"I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy." Peter Lynch
Earnings season kicks into high gear next week and I do have some concerns about how equities may respond even if the earnings come in very strong. One of the members of Alpha Wolf trading has reminded us that most bear markets begin when everything looks wonderful not when the economy and stocks are screaming sell me. I am not suggesting that we are going into a bear market but if we get some stellar earnings and equities are unable to breakout of the range we have been trading in it could be a sign of trouble ahead. Technically we are still struggling to have the bulls take convincing control with many of the indexes and sectors.
Making lower highs and recent lower lows in a short term downtrend below key moving averages
Recent double top unable to make a new higher high but at least it is holding above some key moving averages for now
Recently reclaimed key moving averages but failed to bust through 195 area and now testing those moving averages as potential support
Broke back below the 50 day moving average and made a lower high
After TSM reported dismal earnings and guidance SMH lost the 100 dolla holla support and it is now testing the 200 day as potential support we could also be looking at a head and shoulders pattern on the daily
Making short term lower highs and back below the 50 day moving average
The bottom line is there are enough technical reasons to be cautious of the markets and if earnings and guidance come in strong but equities fail to rally we could be looking at a market where the good news is already priced in.
A few sectors that are of special interest for me next week are gambling, cannabis, energy, health care/ biotech and entertainment.
There is a big cinema convention next week here in Vegas where they will be debuting upcoming films which could give a spark to the sector.
Last week Governor Sandoval signed a executive order to aggressively go after big events like the super bowl with the new Raiders stadium coming in 2020. Analysts are likely going to start modeling how the new stadium is going to impact the Las Vegas casinos. The space has WYNN and LVS reporting next week.
Energy space has been hot with the run up in oil and I would not be shocked if we were to see the sector take a breather and potentially consolidate or drift lower.
The cannabis space had a lot of press last week with several politicians becoming more vocal about removing Marijuana from the schedule 1 Fed listing and GWPH had a positive outcome from the FDA Adcom with a 13-0 panel vote suggesting the rewards outweigh the risks for approval of their cannabis derived Epilepsy drug. One has to think if the FDA were to approve the drug it would make keeping cannabis as a schedule 1 drug much more difficult since the medicinal value would be verified.
Trump is scheduled to give a speech on drug prices on the 26th and this could have an impact on the already beaten up health care and biotech space.
Earnings will be front and center with some huge names reporting. There is also a fairly active economic calendar next week with GDP closing out the week. Equities have been choppy over the last couple weeks and we could see the same action this week. Do not feel compelled to chase from fear of missing out. Build your plan and let the stocks you want come to you. Have patience and recognize that there are some warning signs out there that should be on your radar and respected.
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This weeks stocks to watch for trading and investing video
$BMY $BWEN $EGAN $FCEL $GBTC $INSG $JYNT $AQMS $KSHB $KEYW $RNWK $GE and much more
Highly anticipated earnings
Source Earnings whispers
Bloomberg Economic calendar
Source Bloomberg
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