Top CEOs Are Saying This About The Upcoming Quarter

What can we learn from the major companies that reported earnings?

Alphabet (GOOG/L) released earnings and missed overall, but their ad revenue beat expectations so their stock went up after hours. Microsoft (MSFT) missed on cloud revenue and ad revenue and their stock went down. Great.

We had a short squeeze last week and saw 7 days of higher highs and higher lows, so it seemed like the market was ready to put in a new up trend, right?

Then Snapchat (SNAP) reported poor ad revenue and Wal-Mart (WMT) reported poor consumer spending results and the market got spooked. What have we learned and where is the market going from here? Is the market bullish or bearish here? The answer is, both… and that’s the chop we’re seeing.

I went through Alphabet’s last 8 quarters of earnings and if the after-hours trading stays where it is now, a modest 2.43% move on an earnings miss will be one of the more muted moves in recent earnings history. The other day I wrote that the market seems to be more forgiving to companies that miss and less rewarding for beats. Sure, there was SNAP and WMT fell 7%, so there are exceptions.

While companies are lowering expectations for the next quarter, they also seem to be saying they are better prepared for a recession and they are not expecting the recession to as bad as 2008. But if you’re reading the earnings, they certainly aren’t saying we’ve hit market bottom and we’re ready to soar from here. We’re muddling.

We have more mixed fundamental and technical data than anything. And later today, the Fed will speak and more than likely give us a 75 basis point increase in interest rates. What they are doing is working in some areas as New Home Sales sank to the lower edge of expectations and well below the numbers from last month. Consumer Confidence also sank to the lower edge of the expected move.

But there is something that can push this market higher as early as next week! Want to know what it is? Keep reading…

There is something that can start driving this market higher. The removal of uncertainty. As Chipotle (CMG) and others give a positive outlook and once the major players in the market are done with earnings, we could see the market breathe a big sigh of relief that the top CEOs aren’t expecting a major collapse anytime soon.

Where does that put us from a chart perspective? Well, keep in mind this is being written before the Fed meeting so things can change quickly, but I’d look for three support levels for us to turn around. I’m looking for a bounce at $385, $382, or $376 on the SPY. A sign of a continued up trend would be as long as we get a bounce at any one of these levels, especially if we can stay above that purple downtrend line. I fully expected a pullback after a 6+% gain, but the test will be how much we pull back.

The last time the Fed spoke, we had a 1.5% bump in a day, only to give all of that back and then some. Remember this two-day period last month?

If we have another two-day period similar to that, we would be around $383 by the close of this Thursday. That would put us in the yellow highlighted area on the chart below. As long as we don’t drop below that level with any type of followthrough, we would see the previous uptrend remain intact. Keep in mind this isn’t an exact science. We could certainly see rejoicing from a Fed announcement and never get close to the yellow area, but I will be concerned if we break below this area. In fact, that level could be a great point to place some long trades if we can bounce off a new support level (blue line).

If you look at the chart above and you agree with the analysis and are determined to put on trades during Fed announcements and major earnings announcements, I’ll give you a potential trade. Personally, I prefer to avoid trading during weeks like this, but I know some of you are looking for trade ideas. Do your own due diligence, but here’s a way you could play this.

Here’s the SPY, and forgive my drawing, but I drew an iron condor tipped on its side (orange lines).

If the SPY finishes above $380 and below $400 by 19 Aug 2022, you’d make max profit.

The trade is set up with these legs:
SELL to Open 19 Aug 22 $400 CALL
BUY to Open 19 Aug 22 $405 CALL
SELL to Open 19 Aug 22 $380 PUT
BUY to Open 19 Aug 22 $375 PUT

Credit/Max Profit: $295 per contact
Buying Power Requirement: $207 per contract
Exit: With a breakout either over or under the blue lines on the chart above. I also exit iron condors at 25-50% of max profit.

If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008

 

Jeff

Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society

Is The Stock Market Cycle Pointing To A New Bull Market Already?

Is The Stock Market Cycle Pointing To A New Bull Market Already?

memberswis
On February 6, 2023

February 7th, 2023Is The Stock Market Cycle Pointing To A New Bull Market Already?Are we in another bear market rally or the start of something new? That’s what everyone wants to know, especially as we

Job Creation Shocks The Market

Job Creation Shocks The Market

jeffwood
On February 5, 2023

February 6th, 2023Job Creation Shocks The MarketIf we’re heading into a recession, how were we met with better-than-expected job growth numbers last week? Unemployment dropped, despite the headlines of tech companies planning to lay off

Job Cuts And Stock Buybacks Keys To Success In 2023

Job Cuts And Stock Buybacks Keys To Success In 2023

memberswis
On February 2, 2023

February 3rd, 2023Job Cuts And Stock Buybacks Keys To Success In 2023 The thing I’ve learned from this earnings season is that a company can have consecutive quarterly drops in revenue and provide a lower

Fed Raises Rates But Bulls Are Still In Control

Fed Raises Rates But Bulls Are Still In Control

memberswis
On February 1, 2023

February 2nd, 2023Fed Raises Rates But Bulls Are Still In ControlOk, bulls. You win.  I will start lifting my bearish stance on the market.  Despite the final 10-minute market sell-off and a Dow that finished

What Past Fed Announcements Tell Us The Market Will Do Today

What Past Fed Announcements Tell Us The Market Will Do Today

jeffwood
On January 31, 2023

February 1st, 2023What Past Fed Announcements Tell Us The Market Will Do TodayWatch out - this article is going to have some math.Here we are once again on Fed Announcement day. Most of the folks

The Hidden Profits Of 2023

The Hidden Profits Of 2023

jeffwood
On January 30, 2023

January 31st, 2022The Hidden Profits Of 2023There is still one more trading day left in January, but if the adage “as the S&P 500 goes in January, so goes the year” holds true, the markets

The Fed Goes Up Against Earnings This Week

The Fed Goes Up Against Earnings This Week

jeffwood
On January 29, 2023

January 30th, 2022 The Fed Goes Up Against Earnings This Week We are in peak earnings season with some heavy hitters like Pfizer (PFE), Snap (SNAP), Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL), and Apple

Smoother Sailing in 2023

Smoother Sailing in 2023

user
On January 18, 2023

January 17th, 2022Smoother Sailing in 2023 Nothing has changed since the end of 2022, yet traders have already decided that this year won’t be as bad as the last. Bulls have been piling into stocks

The Rise Of Bing Over Google – That’s No Joke

The Rise Of Bing Over Google – That’s No Joke

jeffwood
On January 12, 2023

January 12, 2023 The Rise Of Bing Over Google - That’s No Joke Before we talk about two tech giants getting ready to battle it out once again, let’s look at the overall market. The

Why I Ignore Most Of The News

Why I Ignore Most Of The News

jeffwood
On January 8, 2023

January 9th, 2022 Why I Ignore Most Of The News It’s easy to get caught up in the financial headlines. I’ve certainly done it. Last week shows why I ignore most day-to-day stories. I know

PREV NEXT
Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.