Earnings

Earnings season can be challenging for even the most experienced traders.  With the NASDAQ and many of the stocks that make up the index at or near all-time highs, they will be under tremendous pressure to perform.  An earnings beat can still disappoint the market if the anticipation was too high.  Believe me, I want earnings to be good and for the market to move higher but I can’t help but notice that some of these companies look quite extended.  So be careful and guard yourself against getting caught up in the drama.

Remember anything is possible at earnings, and if your biased or become emotional you’ve compromised, you’re decision-making ability.  Hold to your rules, stay focused on price and avoid gambling.  It could be a wild week of big morning gaps and whipsaws so buckle up and trade wisely.

On The Calendar

Existing Home Sales at 10:00 AM Eastern is the sole potential market-moving report on the Monday Economic Calendar.  Forecasters came to a June consensus of 5.450 million annualized rate increased only slightly from 5.430 in May.  Other than that we have The Chicago Fed National Activity @ 8:30 AM and three bond events between 11:00 AM and 11:30 AM to close the calendar day.

A big week on the Earnings Calendar with over 800 companies and nearly 1/3 of the of the S&P-500 reporting this week.  Make sure you are checking earnings reporting dates before making decisions on trades.

Action Plan

We should expect a wild and wooly with the possibility of big morning gaps and intraday whipsaws as over 800 companies step up to report earnings.  Expectations of bullish reports seem to be quite high, and many stocks have rallied in anticipation.  Keep in mind with high expectations even good reports could find sellers with the market having expected even more.

Expect fast price action with all the pent-up earnings drama spilling out at the market open.  Turn off the financial news or risk getting caught up in the drama becoming biased and end up making emotionally based decisions.  Focus on price and remember this is the perfect environment for whipsaws.  Last week the Bulls did a very good job of holding the indexes above key support levels.  A bullish sign to be certain but with may stocks like AMZN and FB at or near record highs before earnings there is a lot of pressure to perform.  Plan your risk carefully and remain flexible and be prepared for challenging price action.

Trade  Wisely,

Doug