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Charging Into Earnings Season

A couple of weeks ago, we were all hoping that the upcoming earnings season would save a struggling market from any further losses. But today, after a week of solid gains and new highs, the hope is that earnings season will sustain this momentum and maybe even add onto it. 

“For the last 8 1/2 years, the average move for the S&P during earnings season has been over 2%. And I see no reason why we won't get the same thing again this time,” said Kevin in Options Trader. “That would put the S&P at nearly 2,500. An important milestone on our way to 2,600 (or higher) by year's end.” 

The NASDAQ continues to roll along, leading the major indices again on Thursday and completing five straight sessions in the green. It was up 0.21% today to 6,274.4. The Dow hit a new record for a second consecutive day with a rise of 0.10% to 21,553.1. The S&P increased 0.19% to 2447.8. Banks and technology did well in the session, but they also got some help from retail (of all places) thanks to good news from Target. 

A few big banks kick off earnings season tomorrow, and then more than 280 companies will be reporting next week. Every season is important, but this one will be watched closer than others since this aged bull market is so close to new highs. 

“The quality of this earnings season is likely the final check box needed before heading to 2500 and beyond. Make sure that you put your extra cash to work in the stock market before it takes off once again,” said Steve in RTA

Today's Portfolio Highlights: 

Stocks Under $10: For today’s promised addition, Brian Bolan found a winner in the biotech industry. Sangamo BioSciences (SGMO) develops novel transcription factors for the regulation of gene expression. In other words, its factors turn genes on or off by recognizing specific DNA sequences. The company is a Zacks Rank #2. But the editor was most impressed by its Earnings ESP of more than 16% for the quarterly report coming in early August. Read the full commentary for more. 

Zacks Counterstrike: "In case you didn’t notice, it’s officially summer. There isn’t a lot of participation out there, which means choppy markets and lack of price movement. Even so, markets added to their gains from yesterday, with the S&P up 0.19% and the Nasdaq up 0.21%.  

"Volume in SPY (the S&P 500) ETF was the lowest of the year and perhaps the lowest I’ve ever seen. We are talking about half-day holiday level volumes that we have been seeing lately. It’s really hard to trade when nobody else wants to play. The lack of volume creates an environment of low volatility, which makes only the patient traders profitable.

"Honestly, these slow times drive me nuts. But this is part of the game, we have to be patient and wait for markets to move. If we overtrade, we risk losing money while the market does nothing. It’s as simple as that." -- Jeremy Mullin 

Momentum Trader: "Some good old-fashioned rope-a-dope action in the NASDAQ as I like to call it. To other it’s known as a stop-grabber. A stop-grabber is when the market comes to a level of support and resistance, flirts with breaking out by passing that level, but ultimately reverses. That’s exactly what we saw in the NASDAQ Composite when the index broke down below the 6,107 swing low, flirted with a breakdown but then ultimately reversed higher. 

"That’s good news for tech bulls hoping the composite can recover. The index also broke through the downward trend channel across the tops during the month of June. If it can sustain the rally here than new all-time highs should come across the screen any day now. -- Dave Bartosiak

Good Evening,
Jim Giaquinto

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