We're about a week away from the start of Q2 earnings season, so now's the time to start doing your pre-earnings season homework. I'm not sure what that means to everyone else, but for me, it's all about evaluating relative strength. Which companies have been showing the best relative strength? Those are the companies that, in my opinion, will provide us with the biggest positive revenue and earnings surprises.
I'll kick things off with an airline, Delta Airlines (DAL):
Given the look of this chart, especially the HUGE absolute and relative rallies and the rapidly-rising AD line, I'd be shocked if DAL reports anything negative. I expect a solid beat on both revenue and EPS and I wouldn't be surprised at all to see DAL raise its quarterly and annual guidance. Now, will that translate into huge upside for the stock price? Well, that remains to be seen.
The transportation stocks ($TRAN) in general are exploding to the upside and this index has very strong performance ties to the S&P 500. I'll be discussing the state of transports, the S&P 500, and many other areas of the market in our "Bulls-Eye Forecast: Mid-Year Update" event to be held on Thursday, July 6th at 7:00pm ET. It's a FREE event, but seating is limited. CLICK HERE to register and reserve your seat! If you can't make the live event, we'll send out a time-stamped recording to all those that register.
Hope to see you Thursday evening!
Happy trading!
Tom Bowley, Chief Market Strategist, EarningsBeats.com
