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From week to week my jaw drops open. Some modest earnings beats in conjunction with a market discounting earnings for Q4 won out versus lower guidance. Guidance has stabilized for now. Value was estimated to test 1970.00 and on fumes we got to 1968.75. Phew!
Remarks from last week’s Radar: “This week’s numbers: The bulls will try to extend quarterly and monthly value above 1928’s. They will target 1933.50 and 1940.50. Above may include 1950, a weekly mode/ 1965 a prior weekly value high and 1970.”
Also on the downside: “Below the Bears will target 1883/1875 quarterly vpoc and 1865 the weekly low and 1858/1852.”
Note the high marker at 1970 and the low at 1865. We traveled to 1866.75, then up to 1968.75.
Of course the levels tend to show themselves. Trading it, well, is a bit more of a challenge. While the market structure has many marks to test, each one has the anticipation of acceptance and rejection. When we get to an important structure point, do you have expectations? Those will form good traders and decision makers.
The upcoming week will see ISM Manufacturing Tuesday, Beige Book and EIA Wednesday, Non-Manufacturing Thursday, PMI and Factory Orders. The Employment Situation will be released Friday. IRHO these will shed light on the future course in the short term. Last week Radar looked two weeks ahead and incorrectly included ISM, which will be on this week’s calendared releases.
Let’s look at the numbers: Earnings are essentially known for Q-4. We are in an Earnings Recession. Now we bide time to let the data/headline releases guide us. It ain’t much of a rudder. Stranger things have happened. We could try to travel to the gap area. The Bulls would be doing well to achieve such a high mark. The growth estimates are much lower; the market’s patience not so good. It is a lot to ask of a market to wait 15 months for the promised growth, while reducing the reward along the way! If/when the growth comes, I’m confident the market will respond well to it.
Radar sees no clear path. It’s a coin toss. The next trip into the earnings confessional is April. We have the prospects of the Dollar strengthening further. Slower growth has been forecasted by the U.S. and OECD. Potential rate increases would seem to indicate a stronger Dollar.
The Bulls will try again to extend value above 1942/1952/1968.75. Watch for the news cycle to drive the market. There targets will include 1970/1977/1985.50/1987.50 and possibly 2000/2011.
Below 1930’s the Bears will see how much selling they can muster. Look for runs through value areas and market structure, 1927/1917/1907/1890/1886.75/1879/1874.75. If the markets extend beyond these levels, email meee464@gmail.com for updates.
In a correcting and consolidating market there is a lot of work to repair the auction and establish fair value. At the moment there is still a lot of undetermined Fair Value.
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