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“If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainties.” – Francis Bacon
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The positive reaction to earnings reports continues this morning with the most high-profile example being Netflix (NFLX). As noted in yesterday’s Chart of the Day, historically, the stock tends to respond most positively to its Q4 earnings report, and that was the case once again this earnings season as the stock is indicated to open close to 15% higher taking the market cap well above $400 billion. NFLX isn’t the only example, though, as UAL, P&G, and Travelers are just a few more examples of large companies trading higher in the pre-market in reaction to earnings. The only notable losers are in the Health Care sector where Abbot (ABT) and J&J (JNJ) are down about 2%.
What was looking like a breakdown in the chart of the S&P 500 (SPY) last Monday has quickly reversed. After closing back above its 50-day moving average on Friday, equities picked right back up on Tuesday with additional gains, breaking the string of lower highs and the short-term downtrend that has been in place since early December. We’re still just about 1% off those former highs, but the last five trading days have been a good start, and if the market can continue to react positively to the incoming earnings reports, those highs should be within reach.
Like SPY, some other major indices are playing peekaboo with their downtrends that have been in place since early December. The Nasdaq 100 ETF (QQQ) is an example as it broke its downtrend from the December highs yesterday. Additionally, it didn’t make a higher high yesterday, but based on pre-market trading, it should break that string of lower highs today.