The inverted head and shoulders that is anticipated for the US Dollar took one step closer to completion on Tuesday. UUP is responding in a similar fashion, as we await a break of the neckline in the next few sessions. Targets are the upper trend line at 38.2% Fibonacci.
If the dollar continues higher we would anticipate a headwind for multi-national company’s earnings next quarter.
Earnings thus far: 137 companies have reported. 73% beating EPS estimates on +8.0% growth, 70% topping sales estimates on +5.5% growth. -source @earningscout
US Dollar and Yields
In addition, we are watching yields and banks, as the dollar and the domestic economy improves. We will take a position in TBT, anticipating the 20-year bond and the 20-year yield will continue along their current paths.
The 20-year bond (TLT) weekly chart is headed for support. RSI is dropping through 50 and MACD is crossing lower. We project targets at 120.00 and 115.00 (+/-) as the FED raises rates.
With earnings in full swing this week, we are watching blocks very closely. At the present time blocks have been traded above and below the narrow range between 255.92 and 257.10.
TICK cumulative (lower panel) is still rising and price action is above the rising 9/20ema. MACD is stalling, typical considering earnings season and the lack of conviction that surrounds this period. Until the current market sentiment changes, we are bullish.
Rotation and Banks
Banks will likely continue their bullish trends today, with most of the regional banks higher in the pre-market session. BAC, C, GS, JPM, and MS are favorites.
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