July 20, 2018
Posted 9:30 AM ET - Yesterday the market pullback on a relatively soft round of earnings announcements. The QQQ and SPY are hovering around major technical support levels and the bid is being tested. Solid overnight earnings announcements are being overshadowed by tariffs spats with China. The market has been discounting these comments on the notion that Trump will back off. He needs to strike deals ahead of the November elections. Microsoft is up 4% after reporting earnings and it will set a positive tone for the tech sector. It is breaking out to a new all-time high. Honeywell is up after posting good results and we need to see strength in industrials. Financials looked good on Wednesday and they retreated yesterday. The XLF needs to get back above the 100-day MA. These two sectors will determine if the market is able to move higher. Earnings season kicks into high gear next week with AMZN, BA, FB, GOOG, INTC, MCD, TXN and TWTR reporting. S&P 500 profits are expected to grow 21% this quarter and the bid should remain strong through Apple's announcement on 7/31. Major support levels should hold and I'm expecting a nice bounce today after some nervous jitters in the morning. Swing traders are long QQQ and SPY. Use $177 and $278 respectively as your stops on a closing basis. We are going to give these indices a little room to move and I don't want to be shaken out of these positions when earnings season is about to climax. Day traders should look for buying opportunities early in the day. If the SPY rallies above $280 start buying and use that level as your stop. A possible trade war with China would take months to unfold and Trump's comments are viewed as blank threats at this stage. Both countries have too much to lose. The focus the rest of July will be on corporate profits. . .
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