In Monday's EB Digest, I featured a company that I thought might report disappointing results - Rivian Automotive (RIVN).
It had performed poorly relative to its automobile industry peers ($DJUSAU) and appeared to be discarded by Wall Street. Last night, RIVN reported revenues that fell way short of expectations and its production guidance was weak. Now we know why RIVN was disliked by Wall Street as it trades down more than 8% in premarket action this morning. Well, tonight's earnings is going to be all about software ($DJUSSW). Several former software darlings will be reporting quarterly results, many of which show awful relative strength, including Veeva Systems (VEEV) and Okta, Inc. (OKTA). If I had to pick one that might deliver better-than-expected results, I'd likely go with Splunk, Inc. (SPLK):
Enter plunk, Inc. (SPLK):
There are a number of positives on this chart. First, the RSI has been behaving like SPLK is bullishly trending higher. We've seen the RSI reach 70+ on a couple occasions AND RSI lows have maintained above the key 40 level since November. Second, the AD line is absolutely SOARING. Thus far, the recent selling has found support at the rising 20-day EMA. Finally, SPLK's relative strength has been steadily increasing the past few months and just hit a new 10-month relative high vs. software. If there's a "diamond in the rough", I like SPLK's odds.
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Happy Trading!Tom BowleyChief Market StrategistEarningsBeats.comBetter Timing. Better Trades. |