Earnings Season Begins.  Can The Big Banks Reverse Bearish Price Action?

The current downtrend and the choppy bearish price action is without question challenging for all traders.  It tests our ability to maintain discipline and follow a set of rules.  I have been trading for 27 years and can tell you honestly that dealing with choppy markets never gets easier.  Temptations and distractions are everywhere.  Sitting here day after day doing nothing but watching the market grind is frustrating to be sure.

With a couple of big banks reporting today, we kick off the second quarter earnings season.  However, we also must realize that today is the last trading day before a three day weekend.  Personally, I’m hoping the banks can reverse the downtrend, but my desire is not a good reason to trade.  As the sole owner of my trading business, the responsibility to maintain discipline rests directly on my shoulders.  I take that very seriously because my paycheck depends on the fact that I do.

On the Calendar

Along with the drama of the earnings kickoff, there are reports of note on the Economic Calendar.  At 8:30 AM Eastern we will get the weekly Jobless Claims number as well as a reading on the PPI number.  At 10:30 AM Eastern Consumer Sentiment number will be reported.  My guess is the PPI number will the one most likely move the market this morning.

Although the market is closed Friday, at 8:30 AM Eastern the Consumer Price Index and Retail Sale numbers come out.  Business Inventories report at 10 AM.  Both the CPI and the Retail numbers are market-moving reports.  With the market closed, we have to consider the possibility that Monday may produce a gap.  Plan accordingly.

Action Plan

My plan for the day is simple.  Manage my existing positions!  While I will prepare for new positions, I will have Monday in mind.  I see no reason for adding new trades today the potential for risk is simply too high.  I have no desire to ruin a three-day weekend worrying about a bunch of new positions.  Take the day off and do something fun.  Make it a 4-day weekend and enjoy yourself!  I can promise you the Market won’t care!

I wish you all a wonderful weekend.

Trade wisely,

Doug