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Over 90% of the biggest US companies report earnings this week

Over 90% of the biggest US companies report will report their quarterly earnings this week in what is expected to be the fourth consecutive quarter of declining profits. While I've spend the better part of the day scanning for new trade setups, it would only be prudent to hold off entering any new positions, especially individual stocks, until the flurry of earnings reports starts to wind down next week.

SPX peak earnings week quarterly cycle lines July 18th

SPX peak earnings week quarterly cycle lines July 18th

With such a concentrated number of the largest US corporations reporting this week, I figured that I'd add some cycle lines on a chart of the S&P 500 to see if there were any patterns that stood out in the markets during the previous key earnings weeks. The cycle lines on this 2-year $SPX chart are set 3-months (1 quarter) apart. It could be just mere coincidence that the key inflection points highlighted on this chart occurred during these previous peak reporting weeks but only time will tell.

The most important take-aways from this post would be; 1) to expect an increase in volatility, especially overnight gaps over the next week or two, with so many important companies reporting and 2) regardless of whether the bulk of companies miss, meet or exceed expectations as we get into the thick of earnings season, the important thing is how the market reacts. Do they buy bad news? Do they sell better than expected earnings?.... We'll soon know. As of now, the potential for a major top in the $SPX (and resumption of the primary downtrend in all other indices) still exists while those potential divergent tops are still a possibility on nearly all US stock indices as well as the potential divergent low on the $VIX highlighted earlier today. On the flip side, the potential for those divergences to be burned through, should the markets continue to climb is also a very real possibility & would certain strengthen the bullish case.

$COMPQ daily 31-period cycle lines July 18th

$COMPQ daily 31-period cycle lines July 18th

On a somewhat related note, in playing around with the cycle lines, I also added cycle lines 31 trading sessions apart on the $Nasdaq Composite & found it interesting to see how many inflection points in the market over the last couple of years line up with those cycle lines.

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Jul 18, 2016 4:37pm|Categories: Equity Market Analysis|Tags: , , , , |10 Comments

10 Comments

  1. Teeps01 July 18, 2016 4:40 pm at 4:40 pm

    Very cool

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  2. jupiter July 18, 2016 4:48 pm at 4:48 pm

    It seems there’s always something that makes sense in the market; one just has to find it.

    Randy, you have the knack! Thank you.

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  3. snp July 18, 2016 4:50 pm at 4:50 pm

    but if this chart was sheet music, what song is this?

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  4. joefriday July 18, 2016 8:35 pm at 8:35 pm

    Nice work Randy..Thanks

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  5. alshaw July 18, 2016 8:52 pm at 8:52 pm

    good but bottom line it all does not matter one bit bottom line we are going higher a lot higher WHY QE QE QE QE QE QE QE THE PRINTING OF DEBT AND REM ALL FED HEADS SUPPORT HILLARY AND THEM SCUM CROOKED PIECES OF GARGABE WILL KEEP THIS MARKET UP UNTIL NOV 3 AND MAKE HILLARY THE PREZ ITS A SAD SAD SAD DREAM. RIGGED MARKET A BROKEN MARKET A NO FREE MARKET put all that data and stats ON A CHART IN 1998 ka boom UP LIKE A ROCKET SHIP

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    • Eric K July 18, 2016 9:25 pm at 9:25 pm

      @alshaw, So how do you position? All cash until Nov?

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  6. Shambo July 18, 2016 10:00 pm at 10:00 pm

    over your fear already!

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  7. Shambo July 19, 2016 9:37 am at 9:37 am

    those 31 day cycles are interesting, thanks Randy.

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