What Rocket Lab’s Chart Says Ahead of Next Week’s Earnings

Rocket Lab USA RKLB has risen by more than 400% over the past year, and the space-equipment maker is set to report earnings after the bell next Thursday (Feb. 27). What does technical and fundamental analysis say heading into the results?

Let’s have a look:

Rocket Lab’s Fundamental Analysis

Wall Street is looking for RKLB to report a $0.07 adjusted loss per share on $130.6 million of
revenue. That would stand up well to the company’s year-ago comps of $-0.08 in adjusted EPS on $60 million of revenues.

If analysts’ consensus forecast is right, then Rocket Lab’s revenues will have grown by about 118% year over year. Investors will also likely focus on management’s forward guidance given that RKLB’s sales have been growing so fast.

Rocket Lab has a number of deals in place with the U.S. Defense Department and such private-sector clients as BlackSky Technology BKSY, Firefly Aerospace, Kratos Defense & Security KTOS, Varda Space Industries and French Internet-of-Things constellation operator Kineis.

One theme seems to be developing -- that there’s seemingly enough demand for affordable private space-launch services for both Rocket Lab and its Elon Musk-led rival SpaceX to potentially thrive. (Jeff Bezos-backed Blue Origin and some other competitors are also in this "space," but they’re not yet at SpaceX or Rocket Lab’s operational levels.)

Rocket Lab’s Technical Analysis

Now let’s check out RKLB’s six-month chart as of Wednesday (Feb. 19):

Readers will see that the stock looks like it might be setting up for some coming volatility as its earnings release approaches.

Since mid-December on, Rocket Lab has developed what’s called a “closing pennant” formation, denoted by the two diagonal purple lines at right in the chart above.

This is a pattern where a stock simultaneously posts lower highs and higher lows -- and once the pattern closes, there’s often an explosive move one way or the other. Unfortunately, this pattern doesn’t signal which direction the stock might go (up or down).

Readers will also see that the closing pennant’s lower trendline is lining up with two other technical indicators.

First, it’s syncing up with Rocket Lab’s 50-day Simple Moving Average -- or “SMA,” marked by the blue line above. Second, the trend line is lining up with the 23.6% Fibonacci retracement level of Rocket Lab’s August-to-January rally (as marked with a gray line above). That combination potentially creates a powerful area of support for the stock.

Otherwise, Rocket Lab’s technical indicators aren’t signaling all that much.

The stock’s Relative Strength Index (the gray line at the chart’s top) is neutral, while the daily Moving Average Convergence Divergence (or “MACD,” marked with gold and black lines and blue bars at bottom) has almost turned bearish.

Rocket Lab’s 12-day Exponential Moving Average (or “EMA,” marked with a black line) and 26-day EMA (denoted with a gold line) both remain above zero, with the 12-day line moving below the 26-day one.

At the same time, the histogram of Rocket Lab’s 9-day EMA has moved below zero. All of that historically can be bearish for a stock.

(Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle owned RKLB, BKSY and KTOS at the time of writing this column.)

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