Big Tech Earnings Could Turn The Equity Market's Tide

Earnings season is reaching its climax, and we have already had some exciting price action so far. Big Tech has been this year's most prominent market drivers, and its grandiose 2020 returns are being put to the test once again.

This week of major earnings reports leads up to one of the most controversial elections in US history, while a global pandemic picks back up and economic risk swells. This rising anxiety has some investors on the run, pulling profits where they can. Let's take a look at this week's action and what to expect from this week's big hitters.

Last Week's Recap

Last week we had some mixed results from our tech powerhouses. Last week, Netflix NFLX released highly anticipated earnings on Tuesday, disappointing investors after illustrating weaker than expected subscription growth. NFLX shares have tumbled 8% since, as investors and traders pull profits. Still, the shares remain up 49% for the year.

Tesla TSLA just released its Q3 earnings with record figures on effectively every metric. The innovation-driven automaker just recorded its 5th consecutive profitable quarter.

Elon Musk and his automotive giant are finally keeping their ostentatious promises. Elon promised half a million cars delivered by the end of 2020, and the company might just be able to pull it off.

In the face of a global pandemic and economic recession, Tesla was able to deliver a record number of EVs. The enterprise is looking at a very bright future, and it seems that every quarter TSLA's seemingly lofty valuation is further justified.

Tesla's Shanghai Gigafactory was a success, and its Berlin Gigafactory is set to start production next summer. Tesla is undoubtedly going to be a major automotive driver in the Roaring 20s.

What to Expect This Week

5 out of the top 6 largest companies in the world are reporting this week, and this could catalyze some sizable market-moving action.

Tech has faltered since the beginning of September as the pre-election jitters begin to impress fear into investment/trading decisions. The 3 largest world tech giants: Apple AAPL, Microsoft MSFT, and Amazon AMZN, have all dipped below their 50-day and will be looking towards their 200-day moving averages for support if this week's results add to the selling pressure.

Below are the critical tech earnings to look forward to this week, along with Zacks Consensus estimates.

Levels to Watch

The markets are really taking a tumble today as COVID-19 cases surge over the weekend to record levels. Investors and traders are worried that this second pandemic wave will send another financially devastating shockwave through the economy.

MSFT is down over 3% today, once again dipping below its 50-day moving average (blue line), which sits at $212.50. The next big support level, if the shares continue down through its September quarter earnings, is around $190, which represents the 200-day moving average (red line) as well as the stock's pre-pandemic highs.

AAPL is down marginally today and is in a similar position to MSFT, having dropped below its 50-moving average (blue line) and is moving lower. The support level to watch out for here is $100 per share, which I have circled in red. If it breaks below this level, watch out for its 200-day moving average of around $90 per share to support the stock.

AMZN has been trading sideways since the beginning of July, stuck in a trading rut between $2,900 and $3,500 per share. The stock has fallen below its 50-day moving average (blue) and is looking towards Thursday's results to push the shares back into growth. AMZN is trading at $3,190 and will be looking at the $3,100 level for support (circled). Analysts are anticipating record figures from the e-com and cloud giant. Let's see if this tech behemoth can deliver.

Final Thoughts

If these three tech pioneers make it down to their 200-day moving averages, I will not hesitate to buy. There is an enormous amount of uncertainty in the markets with a record daily COVID cases and maybe one of the US's most contentious elections a week away. I would be cautious in purchasing any stocks going into earnings this week.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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