The remarkable rally off the lows now faces the bulk of earnings, and we will finally see the actual company impacts of the pandemic.  It seems everyone and their dog is attempting to predict what comes next when in truth, anything is possible.   Expect significant price volatility, stay focused on price, and remember what we want to happen is not important; what current price action indicates is!  Predictions are worthless without price action confirmation.

Asian markets closed mixed but mostly lower overnight as China cuts prime loan rates.  European markets are modestly lower this morning across the board as Germany begins to reopen its economy.  Reacting to plummeting US Crude prices, the futures point to a Dow gap down of more than 400 points ahead of earnings reports.

Economic Calendar

Earnings Calendar

As we begin the new week and a ramp-up of earnings with 77 companies stepping up to report.  Notable reports include ALLY, ACC, EFX, HAL, IBM, MTB, NVR, TFC, & ZION.

Top Stories

US crude price dive over 20% due to the coronavirus crushes the demand and pulling the futures lower this morning.  Prices on the May contract for West Texas cured tanked 19%  to $14.80 per barrel and could remain under pressure for the next month, as reserves continue to grow.

The Senate is nearing a vote on a 370 billion dollar deal for small businesses that had quickly run out of money due to the virus impacts. 

As numbers begin to improve in Germany, the country will start to reopen, allowing some shops, car dealerships, etc. while hot spots around the world such as Singapore, Spain, and Russian continue to spike.

Technical Speaking

The remarkable rally that has recovered more than 50% of the virus sell-off now faces a big week of earnings reports and crude oil prices plunging.  The DIA remains under its 50- day average, but the SPY managed to close just slightly above the critical psychological level.  Sadly at the time of writing this report, US futures point to a gap down that could produce failure patterns at the 50-day average at the open.  The QQQ having surged well past its 50-average is not in jeopardy of failing this necessary technical support, but after rising more than 14% in just 9-day appears quite over-bought in the short-term.

There are those predicting that this current rally will continue with all the Federal spending and the unlimited operations of the FOMC seemingly buying up everything in sight.  However, there seems to be an equal number of those predicting that as earnings begin to reveal the actual damage of the virus that we will see a retest of market lows and maybe even new market lows!  As for me, I will avoid all the predictions, set aside my bias, and simply trade the chart.  The fact of the matter is that retail traders have little to no impact on the direction, so the best course of action is to stay focused on price action sticking to your rules and trading plan.  As we wade deeply into 2^nd quarter earnings, expect volatility to remain high with enough intr-day whipsaws and overnight reversals to keep us on our toes.

Trade Wisely,

Doug