Flat markets as earnings started coming out. The first red week in 6 weeks, right off the resistance close to 4200. While the VIX fell to its lowest level since 2021. With earnings expectations dropping 7% year over year in the SP500, earnings to decline for the second consecutive quarter. However, so far, earnings have surprised to the upside.
In this week’s news, Thursday’s weekly jobless claims suggested weakness in the jobs market and now we have a 90% chance of a 25bps hike coming out in May. Housing data came out softer this week as well as existing home sales.
The US10Y yields continued to hold out the channel support we have drawn out, claiming this would be too easy of a move, but low and behold. This pushed bond prices lower and if this continues there should be some downside pressure in the equity market as well.
Earnings this week:
Here are some of the larger names reporting this week.
Monday:
Pre-market: Coca-Cola (KO), Credit Suisse (CS)
After-hours: First Republic Bank (FRC), Brown & Brown (BRO)
Tuesday:
Pre-market: Verizon (VZ), UPS (UPS), McDonald’s (MCD), 3M (MMM), Pepsico (PEP), Spotify (SPOT), Raytheon Tech (RTX)
After-hours: Microsoft (MSFT), Alphabet (GOOGL), Visa (V)
Wednesday:
Pre-Market: Boeing (BA)
After-hours: Meta (META), Roku (ROKU)
Thursday:
Pre-market: American Airlines (AAL), Caterpillar (CAT), Southwest (LUV), Mastercard (MA), Crocs (CROX), Altria (MO), Abbvie (ABBV).
After-hours: Amazon (AMZN), Intel (INTC), Snapchat (SNAP), Cloudflare (NET), Pinterest (PINS), Gilead (GILD).
Friday:
Pre-market: Chevron (CVX)
There are huge market earnings coming out this week, which make up a large portion of the market cap. Like MSFT, META, GOOGL, V, AMZN, and more. They should (if a large deviation) have an effect on the market moving it out of the range. I would watch FRC as well considering the recent trouble it’s been in.
S&P500 this week…
Where will the ES land? There is a lot riding on earnings in the coming weeks and into the FOMC rate decision but I think that we could be for an attempted ride higher if earnings comply with one last bear squeeze. Remember, markets only go up.
This does depend on a few levels holding naturally. We also got our first red week in 6 weeks.
First case for bulls:
We hold above 4140, but more importantly, we hold above 4170 rebid. Early in the week.
The second case for bulls:
We close above 4180, targeting the 4206/10 region.
First case for bears:
We run through 4140 downside and close under 4132 early in the week.
Second case for bears:
We fail highs around 4180, if not 4206/08 (where I would want to initiate my swing shorts).
SPY:
Overall looks like a bullish flip in the medium and longer term for the SPY. However, we’re at the top of a major distribution block, that can stretch up to 418 or so, currently 412. Where I would entertain the possibility of the market reversing. At this point if we actually close under 408 we can start the leg lower, which might just be a higher low.
Other markets analysis & correlations
(QQQ, TLT, IWM, AAPL, SMH)
Always important to watch tech to see what it’s up to.
QQQ has been slightly diverging from SPY in that we’re forming slightly lower/equal highs, respecting the distribution top rather than running higher with SPY. A turn in tech off earnings would make sense of this action, the once stronger market is now looking suspicious. This week it’s all about the tech earnings that come out. I would suspect tech is VERY near an inflection point to turn lower.
320 has established itself as a large gamma resistance based on MM heading positioning, putting downside pressure on that level. Which wouldn’t make as a last chance for the shorts.
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