueled by a combination of better marketing, new menu items and re-trained restaurant staff, Chipotle served up much better than expected fourth quarter results on Wednesday,” Yahoo Finance reports.

The stock finished the day higher by more than 11%, briefly breaking above $600 for the first time since late 2015.

CMG

It also doesn’t hurt that it’s been about six months since anyone has fallen sick eating at Chipotle.

You might recall the burrito chain temporarily shut down one of its locations back in August after an investigation revealed as many as 700 people might have been sickened after eating their food.

Meanwhile, Chipotle stock tanked on the news. The ghost of past food poisonings spooked investors, sending shares lower by as much as 8% the day the story broke.

That’s when something peculiar happened: Chipotle shares caught a bid.

After briefly visiting the lower end of its summer trading range, Chipotle stock quietly rallied despite the negative headlines. The reaction to the bad news turned into an important change in character for the stock. After all, there are few events more bullish than a stock that moves higher following a negative news event.

We traded this Chipotle bounce. But the Fourth-quarter meltdown shook us out of this position for a small gain. I’ll be watching closely for a suitable point to trade this resurgent stock again very soon.

Speaking of shakeouts, Twitter Inc. (NYSE:TWTR) shares are cratering despite topping earnings estimates.

Twitter beat it’s top- and bottom-line numbers — but the stock took a huge hit yesterday after the company admitted it probably wouldn’t make as much money this year as analyst originally expected.

To make the matter worst, Twitter’s user base appears to be stagnating. It’s monthly average user number is dropping, so the company is responding by… announcing it will no longer report monthly average users.

Nice cop-out, guys…

TWTR

Finally, if you’re looking to grab a hot date for Valentine’s Day, Match Group (NASDAQ:MTCH) has you covered.

Match Group, the parent company of Tinder, Match.com, OkCupid, and other popular dating sites, smashed earnings expectations. The company posted sales of more than $450 million thanks in part to a surge in paid subscribers to Tinder, it’s popular “hook-up app” targeting single millennials.

The stock soared nearly 10% during Thursday’s session before giving some of its gains back just before the closing bell:

MTCH

When we last checked in on Match last spring, the stock was taking a beating after Facebook announced it was getting into the dating game. At a developer conference, Mark Zuckerberg said he wanted to help connect “the 200 million people on Facebook who list themselves as single.”

Like all Zuck’s ideas, the move was a warning shot to Match. Zuck loves to poach any rival social network’s ideas and unleash them on Facebook’s massive user base. It’s a sound strategy that’s helped Facebook dominate competitors like Snap Inc. in the past. And it looked like it would give Match trouble going forward.

Traders smelled blood and pounded their sell buttons shortly after the Facebook news hit the wire. Just a few hours later, Match shares were down a staggering 22%, breaking a powerful uptrend that had propelled the stock to new highs for the better part of 2017-2018.

While the Match massacre was swift and brutal last year, this latest earnings report proves the company can still perform despite Facebook moving in on its turf. It looks like Zuck is going to lose this round of the dating game.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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