Tweet *****It's the end of one season and the beginning of another. We are officially in Spring, but there are other seasons within seasons that we tend to mark our memories with. The ski season is over, the sailing season will start in another week and for some of us traders, the earnings are just the ticket to gap the bridge.
Of course earnings season is longer than a week it actually lasts the quarter, but the markers happen within the 2-4th week. These are the earnings of the market leaders that traders watch each quarter and for which I create earnings plays. With the Dow and S&P 500 reaching new highs, the reaction to earnings may be more unpredictable than before but I feel that the reaction to beating or missing earnings forecasts will become much more positive and negative than in prior 4 years' quarters.
I think that most of my readers know that the unexpected results either way will bring more interest, but more than before the winners vs losers will become increasingly important and may determine whether the holders will stay or flee. Remember that the markets are at an all time high so earnings will need to not only fulfill the current expectation, but forecast a better outlook for the next and future quarters. If the consensus ends up on the negative side, expect more flee; if the positive side, expect more flow. That is not rocket science most of the time, but adding to the unknown is the usually "sell in May and go away" tradition.
After 4 years of bullish market and recent breakout high neither scenario is impossible.
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