Earnings

Earnings seem to be just what the doctor ordered as the bulls step up and show a willingness to follow-through.  With significant technical damage to repair in the index charts, let’s hope a good earnings reports can continue to inspire the bulls to break through resistance levels.  With all the political turmoil swirling about we must remain on our toes and have plans to manage the risk.  The VIX is showing signs of improvement, and with the reduction of daily reversals, a swing traders edge is also returning.

Keep in mind, repairing the technical damage in the index charts can be a challenging and choppy process.  However, if volatility remains in check, then stock pickers with good technical skills will once again have the upper hand.  Go Bulls!

On the Calendar

Today the Economic Calendar has two market-moving this Tuesday.  First at 8:30 AM Eastern, Housing Starts according to forecasters will post solid gains in March of 1.264 million annualized starts while permits slip slightly to 1.315 million.  Secondly at 9:15 AM the Industrial Production is expected to report a 0.4% gain overall with a 0.2% increase in capacity utilization climbing to 78%.  The Fed has a lot to say today with four speakers at 9:15, 10:00, 11:00 and 1:40.  The Redbook report at 8:55 and bond auction at 11:30 are very unlikely to move the market.

On the Earnings Calendar, we have a busy day of important reports with GS, JNJ, PGR, and UNH reporting before the bell.  After the bell, we will hear from the likes of CSX, IBM, ISRG, and UAL.  In total there are 50 companies expected to report results today.

Action Plan

I had mentioned a couple of weeks ago that earnings would likely be the best chance of settling market nerves and allow the market to pick a direction.  So far that seems to have been correct with market finally showing signs of follow through without the daily flip-flop.  Unfortunately, earnings commonly produce big opening gaps still making for a challenging trading environment, but the VIX is finally calming slightly.

Good earnings reports are just what the market needs right now as the indexes challenge the resistance of their 50-day moving averages and price action resistance levels.  The Dow Futures currently indicate a gap up of nearly 150 points at the open moving the index back above the 50 SMA.  The SPY and the QQQ will also attempt to breach this important average at the open today.  Continue to expect fast price action and keep in mind the bears are not likely to give up easily, and the risk of intraday whipsaws still exist.  With geopolitical issues continuing swirl overhead we can’t just throw caution to the wind.  Have a well thought out plan for every trade.

Trade Wisely,

Doug