Earnings season is upon us. Today, JPM reported better than expected earnings, however, the stock nor the market reacted positively to the news.
The million dollar question is: Where is this market headed? While this is only my opinion, the market has been feeling weak lately. I do not want to discount the earnings of JPM, but there are some big names who still have to report. There will be more clarity of market direction once we see how these stocks performed in the first quarter. Names to keep an eye out for are GOOG, AAPL, BAC, and C just to name a few. Over the past two days the SPY’s have touched the 50SMA and bounced slightly off them. Lately the bulls are unable to get this market moving higher. Tomorrow could prove to show some indication of market direction. Technically speaking, if we break through the 50SMA convincingly I think we can see easily see another 3-5% of downside. While my market thesis is neutral to slightly bearish in the near term, I am looking to buy dips at good levels and sell the rallies. The reason for this is that support levels have yet to be broken, so I am respecting those at the moment. The trend has also showed if you buy relative strength and short weakness you will be satisfied with you returns. Like I mentioned earlier, I am paying close attention to earnings that come out over the next week and seeing if levels of support have been broken. The other reason I remain slightly bearish is there still remains exogenous risk. The Fukushima plant has been upgraded to levels of Chernobyl and there is still Middle East uncertainty. With these concerns still on the back burner, I remain cautious in my trading. At any time a piece of news can come out that will decimate the market and see a potential mini flash crash.
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