Earnings season is still in the early stages, but we have seen some decent numbers in a few of the larger companies up to this point. So far...so good, although we still have a way to go before this round of earnings is complete and the overall results impact sentiment.
We have been talking a lot about sector rotation. With the passing of each earnings season, will need to identify any changes in sector trend. Pay attention to earnings results, especially with each sector, when adding new positions at these levels.
Technically, the markets are moving right back up to high resistance levels and are now showing signs of increasing volume. The VIX is dropping as fast as the markets are moving to the upside, as it currently revisits yearly lows.
Adding longer-term, bullish positions (preferably diagonals) at these levels would make sense; however, earnings season can pose a problem. If you are planning on taking longer-term positions, then make sure to trade outside of the earnings event, either before or after the results are posted. It is okay to wait until after the event to enter the trade, thus giving you a better idea of the stock's next move and increasing your probability in direction.
July monthly option expiration is tomorrow, so make sure to address your portfolios. Keep in mind your exposure moving into August and make note of any moves that need to be made going into next week. The markets appear to be strong here, so take your time and follow earnings results.
Mid-Week Outlook
- Bullish: 9%
- Sideways: 61%
- Bearish: 30%
Have a great night,
The Maverick Trading Team
