While everyone is out here fretting over the Fed, all I can think about is the earnings reports coming down the pipe.
Microsoft and Meta reported after the bell, and Apple and Amazon will be out at the same time tomorrow.
Together, these four mega-cap tech stocks comprise roughly 20% of the S&P 500.
When it comes to the Nasdaq 100, that figure is closer to 40%.
That means the news and numbers that hit the wire over the next two days will have the potential to determine the next move for the market.
The reactions from these stocks will surely drive performance at the index level. That part is just math.
But these companies represent more than just index heavyweights...
Of course, they are the top stocks and most-widely owned investment vehicles… Most investors have direct ties to them.
But more importantly, consider the multitude of indirect ties investors have to them.
They are the AI hyperscalers, the Magnificent Sevens, the world’s top innovators. They sit at the forefront of the global economy… and the center of the trends that drive it.
For example, the Microsoft and Meta reports will speak volumes about the broader technology landscape. They offer insight into whether the AI revolution is just getting started— or is losing momentum. Their sales and capex estimates help the market gauge the health and trajectory of this mega trend.
And as for Apple and Amazon, what two stocks could tell us more about the demand for goods? These are the largest consumer products and retail companies in the world. They are each packed with information about the consumer economy, among other things.
The point I'm making about the four companies that report today and tomorrow is two-fold.
Their reports and reactions will have a significant impact on the major averages— likely dictating the next move for the S&P 500 and Nasdaq 100.
But they will also set the tone for the broader market and send shockwaves through a handful of other industry groups and individual stocks.
I’m talking about all the sympathy trading that will occur over the next few days…
Do you have a lot of AI exposure in other names? Expect fireworks from them.
Do you own a lot of cloud and software stocks? Be prepared for some action in response to these reports.
It’s a global marketplace. All these stocks and industries are interconnected. The performance of the leaders will send ripples throughout the entire market this week.
So let’s talk about the Magnificent Seven and the levels that matter.
Here’s a snapshot with the earnings dates and some performance metrics.
These stocks have carried the leadership baton consistently this entire cycle.
As the best players on the team, they should. In other words, we expect these stocks to score most of the points, and most of them are.
Some have led massively– like META, while others have lagged behind– like TSLA. But as a whole, they are steadily outperforming the rest of the market.
Here’s a look at the relationship between the Magnificent Seven and the Equal Weight S&P 500:
* This is an equal-weight custom index of the Magnificent Seven stocks plus Broadcom (which we consider as one of them)
The index is making new all-time highs on absolute terms, and the relative trend looks poised to follow.
Notice that on a relative basis, the trend has been rangebound since this time last year. This is likely some healthy basing before the primary uptrend resumes.
I’ll be looking for the relative trend to break out and confirm the absolute trend in the coming days and weeks.
Now let’s talk about the stocks that are going to make that happen and the levels investors want to watch.
First up is the market cap leader, Nvidia $NVDA.
Earnings are estimated for late August. This is the only Magnificent Seven with an off-cycle reporting date.
I’m looking to buy pullbacks back toward 153, if we get them.
Our second chart today is Meta Platforms $META.
Earnings just hit, and they beat big on every metric. The stock is breaking out to all-time highs after hours on the heels of it.
Above 740, and the path of least resistance is higher towards the next extension around 864.
If and when we clear it, the next level to watch is 1,344. If this breakout sticks tomorrow, this one is perfectly actionable here.
Next is Microsoft $MSFT. They just announced a huge beat as well, and the stock is soaring to fresh record highs, up about 7% after hours
All indications are that MSFT will continue its steady march towards our next target of 570. From there, we’re looking at about 800.
Next up is Amazon $AMZN, which has earnings tomorrow, July 31st, after the close.
AI infrastructure buildout will be center stage, and of course, investors will look for a read on the American consumer.
Following a steep selloff in Q1, AMZN has just about made it back to its old all-time highs. A big earnings beat could be the catalyst to break it out, and the MSFT report tonight suggests heightened odds of that happening.
I like buying strength north of 240 with confirmation at the 161.8% Fib around 250. The next stop from there is 360.
In the event the earnings reaction is lower, there is a big potential support level around 205.
Now for Apple $AAPL. Unlike their peers, they’ve only dipped their toes into the AI race. Investors will be looking for an update on their future plans tomorrow.
AAPL finds itself at a key polarity level around 215, coinciding with the VWAP anchored to its record high.
If the stock can break above this level, it is headed back towards the all-time highs around 252.
From there, I’ll be targeting 374.
Next up is Google $GOOG. They reported a double beat last week, but haven’t seen much of an upside reaction… at least, not yet.
GOOG is pressing against a key resistance level around 194. This polarity zone has capped every rally for the past year.
If the internet giant can stick the landing above this shelf of former highs, risk is to the upside, and we want to be long, targeting 262.
We can use the all-time highs around 208 as confirmation. GOOG is as actionable as any of the Magnificent Seven stocks at current levels.
Last, but not least, is Tesla $TSLA. The stock fell -8% last week after a disappointing report. It’s clawed back some of those losses since, but it remains stranded in a massive range.
TSLA has been in this holding pattern for four and a half years, still trapped below its prior-cycle highs. It is the magnificent laggard of the day.
And that won’t change until it decisively clears the upper bounds of this consolidation around 490.
I think that’s where it is headed, as long as it can hold above the confluence of interest around 310-325… where it is now.
On the other hand, things can get ugly for TSLA if it violates its VWAP from the 2024 lows, which comes in around 275. It’s not my base case, but I’m open to it.
That covers all the significant levels for the Magnificent Seven.
I’m going to go catch up on these earnings reports.
Steve
Herb Greenberg went live to break down the red flags he’s tracked for years — and the stocks flashing them right now.
In the replay, you’ll learn:
The subtle signs most people miss before a stock unravels
The headlines I don’t trust — and what I read instead
Real tickers I’m avoiding, and why they’re on my list
His top lessons from decades in the market
You’ve seen the stories after they blow up. Now see how Herb spots them before they do.
