Earnings Season

With the analysis expecting a strong 2nd quarter earnings season there may finally get the catalyst need to pick a direction and stop all the flip-floping price action.  If we do begin to recover the path ahead is filled with lots of resistance hurdles and political uncertainty it must continue to manage.  However, a good round of earnings could do a lot to calm the nerves of traders and investors as long as inflation remains in check.

Although earnings create is own brand of volatility it will mostly directed at individual stocks.  Anything is possible, but my hope is the big daily swings will subside, but I would continue to expect frequent market gaps and fast price action as markets deal with resistance and react to the earnings reports.  The fast price action could still be very challenging, but earnings may be the light at the end of the tunnel we have been waiting for to give an edge back to  good stock pickers.

On the Calendar

The Friday Economic Calendar has three Fed Speakers at 7:30 AM Eastern, 9:00 AM and 1:00 PM to both open and close the calendar day.  At 10:00 AM Consumer Sentiment is expected to soften slightly to  101.0 vs. March reading of 101.4, a 14 year high.  Also at 10:00 AM the JOLTS report is also expected to ease but continue to show a strong labor demand at 6.143 million job openings.  The 1:00 PM, the Oil Rig Count, is not expected to move the market.

Second quarter earnings season kicks off today with C, JPM, PNC, and WFC all reporting before the bell.  Analysts are expecting very positive results from the banks showing substantial earnings growth.

Action Plan

With easing Syrian tensions, the bulls stepped up to the plate yesterday and displayed strength all the way through the close.  With several big banks expected to kick off 2^nd quarter earnings with strong results, do we dare hope for a bullish follow-through today?   I can only guess, but if earnings come in as strong as expected, then I would venture an answer of yes, and it could finally help reduce market volatility.

Keep in mind; the index charts have a lot of overhead resistance they still have to overcome, and an armed conflict with Syria will continue to weigh heavy the mind of the market as we head into the weekend.  If in fact, the market does spill off some of this extreme volatility then swing traders with good technical skills could find a target rich environment of discounted stocks.  I wish you all a wonderful weekend.

Trade Wisley,

Doug