Momentum Monday – New Earnings Season, New Opportunities

The charts on Momentum Monday are powered by MarketSmith

Last week, we saw quite a few strong breakouts in tech momentum stocks, offering great swing trading opportunities – most faded on Friday. The major equity indexes are still in an uptrend, but with the SPY closing below its 10-day EMA, small-caps heavily underperforming, and plenty of momentum stocks having distribution days, it makes sense to be a bit cautious with new long positions. 

The latest earnings season has just begun. It is too early to tell but the market reactions so far haven’t been too flattering:

  •  The recent cybersecurity IPO, CRWD cleared new all-time highs 
  • NFLX was crushed after missing its own estimates for subscribers’ growth (the thinking here is if they are losing growth now, when Disney’s service is not even out, then maybe the market is too saturated). It closed below 320, so a test of 300 is very likely.
  • Financials remained mostly unchanged despite beating estimates.

We pay special attention to market reactions to earnings report because it is the ultimate indicator of current sentiment and sentiment is what drives prices in a short-term perspective (a few weeks to a few months). The real action will start in the next couple of weeks with the big tech companies starting to report.

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Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.