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3 Dow Jones Stocks to Buy and Sell After Earnings

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·4 min read
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  • Several Dow Jones stocks have been thrust into the spotlight after reporting earnings.

  • JPMorgan Chase (JPM) is guilty as charged following Q1 results.

  • Verizon’s (VZ) headline beat is being put to the test in VZ stock.

  • IBM (IBM) delivers a beat and big-time breakout opportunity for buyers.

Dow jones logo in famous times square in Manhattan. dogs of the dow
Dow jones logo in famous times square in Manhattan. dogs of the dow

Source: Venturelli Luca / Shutterstock.com

Now two weeks into earnings season, April is proving mostly challenging for even the venerable Dow Jones stocks. The blue-chip index is on pace for a 3.5% loss this month and its weakest performance since September. And that’s also helped drag the benchmark average back down 8.5% in 2022.

Still, that’s not to say that earnings reports in the Dow Jones Industrials have been uniformly bad.

It’s simply a more challenging operating environment for such companies to endure. Beneath the surface there have been winners, alongside the losers. Let’s look at three recent earnings reports, and determine which Dow Jones stocks investors should buy or sell.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Ticker

Company

Current Price

JPM

JPMorgan Chase

$122.59

VZ

Verizon

$48.77

IBM

IBM

$135.81

JPMorgan Chase & Co. (JPM)

JPMorgan & Chase (JPM) has broken pattern, thirteen month and Fibonacci support and warns of deeper correction below $100
JPMorgan & Chase (JPM) has broken pattern, thirteen month and Fibonacci support and warns of deeper correction below $100


Source: Charts by TradingView

JPMorgan Chase (NYSE:JPM) looks like a sell to exit long positions today or even a short.

Aren’t banks supposed to benefit from higher interest rates? That’s the general rule, but business, as in life, is never quite that black and white. And JPM’s earnings release last week delivered on that front.

In summary, the financial giant posted an earnings miss on the back of declining investment banking fees, larger credit reserves and weaker trading revenues in equities and fixed income.

Technically, investors responded by sending this Dow Jones stock down more than 3% in the report’s aftermath. Today, the situation has worsened.

After staging a modest rally, shares have now narrowly broken their thirteen-plus month low, as well as their 50% retracement level from the Covid-19 cycle dating back to March 2020.

With weekly stochastics affirming the price weakness and a downward sloping Bollinger Band not helping matters for bulls, JPM stock is opening itself up to a much larger correction. As such, JPM stock may not find a bottom until a key, longer-term trend and Fibonacci support area below $100 are in play.

Verizon (VZ)

Verizon (VZ) has failed Covid retracement levels and now sits near key pattern support after forming a bearish double engulfing candlestick pattern
Verizon (VZ) has failed Covid retracement levels and now sits near key pattern support after forming a bearish double engulfing candlestick pattern


Source: Charts by TradingView

Verizon (NYSE:VZ) is another Dow stock to close out or short today.

Last week the wireless services giant delivered a slightly stronger-than-forecast top and bottom-line beat for its first quarter. But management surprised investors by modestly cutting its full-year outlook for wireless revenues and profit growth.

Despite encouraging words from CEO Hans Vestberg that Verizon is well-positioned for long-term growth in its mobility, network and broadband markets, investors bearishly opted to live in the moment and sent VZ stock down more than 5.50% in the wake of the report.

Technically, the worst of the damage in VZ stock may just be getting started. As the extended monthly chart reveals, shares have put together a higher volume, bearish double engulfing candlestick pattern, which traded through Fibonacci support tied to Verizon’s Covid-19 bottom. Now the price action is threatening critical lateral and uptrend support.

Coupled with a bearishly positioned downtrend in VZ’s stochastics indicator, a longer-term correction toward $36 to $41 should have investors booking capital gains in Verizon stock, rather than relying on future income to save the day.

IBM (IBM)

IBM (IBM) is set to break out from a ten-year congestion pattern
IBM (IBM) is set to break out from a ten-year congestion pattern


Source: Charts by TradingView

Unlike the other two Dow Jones stocks I’ve mentioned, IBM (NYSE:IBM) is a buy following its earnings results.

It has been ten years of missed opportunities for IBM stock investors. Since April 2012 (adjusting for dividends), owning IBM stock has resulted in a big fat bagel-like return. By comparison, the blue-chip index has generated a return in excess of 220%.

Today though, this doggish Dow stock may deserve more than just a day of outperformance. On the back of its earnings beat, IBM shares are up 5% on the month after jumping more than 7% immediately after reporting. Also, this blue-chip is almost in the green year-to-date, compared to the Dow’s decline of 8.6%.

Technically, a lost decade of performance also bodes well for buying IBM stock. IBM shares are spitting distance from 2013’s all-time-high after putting together a very large and often messy consolidation.

Right now, the large congestion pattern looks set to finish its business with an upside breakout from a smaller, high-level double bottom that has developed since June.

I’d advise investors to wait and buy IBM stock on a second attempt and pattern reaction through $140.51 that’s confirmed with a nearby stochastics crossover.

For that patience, a full-blown breakout could take IBM shares toward $200 over the next 12 to 18 months, while also offering investors an attractive, above-the-market dividend of 4.85%.

On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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