S&P 500 Futures: When Was The Last Time Earnings Missed?
The S&P futures (ESZ19:CME) closed Tuesday’s regular trading hours at 2995.68, the upper end of its trading range, after opening at 2973.61. Overnight opportunities to initiate a lower long position were non-existent, as JPMorgan, UnitedHealth and Johnson & Johnson started third quarter earnings with a bang.
As noted on the attached MarketProfile screenshot, the daily VPOC has moved higher over the last few days, indicative of buyers stepping in and willing to pay more. Solid support underlies this most recent move with a High Volume Node (HVN) firmly in place in and around the 2980 level. If asked where the best Low Volume Node (LVN) is, we would have to say above the highs of the day at 3003.25.
We really do rely upon these histograms when initiating and exiting trades. I’ve said it before, and I’ll say it again, water flows from a high point to a low point, something very common, and often exhibited in trading.
Markets traded north of the VWAP most of the day, which wasn’t tested until after hours. The overnight low, like yesterday, was never really tested either during regular trading hours, but the market once again hit its head slightly above the 3000 level.
Earnings continued on the positive side, and a viable and acceptable Brexit set the stage for overnight and today’s U.S. open. All in all, a good day to be long. With earnings starting to hit the street, the end of the overnight session heading into regular trading hours could prove to be interesting.
JPMorgan, UnitedHealth and J&J reported yesterday, and kicked off another round of what I call “why do analysts always miss on the low side”. Think about it, when is the last time you remember more than one major miss. Maybe some of their “sister” stocks will change the pattern, but I doubt it. I’ve been watching these reports for upwards of 50 years, and nothing has changed; put out an estimate that can be beat, then sell on the news.
The only major speaker this week is Bank of England’s Mark Carney, one of my favorites, but his hands have been tied by Brexit for quite some time. I highly doubt that there will be anything earth shattering there, or in the many CPI’s due to be released. Brexit remains the wild card, but even that seems to be heading to a positive resolution.
Sure, everyone has their opinion as to what a “no-deal” Brexit brings to the forefront, but spoken ramifications vary. The British Pound had a nice run overnight, but seemed to run out of gas during U.S. hours. As discussed yesterday, the European Council Bank meets later in the week, so if you’re trading these markets, get ready for a bit of volatility, there’s going to be some long days and nights…
As noted yesterday; we are still long on Coffee (KC), but closed out the Aussie Dollar. The macroeconomic world is alive and well, with the 10-Year taking a hit, providing for a good buying opportunity. The Dollar only has one direction to go, and that’s down. It would be highly unlikely if that is not on Trump’s agenda. It wouldn’t make sense to revitalize the manufacturing sector only to see your currency increase. Earnings driven day today, so remember, buy on rumor and sell on news.
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As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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