Volatile Earnings Season Is On The Horizon

Volatile Earnings Season Is On The Horizon
3844328 / Pixabay

Commenting on the coming volatile earnings season and today’s trading Gorilla Trades strategist Ken Berman said:

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Q2 2020 hedge fund letters, conferences and more

The major indices are all trading significantly higher at midday, as stocks continued higher this morning following Friday’s encouraging rally on Wall Street. The Nasdaq hit yet another all-time high in early trading, with Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Tesla (TSLA) leading the way higher, continuing last week’s trends. The S&P 500 and the Dow also hit new multi-week highs this morning but with the key cyclical sectors being under pressure due to the continued economic uncertainty, they are well below their record highs.

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We Are In For A Volatile Earnings Season

The number of new COVID-cases remains very high both in the U.S. and globally, with the global total now approaching 13 million, and the hot spots in India, the U.S., and Latin America are still very active. Even though we got positive vaccine-related reports, the rally remains narrow, and small-caps failed to join today’s party. This could mean that we are in for a volatile earnings season, with the first major reports from the battered financial sector coming out later this week.

Market Wrap

Dow: 26,517, + 442 or 1.74%

S&P 500: 3,230, + 45 or 1.4%

Nasdaq: 10,822, + 205 or 1.9%

Russell 2000: 1,430, + 7 or 0.5%

Market breadth has been relatively weak despite the large-cap benchmarks’ strong performance, with advancing issues only outnumbering decliners by a 3-to-2 ratio on the NYSE at midday. Only 11 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 146 stocks hit new 52-week highs. The major indices have been trading above their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday buying pressure. The key sectors have been diverging substantially in early trading, and apart from the mighty tech sector, only healthcare stocks and materials are better-than-average, with real estate stocks, financials, industrials, and energy-related issues all lagging behind. Stay tuned!

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