By Nicholas Santiago on April 12th, 2010 12:58pm Eastern Time
Today's volume may rival the lightest volume trading day of the year. Unfortunately, this is a very dull market and as we all know by now a dull market usually favors the upside; hence the market adage, “never short a dull market.” However, beginning this afternoon the dull market and light volume could change, so be ready.
Earnings season will soon be underway as Alcoa Inc. (NYSE:AA) is scheduled to report earnings today. The stock is still well below its January highs of 17.60. Currently the stock could have some upside, however, the 15.50 level looks to be good resistance on the daily chart. Should the stock have a negative reaction after its earnings release it will have support around the 13.00 level. While Alcoa Inc. has rarely been a huge mover it will often bring some much needed volatility and volume to this snooze of a market.
Tomorrow afternoon another important stock will report earnings. This time it will be the technology leader Intel Corp. (NASDAQ:INTC). Intel Corp. has a bullish daily chart pattern in place. Therefore, the stock could see an initial move higher after their earnings report. However, playing earnings is always a risky game. The upside for Intel Corp. looks to be the 24.00 level while the downside for Intel Corp looks to be 21.00. In either case this stock should help to increase the volume and volatility in this market.
J.P. Morgan Chase & Co. (NYSE:JPM) is the next major stock to report earnings after Intel Corp. They are scheduled to report earnings before the open on Wednesday, April 14th, 2010. J.P. Morgan Chase and Co. and the other large banks have really been the market leaders since March 2009. It is possible that the stock has much of its earnings release already factored in. However, the financial stocks have lead the markets higher and remain technically very strong. Please remember that the Fed fund's rate (overnight lending rate to the large banks) is at zero percent. Therefore, the large banks do not have to make loans to make money; they can simply buy U.S. Treasuries and stocks in order to see a positive return.
Regardless of how the market interprets the current earnings releases it should bring back some volume and volatility. The major stock indexes have had extremely light volume since the February 5th, 2010 pivot low. Hopefully, this earnings season will bring back some good trading action and opportunities, but for now we have to trade what the market gives us.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
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