U.S. Stocks Falter To Open Q1 Earnings Season

Posted Monday, April 13, 2020 by
Shain Vernier • 1 min read

It’s been a rough Monday morning on Wall Street for U.S. stocks. A little over half-way through the American session, the DJIA DOW (-500), S&P 500 SPX (-55), and NASDAQ (-65) are all trending to the bear. While last week brought a bullish open to April’s trade, it appears as though investors are hesitant to take on any more risk. The coming few days feature Q1 2020 earnings reports from some of the biggest names in business.

On the safe-haven front, it appears that demand for U.S. Treasuries has stabilized. Today brought growing yields for the both the 3 and 6-Month T-Bills:

Event                                                 Actual      Previous

3-Month T-Bill Auction                    0.280%     0.125%

6-Month T-Bill Auction                     0.29%        0.16%

For the second straight week, Treasury yields are up. This is a major change in the safe-haven dynamic from March. Moving forward, it appears that institutional capital is in the process of shifting attention back to stocks and other risk assets.

U.S. Stocks Fall To Open Earnings Week

Tuesday is an epic day for Q1 earnings reports. The likes of Johnson & Johnson, JPMorgan Chase, Wells Fargo, and Delta Airlines are scheduled to report. It’s an understatement, but most analysts expect dismal numbers due to the COVID-19 pandemic.

June E-mini S&P 500 Futures (ES), Daily Chart
June E-mini S&P 500 Futures (ES), Daily Chart

Here are the key levels to watch in the June E-mini S&Ps as the week gets underway:

  • Resistance(1): 50% Retracement of COVID-19 Sell-Off, 2786.00
  • Support(1): Bollinger MP, 2650.50
  • Support(2): Daily SMA, 2455.00

Overview: Barring a surprise fundamental event, the markets may be in for a period of consolidation as Q1 2020 earnings are released to the public. Although today’s action is negative, last week was a huge open to April. If we see the June E-mini S&P 500 hold above 2700.00, a retest of the 50% COVID-19 retracement (2786.00) may come into play in the near future.

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