Testing Key Levels
RLT Newsletter
I have to admit, I don’t love earnings season.
Having the direction of the entire stock market hinge on the reactions of a handful of companies is not much fun. Then there’s the sympathy gap problem. Even if one of your stocks isn’t reporting, another name in the same sector can miss and drag your position down with it anyway.
It’s one of the reasons I enjoy trading Bitcoin so much. No earnings, no surprises, just price.
That said, the biggest downside of earnings season is also its biggest upside.
I love trading the gaps that come out of it.
Not before the report. After. A gap tells you an enormous amount about market sentiment. Until you actually see where a stock opens, it’s hard to get a true read on how strong or weak the reaction really is. A lot can change overnight after an earnings call.
Actually, let me correct myself. Gaps aren’t the only thing I like about earnings. The volume is also a key signal and a great place to find edge.
The session right after an earnings report usually gives you a clear picture of who showed up with conviction. Did big money buy the dip aggressively? Did institutions sell into the gap up? The combination of a gap and volume is often one of the best clues you’ll get about a stock’s next major move. Until that first session plays out, it’s mostly speculation.
GOOGL: Nearing the 200-Day
As I’m writing this, GOOGL is set to gap down nearly 5%, opening near its 200-day simple moving average.
If it opens around the 200-day SMA, I expect a bounce. Wednesday’s candle was bearish, closing near the lows, which means plenty of traders were shorting the stock heading into earnings. Those traders eventually have to buy shares back to lock in profits, and that short-covering can fuel a relief rally and create the initial retest.
The $320 to $323 zone is also a significant area of support, with both a major price gap and the 200-day SMA converging there. If GOOGL opens in that range, I’d expect buyers to step in fairly quickly.
However, if GOOGL breaks below the 200-day SMA, the next major support zone comes in around $311 to $305. That area is reinforced by the anchored VWAP from the Buffett gap, as well as the gap fill from the April 8 breakout gap, making the next area of major support below the 200-day SMA.
GOOGL Daily Chart
TSLA: Testing a Critical Level
TSLA is also gapping lower and is now getting dangerously close to breaking its 100-week simple moving average.
It already broke the major uptrend line that had held since 2025, and it’s spent all of 2026 carving out lower highs. A clean break below the 100-week SMA would be a real technical failure and could open the door toward the $300 area.
Between TSLA and SpaceX both taking hits lately, Elon Musk might soon only be the richest man in the world by a measly $500 billion. As Trump would say, “sad.”
On the bullish side, if TSLA can hold both the 100-week average and horizontal support around $360, there’s a real path back to $400.
Even so, TSLA is stuck in a wide sideways range and isn’t one of the market’s leadership names right now. Unless you’re building a long-term position or running a covered call strategy on it, there are better opportunities out there.
TSLA Daily Chart
Semiconductors Are Still Driving the Market
Right now, this market still lives and dies by chips and the broader AI trade.
Wednesday’s heat map was mostly red, but strength in NVDA, AMD, DELL, AVGO, and a few other AI leaders helped stabilize things and extend some of the market momentum that started earlier in the week.
The most encouraging sign for the bulls is that the bearish head and shoulders patterns on SOXX and its biggest component, MU, have so far been bear traps.
I missed my own bullish MU entry by about $4 after laying out the setup last week, so hopefully some of you caught that one.
As long as the bear patterns keep failing to confirm and key supports continue to hold, I don’t see a strong technical case for a major market breakdown here.
MU Daily Chart
Maybe the biggest story out of GOOGL’s earnings wasn’t even the stock’s reaction. It was the company’s continued commitment to AI infrastructure spending.
The capex race is still very much on, and that’s exactly what chip companies want to hear. As long as the big tech players keep pouring hundreds of billions into AI infrastructure, the companies supplying the chips, networking gear, memory, and optical components should keep benefiting.
The market may rotate from one AI winner to the next, but for now, the spending that has powered this bull run seems to still be flowing.
Earnings season is chaotic, but it’s also where edge for the next quarter can be found. Anyone can guess ahead of a report. It’s the reaction, the follow through, and the volume behind it that actually tells you something you can trade on.
Thank you for another helpful update.