Last week was rough on stocks as fear engulfed the market. All of the major indexes remain below key technical levels with the NASDAQ in particular very weak. And the fear was evident as the VIX rose sharply, hitting levels not seen since February of this year when the market was trying to find its footing.
Causes for the recent weakness range from Brexit to confusing messages from the Fed to troubles around the globe. Whatever the real reason(s) traders are reluctant to commit capital to stocks.
This got me to thinking that one way to turn things around would be a solid showing in earnings. After all, when everything is said and done, it almost always comes down to the bottom line. And with earnings season not that far off, it might be exactly what the stock doctor ordered.
There was some nice hope last week as Oracle reported a solid quarter. In fact you can see from the chart below that ORCL had a nice bounce after it reported its numbers and in spite of a weakening market. So it goes to show you that the market will almost always reward those companies that exceed expectations, no matter the market conditions.
But the heart of the earnings season is still a solid 3-4 weeks away so until then traders will have to rely on macro market developments to help guide them. And its when technical analysis can really make a difference.
As part of my daily update to EarningsBeats members I include a market analysis to help guide them through the daily land mines. It includes key support and resistance levels on the major indexes as well as where I see the market heading in the very short term. If you are interested in getting my analysis for free just click here and you will be added to the list.
The market volatility we've seen of late is likely to continue over the next few weeks, especially with the Brexit vote looming. Then before you know it earnings season will be upon us. That could provide an excellent opportunity to profit once the numbers start coming in. Until then, be careful, because its tough to trade successfully with so much uncertainty in the air.
At your service,
John Hopkins
EarningsBeats
