On Tuesday, we heard from some of the world's largest financial institutions, and the banks' message was mostly constructive.
JPMorgan $JPM rallied 2.5% after a double beat, snapping the four-quarter beatdown streak we highlighted in Sunday’s Weekly Beat.
Bank of America $BAC also climbed after beating the market’s headline expectations.
But the big winner was Goldman Sachs $GS, and the big loser was IBM $IBM.
*Click the image to enlarge it
Goldman Sachs stole the show following a big double beat.
GS rallied 9%, posted the strongest reaction score on Tuesday’s Beat Sheet, and closed at a new all-time high.
What's more, this was Goldman’s best earnings reaction since Q1 2019.
And it wasn’t hard to see why.
Goldman delivered record second-quarter net revenues of $20.34 billion, record EPS of $20.98, and a 23.5% return on equity.
The firm’s Global Banking & Markets business generated $15.52 billion in revenue, up a remarkable 53% YoY, with strength across investment banking, FICC, and equities.
In plain English, Goldman is doing exactly what Goldman is supposed to do.
When dealmaking, trading, financing, capital markets, and risk-taking are heating up, Goldman should be one of the biggest winners.
And that's exactly what the stock is saying.
Goldman has been in a very strong primary uptrend for more than a year, and it's continuing to accelerate.
GS is exactly the kind of technical, fundamental, and earnings sentiment alignment we look for at the Beat Report.
We expect the path of least resistance for GS to remain higher for the foreseeable future.
Then there was IBM...
This was an unusual situation because IBM isn't scheduled to hold its regular earnings call until July 22.
But the company released preliminary second-quarter results on Tuesday, and the market treated that as earnings day.
And boy was it ugly!
IBM reported $17.2 billion in revenue, up just 1%, with Software revenue up 5%, Consulting roughly flat, and Infrastructure revenue down 7%.
Management said the shortfall was driven by weaker-than-expected performance from its software business, along with large deals that failed to close on expected timelines.
As a result, the stock fell more than 25% for IBM’s worst day ever.
Worse than Black Monday in 1987...
Worse than anything we’ve ever seen!
And now the chart is sitting right on top of a very important support zone near $212.
If buyers fail to defend that level, it would mark the resolution of a massive top and the beginning of a brand-new primary downtrend.
For now, the bulls are holding on for dear life at $212.
So Tuesday gave us a great lesson.
Goldman has strong technicals, strong fundamentals, and improving earnings sentiment.
IBM has weak technicals, weak fundamentals, and terrible earnings sentiment.
At the Beat Report, we're not just looking for companies that beat estimates.
We're looking for the stocks where the chart, the business, and the market’s reaction all point in the same direction.
Right now, Goldman looks like leadership, and IBM looks like trouble.
And with earnings season just getting started, we expect to see much more separation between winners and losers in the days and weeks ahead.
If we put on a new trade, Beat Report members will be the first to know.
Join the Beat Report today to get our next trade alert, our current watchlist, and access to the stocks we believe have the strongest alignment across technicals, fundamentals, and earnings sentiment.
Thank you for reading,
-The Beat Team
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