Will Q2 Earning Be the Catalyst for New Highs?
Davin Blythe of FairValue Trader - InsideFutures.com - Thu Jul 12, 10:35AM CDT

This article was originally published on Nadex.com.

Fear of a further drop in U.S. equity markets was short-lived during Wednesday’s session, with sellers unable to attack the overnight low and bulls pushing the equity indices back into Tuesday’s range. The markets are doing what they have always done, which is to adjust to new conditions.  Right now, that means adapting to the uncertainty surrounding the trade wars rhetoric.

Overnight, stock markets in both Asia and Europe rallied while the S&P 500 futures pushed back up near this week’s high. We continue to anticipate that the next few sessions will resemble summertime trading. That means quiet, low-volume markets with choppy ranges that often lead to a bullish bias. We think the gravitational pull right now is for the  ESU to push up to 2800.

The economic calendar today is busy, but other than the 8:30 Jobless Claims numbers, it does not feature much that is noteworthy as we don't expect those numbers to offer anything that is market-moving. Tomorrow's calendar features some important numbers early on - Import and Export Prices and Consumer Sentiment - but again, we do not anticipate these to be pivotal; and then in the first two days of next week, the calendar really slows down.

Given this, the calendar will be dominated by Q2 earnings reports.  Tomorrow, these include earnings from banks such as Citigroup, JP Morgan, and Wells Fargo, and the first two days of next week, the headline reports will come from Bank of America, Netflix, and Goldman Sachs.

Our view is to continue to buy dips in the S&P 500 futures, and our conviction will remain strong as long as the ESU18 remains above the 2750 level, which marked resistance last week. The big round 2800 level is vital now; we showed in yesterday's article that 2800 has offered firm resistance since the late January sell-off.

We believe that the dips will be shallow, and we look to buy any weakness. Tomorrow, with nothing important on the calendar after the first hour, we think traders will hit the exits early to take advantage of good weather in a summer that has been relatively busy in the financial markets.

Economic Calendar

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