Earnings and Deal Day Part 1

Markets had a somewhat volatile day that ended little changed.  The SPY ended the day down 0.15%, the DIA up 0.07% and the QQQ down 0.39%.  It seems that despite great beats by the big banks (C and JPM) and DAL in the pre-market, traders were leery of earnings season at the current market all-time highs.  There was also a fear that the phase one of the China trade agreement may disappoint markets as details come front and center Wednesday during the signing. 

The latter fear stemmed from Bloomberg reports that the existing tariffs are remaining in place and all provisions of the deal are already known by the public.  CNBC also reported that both sides understand that the US will not review the existing tariffs any sooner than 10 months after the phase one signing (i.e. after the election).  In addition, there is no agreed path toward eventual reduction of existing tariffs or even for new “phase two” talks.  So, the economic drag of the trade war on both economies is here for at least another year.  (Side note: Reports say the existing tariffs are costing the average American $800/year although details were not provided.)

In more cheery news, Amazon has lifted the prohibition on its Marketplace sellers using FedEx ground transport.  In addition, retail sales are coming in at 5% greater than 2018…which may read through to expectations of upcoming earnings reports.

Wednesday’s major economic news includes Dec. Core PPI and Jan. NY Empire Mfg. Index (both at 8:30 am), Oil Inventories (10:30 am) as well as two more Fed speakers.  Earnings reports before the open include BAC, GS, PNC, USB, CSX, TGT, and UNH. (GS beat and TGT missed so far this morning.)

Overnight, Asian markets were red across the board.  In Europe, markets are mixed, but mostly red so far in their day.  As of 7:30 am, once again U.S. futures are pointing to a flat open, just on either side of break-even at this point.

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Even on a rest day, the bulls have maintained control of the trend and we are within spitting distance of new highs.  However, over-extension and disappointment (over earnings or the partial trade deal) risks remain real.  Continue to use caution while still trading with the trend.  Look for opportunities, but don’t chase. Most importantly, remember to plan your trades, and trade your plans.  Take profits on a very regular basis, move your stops to protect yourself, and wait for the trade to come to you.   

Ed

Swing Trade Ideas for your consideration and watchlist: PCG, NKE, BMRN, MPLX, NXPI, DAR, HZNP, RS, OSTK, BLUE, CNQ. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about are not recommendations to buy or sell.

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