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John Mylant
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Residing in Colorado Springs, Colorado. Has been trading and coaching using a self-developed option trading system for 10 years. Philosophically conservative, accurately trades weekly options with a strong risk management approach. Well sought after by investors around the world, he teaches a... More
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  • ETF SPY:Earnings Is The Big Mover This Week 0 comments
    Oct 13, 2012 12:32 PM | about stocks: ETF, SPY

    Technically Speaking

    RSI- when the RSI showed an over bought position on the first peak it was expected to stock would pull back. But the second peak did not give us an over bought position. This either shows weakness on the second attempt as pushing up or showing us we still have room to grow. This last push down through the middle band to the bottom also(click to enlarge) moved us into bearish territory for the first time since the end of July. This is significant. It could be showing the end of the second leg up of the bullish run.

    MACD- the MACD does not show as much bearish emphasis as the RSI but it continues to get closer to the '0' market. It could be that the lack of movement at the zero line could mean it wants a third leg up. If it was below '0' right now, it would add strength to the bearish nature of the RSI but we just do not have it yet.

    Bollinger Bands- a significant observation may be made here. The past time the stock touched the bottom band, it also used the 50 day MA as support as it ended the first up trend. I am finding the same thing here. The lower band is also resting on the 50 day MA as support. A move through this MA would signal a much hard move through the band.

    Current Events

    Trading will also be influenced by the news flow in Europe, where a summit of finance ministers will take place. The Wall Street Journal reported that a deal on austerity measures for Greece could be reached in time for the meeting.

    Profits are being dragged down by material (.GSPE) and energy (.GSPE) stocks. Material sector earnings are seen dropping 24 percent, and energy sector results are expected to slide 19 percent. In contrast, aggregate profit growth for financials (.GSPF) is seen up 1.6 percent.

    Trading could be especially volatile in the Nasdaq, with a number of tech titans on tap, including Microsoft, Google Inc (GOOG), IBM and Intel Corp (INTC), which recently cut its outlook.

    Third-quarter U.S. earnings have just begun, but already U.S. companies are sounding alarm bells about the fourth quarter.

    Outlooks for the fourth quarter - just two weeks old - are so far decidedly more negative than positive. Thomson Reuters data shows 11 negative outlooks so far from Standard & Poor's 500 companies and no positive outlooks.

    Third-quarter guidance, meanwhile, at the comparable period showed 6 negative outlooks and no positive.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: ETF, SPY
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