SP500 Bull or Bear: Take Your Pick

Bull or Bear

SP500 is in focus, whether you are a Bull or Bear. Take your pick, as breadth remains flat and potential distribution keeps new highs at bay. We nearly tallied a record 9th week higher, but instead produced more blocks overhead as resistance.

Futures are lower in the pre-market session.

Watch List Candidates

Alibaba (BABA) is trading above Friday’s session highs, clocking a record 25.3 billion is online sales, handily beating Black Friday and Cyber Monday sales combined. We also have a potential beneficiary of China’s weekend sales, as JD dot com is trading at 41.50 (+1.51).

Oil and Gas equipment stocks should continue higher this week as Saudi news curtails supply. Crude is higher this morning.

Earnings and Sales: Courtesy FactSet

SP500 companies reporting earnings and sales for the quarter do not support the bearish thesis at the present time, so we need to practice patience.

  • Earnings Scorecard: For Q3 2017 (with 91% of the companies in the SP500 reporting actual results for the quarter), 74% of SP 500 companies have reported positive EPS surprises and 66% have reported positive sales surprises.
  • Earnings Growth: For Q3 2017, the blended earnings growth rate for the SP500 is 6.1%. Seven sectors are reporting or have reported earnings growth for the quarter, led by the Energy sector.

We will be waiting for the Opening Range, before taking any new trades. With the markets showing some weakness, it is possible it could get even weaker as nervous traders sell shares this morning.

High Yield Corporate and Junk Bond Yields

HYG

The caveat for bears remains in the bearish media commentary, as if the weakness in High Yield and Junk Bonds in March were any less troublesome than last week.

Watch these indicators this morning:

  • Junk Bonds and yields for a bounce
  • Sentiment – Tick Cumulative
  • NYAD

Happy Trading,

Vinny

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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.