Well, we’re also well into earnings season and I have a few observations are worth noting. First, it appears that most companies have perfected the art of managing their earning expectations. Based upon a few companies that keep such statistics, the percentage of companies that have beaten EPS estimates so far this season currently stands at a healthy 74%. But the most interesting item noted is that only 61% of companies have beaten top line revenue estimates this season. If earnings season were to end today, it’d mark the third consecutive quarter-over-quarter decline in revenue beat rates. While EPS numbers have been strong, top-line numbers continue to struggle. Folks, our financial crisis had clearly forced companies to get very good at driving EPS (i.e., stock buybacks and strong operational expense reduction; -read “workforce reduction”) while not really being able to sustain top line revenues. Sooner or later this chicken will come home to roost…the only question is when?
However, it seems right now all eyes have been intensely focused on the Fed’s potential new round of stimulus announcement next week as well as midterm elections. If the elections go as widely expected and the Republicans recapture the House but not the Senate, and if the Fed springs into action as the Street is overwhelmingly betting on, then how will the stock market react?
That’s the billion-dollar question. My bet is that if are no surprises, we can expect some selling on the news since a lot of our recent September bullish price action is a direct reflection of the Fed’s QE II announcement. Of course, if the events (not a strong or a very weak QE II buyback program) fall short of the market’s expectations, the selling could morph into a more robust correction. It’s notable that the market is tightly locked into the technical picture, too, and all eyes are on the S&P 500′s April high of 1,220. With more momentum, the index could push above the April high. Again, I am holding to my upside measuring objective of 1236 as I announced in this blog post over a month ago…If those levels are eclipsed, the S&P could move well into the 1,300s.
Market momentum, though, has been waning in recent weeks and increasingly resembles the technical picture in April before the sell-off which I also called in an earlier blog post. If stocks close above the 1200 levels then I think we’ll see 1236 very soon thereafter….of course it will take the Feds to continue to accelerate by priming the pumps, but you should all be prepared to act when the correction comes…again it is only a matter of when?
Trade Smart – Not Often
Hello folks, here is the weekly video update of this past week’s trading action….also, a quick update on our free R-Multiple Software Tool; -we are now in a testing phase and shortly I will hand it out to a few Members that have volunteered to test it out before releasing to all of you…as a reminder this great tool will help each of you uncover just how good of a trader you really are…I am sure most of you will find it very enlightening…I will announce when it will be released on our web site….and one final note, for our Members, please check out our Member’s Home Page for more updates on my current trade positions and possible future trades…
And now, please enjoy our Trader User Group Market recap for this prior week….enjoy
Trade Smart — Not Often
Hey folks, for those of you tracking the markets during the trading day its kinda like riding on a kiddie roller coaster…up and down, up and down, but not too violently….with VIX (the market’s “fear gage”) currently resting at 19.27 clearly the market is not expecting too much volatility during the coming weeks…and of course that is true for position players where the market is slowly grinding upward…my upside measuring objective is 1236 but I do believe this up move is getting long in the tooth…I have my trigger finger ready to go releasing numerous short positions when ready….take a look at the chart below and you can see how tough the market’s price action is finding rising above the key resistance levels…plotting key Fibonacci pullback zones give you an indication of a “normal and healthy” pullback….should short positions be in order, you can use these zones at potential targets….
Also, let’s take a look at the Gold Futures Chart…most of you know I went bearish on Gold to play a possible pullback scenario and that is exactly what happened…nothing can keep shooting for the moon forever and Gold was due for a pullback…however, longer term I am still bullish on Gold so, when pullbacks occur if you can get in on the short term move and pick up some short positions then all the better…now, the time may be moving back to the bullish side again…looking at the 60 minute Gold Chart below you can see how we are on a Wave 5 down position with nice bearish divergence setting up to the upside…my trigger (besides the MACD cross) is the EMA cross..members of our User Group should know what my settings are for the MACD and the EMA’s…if you are not sure, then just email me…..
Trade Smart – Not Often
Folks, it seems that one day the market is down hard and the next day the market is up a good deal…one could get a headache if you tried to “guess” what is next…I would anticipate this type of activity through early November until we’ve heard more definitive action on the Fed’s Quantitative Easing plans (QE II) as well as the mid-term elections…keep in the mind the market is a forward discounting machine with a good deal of anticipation and price action already built into the current price, so when actual facts (i.e., QE II) are known the market then adjusts to its existing anticipation, not what actually occurred….
For those of you that are Members of our User Group you know I’ve been mildly bullish since early September, with an upside measuring objective of around 1236 for the S&P…pullbacks like we had yesterday gives those of us who follow along with my bias the opportunity to pick up some Long positions and ride them higher to quick profits…today would have been such as day…if you like to trade during the day then take a look at the Chart below of the S&P…you can see how I used the 60/15 minute chart combo to take advantage of pullbacks to pick up quick gains….we have a recorded webinar in our Learning Center that outlines our approach for those of you that like to trade more often about how to take advantage of multi-dimensional time techniques to put $$$ in your pocket…for longer term position traders these techniques also work very well…the end result is to always, always be on the right side of the trend, whether it is with a 15 minute bar or a daily bar….
Trade Smart – Not Often
Folks, for our members I just posted a new video on our Members Home page…if you are a current member, simply log in and go to the Member’s Home Page and view the video…this video shows you the current Futures markets I am trading and my current bias for each one discussed…in future videos I will detail existing and new trading opportunities I am looking at….for those of you that are not Members you will need to sign-up and join our Group in order to view any videos posted in the Members area….
The current market action is going according to our trading plan and for those of you following along with actual trades you should be having a great day!!
Trade Smart – Not Often