Earnings Season Begins

Yesterday’s big overnight reversal brought out the Bulls as the market shook off trade war jitters and turned it’s focus to earnings season.  The NASDAQ set and a new record high with MSFT, AMZN, GOOG and FB leading the way record high prices at the close.  Now the big question is can the Bull follow-through to close the week with another gain or will we see some profit-taking ahead of the weekend?

A lot will depend on how the market reacts to the earnings reports from JPM, C, PNC, and WFC which all report before the bell.  The DIA and SPY closed yesterday near significant price resistance levels.  Can the Bank earnings provide enough inspiration to pop through?  That would sure be nice, but there is no need to predict is we simply stay focused on price action and follow the clues it provides.  The good news is that the market is showing strength and just maybe the trade war chop will fade into the background for a little while.

On the Calendar

Import and Export Prices kicks off the Economic Calendar on Friday at 8:30 AM Eastern.  According to Consensus, June will see an increase of 0.1 percent for import prices and 0.3 percent gain for export prices.   Consumer Sentiment at 10:00 AM expects a strong 98.4 print in this preliminary reading in July.  After that, we have the Fed Semiannual Monetary Policy Report, a Fed Speaker at 12:30 PM and at Baker-Hughes Rig Count at 1:00 PM, none of which are likely to move the market.

Today is the official kick off the 3^rd quarter earnings.  We will hear from, JNJ, C, PNC, and WFC before the bell and will be the most notable reports of the eight companies reporting today.

Action Plan

After yesterdays very strong rally led by the NASDAQ which made a new record high, we face the kickoff the 3^rd Quarter Earnings.  As I write this Futures are just slightly positive, but likely to bound around a lot with several big banks reporting before the bell.  If they happen to exceed the market’s expectations, we could see a gap up open but if they disappoint a gap down at the open could be the result.  Only time will tell, and as retail traders, all we can do is wait, watch and then determine the best course of action.

To avoid some of the uncertainty, I mentioned that I would likely close or take partial profits on positions which I did do before the yesterdays close.  Normally Friday is profit-taking-day for me so I will likely continue banking gains today to reduce my weekend risk.  Keep in mind the DIA, and the SPY are facing significant price resistance levels this morning.  After such a big move yesterday a pullback would not be out of the question, but if the big banks beat the market’s expectations this morning, perhaps the bulls will find the inspiration to follow-through higher.  I wish you all a great day and a fantastic weekend.

Trade Wisely,

Doug