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JPM Earnings Friday - But There Is A More Important Release

Posted by Pete Stolcers on April 11

Posted 9:30 AM ET – The market is waiting for its next catalyst and it is 2% from the all-time high. Earnings season will begin tomorrow and analysts believe that this could be the first time in three years that profit growth recedes. Stocks are trading at the upper end of their valuation range and good news is expected.

Buyers are typically engaged during the first few weeks of earnings season. Mega cap tech stocks fuel optimism and the bid should be firm through Apple’s announcement. Even though earnings growth might slow, profits will still hit record levels.

Trade negotiations with China are proceeding and Steve Mnuchin believes that they have agreed on an enforcement mechanism. He has scheduled a call this morning with Chinese Vice Premier Liu He.

England got another six-month extension from the EU and the can will be kicked down the road. The market was expecting as much and it had already discounted the chances of a hard exit. Parliament will probably sit on its duff until September.

Global economic conditions are soft, but analysts believe that China could be turning a corner. The small uptick in the PMI 10 days ago sparked optimism that fiscal spending and monetary easing is bearing fruit. China’s PPI was up .4% and that was the first increase in nine months. Consumer inflation was up 2.3% from a year ago. Tomorrow China will release import and export data and that news will drive the market.

Swing traders are long a half position of SPY. Use an intraday stop of $285. The headwinds are blowing and gains from this point forward will be hard-fought. As the market moves higher we will raise our stop.

Day traders need to tread cautiously. Intraday ranges are very compressed. Futures trading has been very difficult. Focus on stocks that have relative strength and that have broken through major technical resistance. Momentum is the key and you will NOT have a market tailwind to help you. Trim your size and your trade count.

The action will pick up next week as earnings season unfolds.
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