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Corporate America was bracing itself to report the biggest drop in earnings since the pandemic began three years ago, with profits for S&P 500 companies expected to fall by as much as 8% due to inflation, increased borrowing costs, and other headwinds.
However, businesses appear to be blowing past these low expectations, with 77% of reports beating analysts’ estimates, with reported earnings being 7.2% above expectations.
A relatively weak dollar due to the trend of de-dollarization gaining momentum and the looming crisis over raising the debt ceiling due to political differences regarding government expenditure on both sides of the aisle might also have been unwitting tailwinds that have helped the likes of Apple Inc. (AAPL) keep the mood buoyant on the Street
After reporting stronger-than-expected results, the tech giant’s shares surged by 4.8% on May 5.
However, the first quarter still would mark a second straight quarterly fall for U.S. corporate earnings after COVID-19 hit corporate results in 2020.Given this backdrop, let’s look at the prospects of three stocks ahead of their earnings release this week.

The Walt Disney Company (DIS)
DIS has recently been in the news for being on a legal collision course with Florida Governor Ron DeSanctis. Differences between the company and the governor began with DIS’ opposition to the Parental Rights in Education Act, which prohibits lessons on sexual orientation and gender identity in public schools through the third grade.
In an alleged retaliation, the Florida Senate approved the Disney Special Tax-District Bill, which would seek to move the control of the Reedy Creek district from the company back to the state. DIS has expanded the lawsuit contesting this move to include new regulations passed by the state’s legislature that allow officials to nullify development agreements brokered by the company.
Outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger, to give the company’s content executives more power and emphasize sports media more.
Ahead of its earnings release for the second quarter of fiscal year 2023, analysts expect the global entertainment giant’s revenue to increase by 13.2% year-over-year to $21.80 billion. However, its quarterly EPS is expected to come in at $0.94, down 13% year-over-year.
STERIS plc (STE)
STE provides infection prevention and other procedural products and services through four segments: Healthcare; Applied Sterilization Technologies; Life Sciences; and Dental.
On May 3, STE announced a $500 million share repurchase authorization and a quarterly interim dividend of $0.47 per share, payable on June 28, 2023, to shareholders of record at the close of business on June 14, 2023. While demonstrating the management’s confidence in the company’s prospects, share repurchases would also positively impact EPS in the upcoming quarters.
Ahead of its fourth-quarter earnings release on May 11, analysts expect STE’s revenue and EPS for the period to increase by 5% and 5.4% year-over-year to $1.27 billion and $2.15, respectively.

For the fiscal year 2023, revenue and EPS are expected to increase 5.7% and 1.6% year-over-year to $4.85 and $8.05, respectively.
Revvity, Inc. (PKI)
PKI’s offerings cater to diagnostics, life sciences, and applied markets through two segments: Discovery & Analytical Solutions and Diagnostics.May 9 marked the official launch of PKI as a science-based solutions company aimed at revolutionizing next-generation scientific breakthroughs that solve the world’s greatest health challenges. The company would begin trading as RVTY from May 16 onwards.
Ahead of its earnings release on May 11, analysts expect PKI’s revenue and EPS to decline by 46.1% and 57.7% year-over-year to $678.61 million and $1.02, respectively.

The previous post “Golden Pattern For Silver, Not Gold” from December highlighted a bullish pattern called the ‘Golden Cross’ that appeared on the daily chart of silver futures. This occurred when the 50-day moving average crossed over the 200-day moving average.
While the majority of readers considered this signal to be reliable, they did not expect the price of the metal to rise above $30.
The following daily chart will show how the pattern has played out since then.
Source: TradingView
When the ‘Golden Cross’ signal was posted, the price of silver futures was at $23.9 (marked by the orange vertical line), and it went up almost $1 to reach $24.8 before stalling for over a month.

The price was unable to break above this new high and subsequently collapsed, dropping below the blue 50-day MA and testing the red line of the 200-day MA, briefly breaking through to reach the ‘golden cut’ Fibonacci retracement level of 61.8% at around $20.
Fortunately, the price rebounded strongly from this support level and crossed back over both moving averages to establish a new high of $26.4 last Friday.
If you had read the complete post, you would have been more prepared for the market movements described above. I spotted a Bearish Divergence on the RSI sub-chart and alerted about the possibility of a retest of both moving averages. As it turned out, this warning was spot on.
Ultimately, the price of silver saw a $2.5 or 10% increase from the time of the ‘Golden Cross’ signal to its most recent top, validating the reliability of the signal.
Nevertheless, the subsequent rise of only $0.9 (+3.8%) followed by a significant drop of $4 (-16.7%) to $19.9 could have been quite unnerving for even the most experienced traders. Therefore, I believe that this traditional signal should be viewed as a medium-term directional indicator rather than a prompt for immediate entry into the market.
The way the price moves in relation to the moving averages is particularly interesting. Specifically, when the price crosses above the blue 50-day MA, it can be considered a good tactical trigger for a bullish entry (or bearish stop), and vice versa. On the other hand, the slower red 200-day MA tends to act as a strong support or resistance level.

RSI divergence is a highly effective tool that I often use to warn readers in my posts, and it has a strong track record of accuracy. It proved successful once again in the recent price movement, as it allowed careful traders to protect 10% of their investment and avoid unnecessary stress.

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Once again, a Bearish Divergence has appeared unexpectedly, indicating that the lower readings on the RSI sub-chart do not confirm the higher peak on the price chart. As a result, traders should brace themselves for a potential roller coaster ride.
It is difficult to predict how far the RSI divergence may push the price down, but the first support level is at the blue 50-day MA, which is currently around $23.5 (-9.7%). Additionally, in previous price action, the red 200-day MA was retested and is now located at $21.7 (-16.2%).

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.