Earnings and FOMC

Today is the last really big day of reports this quarter, and with the election behind us, the market is free to react to earnings and the FOMC decision.  Asian markets were mixed but mostly higher overnight, and the European markets are currently flat to mostly lower.  The US Futures are only pointing to a modest gap down this morning but after such a huge rally don’t be surprised to see some profit-taking.

Although I expect volatility to remain high, we could see the price action become rather light and choppy after the morning rush as we wait for the FOMC decision at 2:00 PM Eastern.  Consider the fact that the Dow has gained 2000 points in a straight-up move as you plan your risk heading into the weekend.  The odds are that at some point the market will want to test support levels which are now significantly lower.

On the Calendar

On the earnings calendar, we have nearly 500 companies reporting today.  The number of earnings drop off tomorrow, and there is significantly fewer next week.

Action Plan

With nearly 500 earnings reports and FOMC decision on interest rates today what could possibly go wrong?  LOL  Currently the US Futures are pointing to a modest gap down this morning considering the huge post-election rally.  After recovering more than 2000 Dow points from the low in just eight days, it should not be a surprise if we see some profit-taking and a little market rest in the very near future.  Of course, if a deal can be struck with China anytime soon, that would be a game changer.

Expect considerable volatility today as we wait for the FOMC decision and the market reacts to last really big day of earnings this quarter.  I for one took advantage of the big rally taking profits to the bank.  This morning I’m very light in my account and to be honest I’m currently feeling pretty comfortable with that decision.  The possibility of a pullback or at a minimum is very high, but with the energy and momentum, we saw yesterday If could easily be next week before we see much selling activity.  The spin out of Washington could become very intense over the next few days so plan your rick into the weekend carefully.

Trade Wisely,

Doug