Earnings Away

Earnings Season has officially begun with AA kicking things off. The first report is negative, but that was anticipated and pre-market futures are actually mixed, so don't look for much more continuation of the downswing today. We had a very nice move yesterday that went right to my intra-day targets, wiggled, and then dropped a little more. "Bad news earnings" has probably been priced in to the market on the very short term. The Dow is coming up on two support zones and the SPX is coming up on another.

The biggest name companies will be reporting early next week with Banks starting it off on Monday and Tuesday, and then Tech joining in on Wednesday. We are at a point with the news and the charts that much of this early week may be priced in and the market could go soft. It won't surprise me if we get more of a consolidation day, or a Hammer type of day if the market drops a bit early in the day. The Bulls may decide to completely throw in the towel and the SPX drops through 850, but I speculate that the worst case scenario for today is a drop to 850 on the SPX and a drop to 8,250 - 8,350 on the Dow. I will be ready for the market to hold a little above those areas and just go soft and consolidate, or hit those areas and Hammer. As always, we shall see.....

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the Dow:
(click on image to enlarge)

You can see those support areas I noted above. We don't have enough big name companies reporting earnings the rest of this week to create a flip flop market like we may have next Tuesday, Wednesday, and Thursday. But we do have enough earnings and economic reports to puts a little juice back in the Bulls blender and get them "attempting" one last upswing sometime between Wednesday and Friday on a hope for "less than catastrophically horrific earnings reports." As per our conditions, I will continue to take it one day at a time.

4:30 pm MT: Market Wrap: The market did have a consolidation day - as I speculated before the open today. The pause allowed some sectors to move up a little. I "paper" traded calls on VAR, CSC, and GILD. If the market holds this support area and bounces, then I will add to my "paper" calls and look for a 1-2 day upswing. If Retail Sales or some other report dumps the market tomorrow then I will stop out of the calls. The Dow (and DIA) is going sideways intermediate term, but I don't expect it to do that forever. However, I want to be in position just in case we do get another bounce and upswing for a couple of days. A breakdown on the Dow could mean a drop back down to the 8000 - 8,100 area so I won't give the calls much breathing room. We'll see what tomorrow brings.

I haven't had a lot of time to answer post comment questions, but I did manage to get to one today.