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One Industry That's Failed Miserably During Earnings Season

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I could provide a solid list of earnings season failure nominees like semiconductors ($DJUSSC), software ($DJUSSW) and medical equipment ($DJUSAM). However, I'm going to give the award to gambling ($DJUSCA). Since the big banks kicked off earnings season on April 14th, we've seen 8 gambling stocks with market caps greater than $1 billion report their quarterly results and, quite honestly, Wall Street hasn't cared a bit. The initial reactions have been strong, with 6 of the 8 gapping higher at the opening bell after reporting results, but, by day's end, only 1 gambling stock was able to close above its open. Additionally, on average, these 8 gambling stocks lost more than 4% from opening bell to closing bell. That's the opposite of accumulation and is cause for concern.

Technically, we saw the DJUSCA close on Friday at its lowest level in the past 2 1/2 months:

The daily PPO has taken a very bearish turn to the downside, while price support from recent lows has been lost. Throw in the deteriorating relative strength and it's easy to be bearish this group right now. The only gambling stock to have closed above its open - a possible sign of accumulation - is Red Rock Resorts (RRR). Everything on this chart remains very bullish. If you're going to own a stock in a weak industry group, make it the one with the best relative strength - like RRR:

On Monday, May 10th at 4:30pm ET, I'll be discussing many areas of the market during our "Sneak Preview" webinar of our upcoming May 19th draft, when we select the 10 stocks that will be equal-weighted in each of our 4 portfolios. It's important to identify the leading areas and then further research to find the leading stocks within those areas. This will all be covered during our Sneak Preview webinar. For more information on how to register for this FREE event, CLICK HERE.


Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More
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