EarningsBeats.com Digest

Published: Fri, 11/22/19

EarningsBeats.com Digest for November 22, 2019

Dear EarningsBeats Digest Member,

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Keep Tight Stops on Relative Laggards

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Five weeks ago, I wrote about Texas Instruments (TXN), citing its solid relative strength and expecting a solid quarterly earnings report. Well, it didn't happen. TXN disappointed and ran into a lot of sellers the next morning at the opening bell. After rallying for a couple weeks, TXN tested its declining 20 day EMA and rolled over. Yesterday, it appeared to be breaking down beneath that post-earnings low, only to rebound and print a hammer by the close.

While semiconductors ($DJUSSC) have been very strong during the S&P 500's march to record highs, TXN became a relative laggard since the disappointing earnings were released. When a stock is at a 52 week relative low to its peers, you'd better make sure it holds onto key price support. Looking at the chart above, I'd have to say that price support in the 115-116 area is critical. The hammer and false breakdown could provide a lift to TXN in the very near-term (perhaps to allow it another 20 day EMA test), but I'd be sure to keep my stop in play if I owned TXN. Relative weakness and a price breakdown can be a lethal combination.

Happy trading!

Tom Bowley

Chief Market Strategist

EarningsBeats.com
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