Earnings Week Begins

The first heavy week of earnings begins.....Don't look for a smooth ride on Tuesday, Wednesday, and Thursday.....it may happen, but it's more likely that volatility will increase. The market is about to get very newsy. This is normal for Earnings Season, so just let it ride.

I will probably continue to stick with short swings until at least Friday. There may be some nice earnings pops to play this week and next, so as always there is the potential for good opportunities.

Remember that the Bulls had a mini paradigm shift on Friday and one rose colored lens came off. I'm not expecting a bullish push on a "glass is 10% full" Earnings Season any more. I think the glass is going to need to be 30% - 50% full now in order for the Bulls to feel like they have enough ammo to trend the market for 1-2 months and get that Descent Block on the SPX monthly charts to follow through. How ever it turns out, I'll take it one day at a time for now.

Don't get too caught up in every little report. There will be a lot of elevator analysis, newsletters, posturing, reporting, and gyrating the next two weeks. Most of what you see will be organizations fighting for your eyeballs by "marketing" you information. When the market gets more intense, you need to get more intelligent, and that means simplifying. Look at the Big Picture that emerges from all the news chaos (that's the Stage 2 Consensus I keep talking about). Use your charts to see through the hysteria. And look for good opportunities one day at a time and one opportunity at a time.

Our first bit of interesting news is that Oil is all the way back down to $39 a barrel. We are experiencing some wild fluctuations in Oil, just as I warned. Energy will be a global issue until the world figures out that we are in a macro demand shock. Pre-market futures are down a little since Energy has been a leading sector both up and down recently (and long term), which is generally not what you want from a healthy market.

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

You can see that support is at 875 - 878 and then again at 850 - 855. The downswing is four days old with a little goof candle on Thursday. It looks similar to the downswing two swings ago. It has a decent probability of finishing out today and then traders may sit and wait for the first wave of heavy earnings after the close today and before the open tomorrow. The timing makes sense, so we'll see if it plays out that way.

This week is going to be what it's going to be. There is more unknown going into this Earnings Season than in many past seasons. That's exactly why I think the Bulls were wise to not get ahead of themselves and speculate like they always do on earnings. Like I said above, take it one day at a time and one opportunity at a time for the next week.