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Earnings Season Has Started
www.oneoption.com
Mega cap tech earnings in two weeks will tell us if there is any gas in the tank.
PRE-OPEN MARKET COMMENTS MONDAY – The market hit some resistance last week and gains from this point forward will be hard fought. Earnings season kicked off Friday and the reactions to JPM, C and WFC were mixed. The major releases won’t fire up for another week.
Mega cap tech stocks have fueled the market rally and the leadership has been narrowly defined. Last week there was a strong round of profit taking in those stocks. Money rotated out of big tech and into small caps. The last leg of a market rally often features a bounce in the laggards so from my perspective, this is a warning sign.
From a technical perspective, there is an ascending wedge formation on a D1 basis for the SPY and that is common near market tops. The volume has been light and that is another sign that the conviction is low. I will be watching for a rise in VXX as the market treads water at the all-time high. The bid should remain strong until mega cap tech stocks report.
We don’t trade what we think, we trade what we see. I will be watching the price action very carefully. We want to see the bearish engulfing candle from Thursday erased quickly. We also want to see good earnings reactions this week.
The economic releases are minor so they should not have a big market impact.
The Republican National Convention is this week and it will not have a market impact. The assassination attempt on Trump will not have a market impact either.
Overseas markets were slightly lower so there is a small head wind.
The market is gapping up this morning. Wait for the bid check. If the pullback is brief and shallow, favor the long side. If it is deep and prolonged, you will have to wait longer before buying. I am seeing good opportunities on both sides. Wait for your set up either way and know that buyers and sellers are active. Stick with day trading and keep your swings to a minimum. The market is coming into a turn so take your foot of the gas and wait for the straight away.
Support is the low from Thursday and resistance is the all-time high.
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