It is that time game again as companies begin reporting quarterly earnings report. Given the political and economic backdrop it will be interesting to see how the market reacts. We have had quite the run off the December lows back up into resistance. Earnings and resistance may be the catalyst to end this current rally attempt. Maintaining a high level of discipline with your trading plan including your risk management strategy is paramount. Without such a plan expect to experience pain in your account. At the end of the day we must protect our capital. Keep your focus and always obey the exit signals. This market will get interesting with earnings and the current climate.
We would prefer this market to consolidate at current levels while remaining in a tight range. Do not expect this to be the case. A more likely outcome here would be some tough sledding as earnings reports flood newswires. December lows are likely to come back into play too. No one can be sure where this market heads, but after the last quarter’s performance it would not come as a surprise if we do see this market churn lower. This does not mean we are in the camp we are going to collapse, but testing the December lows would not be the end of the world and certainly not the first time this type of action has occurred. Such action may prove to set this market on the path back to all-time highs! Anything is possible, but we can only trade the market in front of us.
JPM reporting earnings this morning and it was the first time in 15 quarters the company has missed expectations. We suspect this won’t be the first company to miss. The stock is trading lower by almost 3%. Another suspicion certainly will be reaction to earnings will be just as volatile as in the past. While the volatility of the reaction may not be reflected in the index certainly individual stock reactions could be quite violent. A wise move would certainly to know when your stocks are going to report and ensure you have proper position sizing with exits. Knowing your open risk is key.
We hope you have a profitable trading week. There are still opportunities intraday and our chat room will be all over those.
