S&P 500

Another Flat Earnings-Week Open

Posted Wednesday, July 17, 2019 by
Shain Vernier • 1 min read

In the summer heat of earnings season, It has been another muted open on Wall Street. For the first hour of trade, the DJIA DOW (-23), S&P 500 SPX (-6), and NASDAQ (-8) are hovering near flat. Earnings reports from United Airlines, Goldman Sachs, Charles Schwab, and JP Morgan brought heavy two-way action during Tuesday’s session. Wednesday features reports from Bank of America, Mellon Corp, eBay, and Netflix. Given the influx of corporate financials, it may turn out to be another whipsaw session for the U.S. indices.

Later today, the FED releases its Beige Book Survey. This is a secondary event, but will give the markets another look into FED projections regarding near-term economic growth. Without a doubt, traders and investors will be looking to the Beige Book for clues on just how many rate cuts may be in the cards after the July 31 FOMC meeting.

DOW Muted Following Earnings Releases

Following Tuesday’s weak close, the DJIA is off modestly to open today’s action. September E-mini DOW futures are trading in the neighborhood of 27300, about 100 points off all-time highs.

September DOW Futures (YM), Daily Chart earnings
September DOW Futures (YM), Daily Chart

Here are two levels to watch in this market for the remainder of the session:

  • Resistance(1): Swing High, 27396
  • Support(1): 38% Current Wave, 27114

Bottom Line: Throughout 2019, buying dips has been a profitable way to trade the DJIA. If we see a retracement in the DOW stemming from earnings season, then a buy from the 38% Current Wave Retracement (27114) is a good way to play the action.

As long as the Swing High (27396) remains the upper bounds of the September E-mini DOW, I will buy orders queued up from 27129. With an initial stop at 27089, this trade produces 40 ticks on a 1:1 risk vs reward management plan.

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