Earnings Session

As we begin this earnings session, the DIA and SPY are challenging important resistance levels while the QQQ is at new record highs.  We can expect the Futures to be volatile and the likelihood of significant morning open gaps as the market reacts.  Earnings season can be very challenging but can also be very rewarding.  Here are a few ideas that have served me well during earnings.

1. Never be caught off guard. Always know when a company your holding or one you’re considering to purchase is reporting earnings.
2. Turn of the News. Remember the mainstream financial new is about entertainment and advertising.  If you get caught up in the hype and drama, your trading will be affected.  (I only watch the headlines and form my own opinion based on actual price action)
3. Focus on the chart patterns and the price action and avoid trying to predict how the market will react to an earnings report.
4. Stick to your rules and plan each trade. Always remember trading is a business and emotional decision making has no place in business.

On the Calendar

The Monday Economic Calendar starts the week with three market-moving reports.  At 8:30 AM, we will hear from Retail Sales that expects a sizable 0.6 percent headline gain according to consensus.  Also at 8:30 AM, the Empire State Mfg Survey, is expected to remain strong but decline slightly to 21.0 vs. June’s 25.0 reading.  The at 10:00 AM, Business Inventories are expected to increase by a healthy 0.4% according to forecaster estimates.  To finish up the calendar day we have, we have a Bond Announcement at 11:00 AM, and two Bond Auctions at 11:30 AM.

On the Earnings Calendar, we have 26 companies reporting.  Before the bell, we will hear from BLK, BAC & JBHT.  After the bell most notable is NFLX.

Action Plan

With a busy Economic Calendar, this morning and big earnings report’s, the market will have plenty of data to react to this morning.   If that were not enough the news could also be a factor as the President meets with Russian Leader Vladimir Putin in Helsinki today.  Futures are currently pointing to a slightly bullish open as but that could easily change with each report.

Earnings Season can be challenging for traders due to the uncertainty and volatility they can create.  Large morning gaps can become the norm as the market reacts to the results so plan your risk accordingly.  If you watch financial news networks, guard yourself against being caught up in the drama and the ridiculous predictions which no one is ever held accountable.  Focus on the chart patterns and price action setting aside personal bias as you plan each trade.

Trade Wisley,

Doug