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Big Banks Post Great Profits - Earnings Bounce Is Starting - Ride These ETFs

Posted by Pete Stolcers on April 13

Posted 9:30 AM ET – The market has been able to find support above the 200-day moving average. Earnings season has started and profits will calm nerves. Banks posted solid results and the S&P 500 is up 15 points before the open.

Chase, Citigroup and Wells Fargo are trading higher after announcing earnings. Interest rates are moving higher and employment growth is strong. The backdrop for this sector is excellent and that is why we are long XLF. The first part of the earnings cycle is dominated by financials stocks so we should see nice follow-through next week.

Trade war chatter has temporarily stopped and the most recent comments from China were conciliatory.

Trump has softened his stance on Syria. I still believe that a missile strike will happen any day. That selling pressure should only last a few hours. The last time we bombed airstrips in Syria we gave Russia ample time to evacuate. Tension between the US and Russia will remain elevated, but I don’t believe it will have much of a market impact.

Economic data has been excellent.

Swing traders should be long XLF and XLE. I like these two sectors and you should use the respective 200-day moving averages as a stop on a closing basis. The market will grind higher the next two weeks and the SPY should be able to get above its 100-day MA.

Day traders should look for opportunities to get long. We won’t see much weakness early in the day so don’t delay. Financial stocks are going to provide a nice tailwind and the price action should be very constructive today. Support is at SPY $266.50 and resistance is at $269.40.

Look for an earnings bounce that lasts 2 to 3 weeks.
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