Five ‘Magnificent Seven’ names will post earnings before the week ends. Levels to watch
All eyes are on the megacap growth earnings tonight and tomorrow, including five of the MAG 7 stocks. Here’s what you need to know from a chart point of view. A familiar bullish chart formation First, let’s take a close look at the MAGS ETF , itself. Similar to the SPX , NDX , and XLK , the ETF has rebounded sharply from the March lows — but MAGS has yet to break out to new highs. Unlike XLK, MAGS includes components not strictly classified as technology, which has weighed on its relative performance. The ETF has rallied back to levels from earlier this year, leaving it roughly flat since last October — essentially two earnings cycles of sideways action. While the recent move has been extended in the short term, it follows a period of notable underperformance, meaning there was significant ground to recover to simply return to those former levels. Looking back to last spring, a similar setup emerged — though over a shorter timeframe. The breakout through the neckline a year ago led to a steady and consistent uptrend that ultimately peaked in late October. This time is different for a few reasons. First, MAGS already is back above its 200-day moving average and second — the ETF is much closer to its prior highs than it was last year. Further, the gap higher last May pushed the ETF into overbought territory for the first time but did not trigger a meaningful sell-off. We are now seeing a similar dynamic, with MAGS recently reaching overbought levels again. While that has limited further upside for now, it has not led to a breakdown either. As a result, the right shoulder of a potential inverse head-and-shoulders pattern appears to have formed. MAGS vs. SPX: Not that extended Despite the ETF still not yet surpassing its prior high, MAGS has outperformed the SPX over the last few weeks off the lows. That relative strength began right after the ratio line tested and held a key uptrend drawn from the late-2023 low. As shown here, each time MAGS has pulled back meaningfully versus the SPX in its short history, the ensuing bounce has led to strong follow-through rallies lasting several months. In both instances since mid-2024, that strength ultimately pushed MAGS back to — and then through — its prior relative highs versus the SPX. We saw similar behavior in earlier periods as well. The sample size is clearly small, but if this pattern continues, a move back toward those relative highs — and potentially through them — shouldn’t be ruled out. The Five vs. MAGS As we know, the underlying components within the MAGS ETF have taken divergent paths in terms of performance and weight. Here’s a look at the five names reporting tonight and tomorrow versus MAGS, using relative lines over the past two years. This should come as no surprise to anyone following the largest stocks in the world. GOOGL has been the clear standout since bottoming last spring. More recently, AMZN has caught a strong bid and emerged as one of the leaders, but just over the last few weeks. AAPL has outperformed since last July but not consistently. META has been largely directionless for several months both on an absolute and relative basis, and MSFT is still working to regain momentum — though it has started to bounce from its recent lows over the past few weeks. Now let’s look at ALL seven MAGS holdings alongside the ETF itself on a performance basis over the last 12 months. As is crystal clear, only two of the seven have outperformed the ETF: GOOGL up roughly 120% over that time frame, and NVDA , up about 94%. The other five have lagged, which has ultimately acted as a drag on the ETF. Thus, the best-case scenario is to see those relative laggards begin to regain investor interest while having the leaders continue to push higher. If that happens, it would strengthen the broader large-cap growth complex — not just technology — especially considering many of these names are still well below their highs from last year. A necessary step for anything like this to transpire is to see solid responses to earnings these next two days. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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