Will Q1 Earnings Season be the Impetus for Price to Break-Out of this Consolidation?

The stock market has been doing a good job of late chopping up shorter-timeframe traders.  Here is how I see the market …

S&P 500 Index ETF (SPY) – Weekly Chart

The above weekly chart highlights the fact that we are clearly in a corrective pattern for the SPY off of an extreme trend strength warning signal (dark blue candles) made by charting software … we are now in a position of having the ATR in resistance, so until we can get a better idea of this weekly price structure, it behoofs traders to take caution with their overall exposure to equities.

S&P 500 Index ETF (SPY) – Daily Chart #1

The daily chart shows that we are in a bigger consolidation pattern and are no longer trending … traders have to be more nimble in this type of trading environment.

S&P 500 Index ETF (SPY) – Daily Chart #2

Even if you are a big equity bull, it is not clear yet that the corrective pattern is complete … the C-wave of the correction did not actually go down to make a new lower low below the A-wave low.  Typically that last push to a new minor low is necessary to take out stops and set-up the squeeze higher out of the corrective pattern.  Also, the market usually makes one fake-out move to the upside to get the weak hands out of their shorts and to get the naive bulls more aggressive.  If that happens here again with this price structure, I would expect price to push higher for the next week that would peak above the trendline off of the two prior highs – that break would get many traders further committed to new longs as they “play the break higher”.  The market tends to bitch-slap this early break-out attempt.

I would then think that the market pushes down to make that new C-wave low … that is when we will see if this is indeed a corrective pattern and we can therefore make a more legit move to attempt a break of the prior highs.

S&P 500 Index ETF (SPY) – 195 Minute Chart

The bigger question I am still monitoring, however, is whether or not we are making an ABC correction or whether we are making a bigger 1-2-3 price structure that is part of a much bigger distribution pattern or even the marking of a very important market top.  If we are making that bigger move, then look for SLOT resistance to hold and price to turn lower.  Maybe that move lower starts after monthly OpEx or even closer towards the end of April??  We shall see …

Cheers … Leaf_West

COST Update …

Earnings for Costco aren’t scheduled to be released until May 24, 2018, but COST’s stock looks like it is ready to break higher out of its latest consolidation pattern.  Here are the charts …

COST – Daily Chart

Everything on my chart indicators points to COST making a move higher here … I am long June monthly call options and plan on trading the stock going forward here as it begins to get some mojo.  Here is a closer look at the break higher with the 195-minute chart.

COST – 195 Minute Chart

Cheers … Leaf_West

I Like JPM Here into Earnings …

I think Q1 earnings reporting season could provide the market with a much more bullish backdrop for equity traders … one stock that reports this week is JPM, which leads the bank reporting season off when it reports this Friday before the open.

JPM’s chart suggests that the most likely short-term path after the report is to the upside …

JPM – 195 Minute Chart

The trend strength histogram has pulled back into the Chop Zone and looks like it could be signaling an upcoming expansion phase.  If that is what is going to happen, then the break higher by the relative strength indicator suggests to me that the stock wants to go higher if the earnings report is anyway half decent.  I am long call options that expire in May.

Cheers … Leaf_West

AMZN … Where will the Music Stop?

AMZN is paying the price during this market correction for being so widely held and for having run so hard for so long.  Where is support likely to re-appear?  No one, knows and I think that will depend almost entirely on when the tech market gets a bid finally.

Here are the levels I am looking at …

AMZN – Weekly Chart

The weekly broadening price formation has seen price pullback to the upper support/resistance line.  Will price find meaningful support here at around $1375??  Maybe …

AMZN – Daily Chart

On the daily chart, I can see what looks like a nice band of prior volume in the $1125 – $1200 zone … with that zone in mind, I decided to sell some OTM put options that expire before the next earnings date (April 26th).  I sold some of the $1150 puts that are going to expire on April 20th.

AMZN – 195 Minute Chart

I continue to trade AMZN as my main focus intra-day, but I am not yet prepared to hold any long/short position overnight.  Selling some OTM puts at that $1150 level is a much safer way of making a multi-day bet on what will happen to AMZN over the next couple of weeks.

Cheers … Leaf_West