Earnings season is underway. Last week, the big banks reported earnings that were somewhat disappointing. Now we are going to start to see big cap tech report soon and everyone is waiting to hear what they have to say. The NASDAQ 100 has been the biggest winner since the March lows. The Invesco QQQ Trust (NASDAQ:QQQ) which represents the Nasdaq 100 Index retraced 70% of it’s declined from the February top to the March bottom. So any good news in the Nasdaq 100 is probably already factored in. In fact, stocks such as Netflix (NFLX), Amazon.com (AMZN) and others have gone parabolic recently. So when you see this type of pattern on the charts it will usually tell us that they need to pullback or consolidate for a while before moving higher. So it is safe to say that the NASDAQ 100 Index got a little ahead of itself ahead of earnings. Just remember this looking to trade in front of a stock that has already rallied before the earning announcement.
The real test for the markets will be when we see the other important sectors report earnings outside of big cap tech. As we all know, most sectors have been hammered since the COVID-19 crisis began. This tells us that the earnings announcements may not be so important this time around outside of technology. The markets are already anticipating bad news unless the stock has been a high flier during this crisis period. This is a very good reason why you will want to follow the charts and the technicals going forward. This earnings season may be the least important for stocks.
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