Good Earnings, Bad Price Action

The S&P 500 is pressing higher, the tape is strong, and earnings season is doing what it always does… separating the leaders from the laggards. 

But what stood out on Friday wasn’t just who beat or missed. It was how those results were received.

*Click the image to enlarge it

We saw four financials post positive earnings results, but once you strip out the tailwind from the index rally, two of those quickly fall apart. That’s exactly what our reaction score framework is designed to capture. 

It’s not about whether a stock went up. It’s about whether it should have gone up more. And in names like Fifth Third $FITB and Regions $RF, the answer is no. 

These weren’t strong reactions.

At the same time, Netflix $NFLX delivered a clean double beat… and got absolutely smoked. The stock traded lower by nearly 10% on the day, with a reaction score of -7.4, the worst we’ve seen so far this earnings season. 

So let’s dig into both sides of that equation.

Starting with Truist Financial $TFC, this is what constructive behavior looks like when fundamentals and price are finally starting to line up.

Truist Financial delivered a strong quarter, with earnings per share up 25% year-over-year. That growth wasn’t coming from one-off items either. It was driven by real underlying momentum across the business, with loan growth, fee income, and operating leverage all moving in the right direction.

What stands out most is the quality of that growth. Commercial lending continues to expand, investment banking and trading revenues are picking up, and wealth management remains a steady contributor. 

At the same time, expenses are being managed effectively, allowing profitability to scale higher. You’re seeing the combination of growth and discipline, which is exactly what you want to see.

Now layer that on top of the chart.

TFC has carved out a textbook multi-year base. The stock tried to break out earlier this year and failed. 

But instead of rolling over, it reset, held the range, and worked its way right back up to the same level. 

Now we’re back at the scene of the crime, with three consecutive positive earnings reactions acting as a tailwind.

If buyers can follow through here, TFC will be in a brand-new primary uptrend. 

Now compare that to Netflix, which is telling the exact opposite story.

On the surface, the quarter looked great. Revenue was up meaningfully year-over-year, while net income surged to more than $5.2B.

The company is guiding for 12–14% revenue growth this year, with expanding margins and a rapidly growing advertising business. 

Engagement metrics are hitting all-time highs, and management continues to highlight a massive runway ahead.

That all sounds like a stock that should be going up.

Instead, it has been punished for four consecutive earnings reports.

And the chart explains why.

What you’re looking at is a textbook distribution pattern. 

Earlier this year, it looked like the stock might break down and complete the top, but it wasn’t ready. It bounced, came back into the range… and then failed again.

Now you’ve got a fresh lower high and a brutal post-earnings reaction.

And when you combine that with four straight negative earnings reactions, you have a clear shift in sentiment. 

It doesn’t matter how good the numbers are if the market no longer cares. That’s the key takeaway here. 

Earnings sentiment has flipped from a tailwind into a headwind, and that’s exactly what you see in topping structures.

So while TFC is being accumulated and setting up for a potential breakout, NFLX is being distributed and flirting with a downside resolution.

In the Daily Beat, we break down these reactions to show you what’s actually happening beneath the surface. 

But in the Premium Beat Report, we take it a step further. That’s where we’re actively positioning in names where technicals and fundamentals are aligned.

If you want to focus on the stocks with the best technical and fundamental trends, that's where you need to be.

Happy 4/20 to those who celebrate,

-The Beat Team