Big Data Highlights Stocks To Watch This Earnings Season

Earnings season is now well underway in the US and so far investors like what they see, if market reaction and sentiment metrics are anything to go by.

While the S&P 500 fluctuated on Tuesday in response to Obamacare negotiations in the US Senate, corporate earnings from the likes of Johnson & Johnson, UnitedHealth Group, United Airlines, and Netflix helped soften the blow. As a result, we saw record new highs for a number of different stocks and sectors.

Notably, the Nasdaq composite notched up a seventh day of consecutive gains on Tuesday, closing at 2,460 while the Russell 2000 also hit a new all-time high in intraday trading, the first since June 9th.

Investor Sentiment Positive Across The Board

As well as new market highs, investor sentiment metrics also looked broadly positive after market trading on Tuesday, July 18.

As can be seen from the following graphic taken from RavenPack’s big data analysis platform, investor sentiment with regard to US earnings season is green across the board.

This is not surprising given the strong earnings numbers we have seen so far from the likes of BAC, UNH, UAL, LMT, NFLX and others.

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General sentiment for the whole market scores a moderately positive 0.22 and this is with a high volume media buzz of 4.25.

With stock markets at all-time highs, there is a fear of overvaluation in the back of everyone’s mind. However, positive earnings reports are helping to soothe investors’ nerves which, in turn, is manifesting itself in positive investor sentiment scores.

Stocks Paving The Way

According to earnings sentiment metrics from RavenPack, a number of stocks are leading the way this earnings season. Of the stocks shown in the graphic above, several are showing broadly positive sentiment scores.

Bank of America (BAC) makes up a big part of the map with a contribution of 357 articles over the last day alone. The stock scores a positive sentiment score of 0.51, a direct result of its recent earnings report which came in above expectations. Indeed, the company said its bottom line EPS came in at $0.46 per share which was ahead of the street consensus for $0.43 per share.Undoubtedly, the score would have been higher if the stock had finished higher in market trading but it did not.

Likewise, Lockheed Martin scores a positive 0.51, UnitedHealth Group scores 0.58 and Goldman Sachs scores 0.55 based on a volume of 145 articles. This is despite Goldman Sachs falling -2.60% in yesterday’s trading - a reaction that suggests the positive earnings release is not being appreciated by market participants.

Meanwhile, Netflix, a stock which has seen one of the biggest price gains of the last few days (up 13% since Monday close) scores 0.36. This is lower than you might expect and suggests that positive sentiment and market attention may now be fading.

Stocks Missing Out

On the other side of the earnings story, there are a handful of stocks posting negative sentiment scores. IBM scores a negative -0.11 after the company missed earnings expectations and the stock is currently down -2.79% in aftermarket trading.

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Likewise, communications provider Ericsson (ERIC) is also sharply in the red. The company missed earnings expectations and reported a loss of $114.6 million, after reporting a profit in the same period a year earlier. The stock fell -16.69% in normal hours trading with further volatility expected in the coming days.

Where To Find Opportunities

Overall, earnings sentiment scores show positive signs and this will give investors confidence that the record breaking rally in US equities can continue for a little longer. As long as companies are beating market expectations on earnings, they will continue to command higher prices going forward.

If you would like to see two of my best stock picks based on big data analysis of recent earnings make sure to check out my free case study where i highlight two stocks that could continue to rally following their latest earnings numbers: Big Data Analysis Highlights Two Stocks To Buy This Earnings Season.

JB Marwood is an independent trader and writer specialising in mechanical trading systems and market analysis. He can be reached at http://jbmarwood.com

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