Earnings Season Begins Monday

I hate to trade during earnings, you lose your edge and technical analysis is all about gaining an edge. That being said, there will be no trade ideas posted tonight until we see the market's reaction to Alcoa's earnings report.

What we are looking for is not what's in the report, but how the market responds to the report. The last few days the market has been marked up and looks set to gap up Monday morning based on Asian trade tonight. This behavior is impossible to reconcile at this point when the market breadth has been shaky at best and apathetic in most cases over the last 3 weeks. Speaking of which, it seems the market is up almost everyday, but the SP-500 has gained less then 3% in the last 3 weeks, just to put things into perspective.

If you want to get a leg up, the sectors I'll be paying close attention to next week will be: Computer and Software Services, Conglomerates, Media, Consumer Durables, Drugs, Energy, Health Services, Materials, Housing, Auto Manufacturers, Financials, Specialty Retail and Treasury related securities.

Lets see what mood the market is in. It's fair to say that interest rates will be rising and there are a lot of industries that will suffer as a result of that so rate sensitive sectors like semi-conductors and bio-techs, businesses that rely on borrowed capital that are not producing positive cash flow will all be on the radar.

So take a break, be patient and we'll leap when the odds are in our favor.

Have a great week.