This column was originally published on RealMoney on July 24 at 11:45 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.Quarterly earnings moved the markets last week, as reporting season opened with a bang. Though the forces of gravity struck with a vengeance after Wednesday's rally, some popular stocks could move higher once volatility winds down. So let's examine five widely-held issues that just reported, to see how they might trade in the weeks ahead. Rather than zooming in to the minutiae of last week's price action, I'll take a giant step back and look at each stock in the weekly view. This larger-scale picture should lower the emotional fires and allow more potent observations about longer-term trends in play for these industry giants. The Yahoo! ( YHOO) earnings release was an absolute disaster. The stock dropped out of a four-month consolation pattern in a voracious selloff, driven by 400% average weekly volume. Of course, some folks are already asking if this decline represents a good buying opportunity. My most polite answer is "no, no and heck no." The selloff marks a major distribution event that predicts considerably lower prices into the end of 2006 and beyond. In fact, we could be looking at a measured-move downtrend that parallels the January-to-May selloff between $43 and $28. If so, that places a conservative $19 target on the stock after the dust finally settles. In other words, any bounce that approaches $30 in the next few weeks should offer an excellent short-sale opportunity (see Yahoo! chart below). Google ( GOOG) ran in place after reporting healthy earnings on Thursday evening, but good things may be happening just below the surface. Note on the chart below how the stock dropped into a broad triangle in October 2005. It's still grinding through the consolidation pattern almost a year later. This is one sign of a stock that will eventually move much higher. Most likely, price ran too far ahead of fundamentals during its post-IPO run and needs time to catch its breath. But there's no telling how long it will take for this imbalance to work out of the system and let the stock trend higher. So all we can do is stalk the boundaries of the triangle, which currently shows support at $365 and resistance at $420. A sharp move through either end of this sideways pattern should trigger months or years of strong trending action.
Microsoft ( MSFT) had a great week after an upbeat 2007 outlook, but the company still faces considerable challenges. Note that the four-year trend line broke when the stock sold off hard in early May. It will be tough for rising price to remount this new resistance level any time this year. So last week's rally may have left potential buyers with just 2 points of upside until aggressive short-sellers descend on the stock once again. Of course, short-term recoveries can turn into long-term uptrends when there's enough buying interest. But that's unlikely, given the issue's massive legion of bagholders between $25 and $28. Besides, you didn't think the company would go out of its way to underestimate Vista's sales impact next year, did you?
Apple Computer's ( AAPL) true believers were out in force last week, catapulting the stock to a six-week high after a less-than-stellar earnings report. Strong buying interest throughout the week suggests the bottom is finally in for the company, but upside potential remains clouded. The trouble starts in the low $70s. Note the multiple reversals at that price level throughout 2006. Add in Fibonacci resistance marking the 62% retracement level for the bounce that started two weeks ago. In sum, this suggests that Apple will be an interesting long-side trade for the balance of the summer, but don't expect a return to the all-time high at $86 anytime in the near future. Suits me just fine if those loony Apple cultists have less to crow about.