Earnings season swings into gear


S&P 500


The Dow Jones Industrial Average ($DJI) had a gain of 34.43 points, or 0.3%, and closed at 11,671.88 on Tuesday. Over half of the Dow's 30 index components posted a gain for the session. The top performers were Bank of America (BAC) (+2.01%), Intel (INTC) (+1.74%), Chevron Corp. (CVX) (+1.57%), and Home Depot (HD) (+1.37%). Telecoms were the weakest. Verizon (VZ) fell 1.56%, while AT&T (T) ended the session lower by 1.52%. Alcoa (AA) (-0.97%) and Merck (MRK) (-0.67%) topped the losing list.

Nasdaq 100


The S&P 500 ($SPX) rose 4.73 points or 0.37%, and closed at 1,274.48. The strongest percentage performer in the S&P 500 was Apollo Group (APOL), which jumped back from pre-earnings losses to post a gain of 13.36% after it beat expectations despite a 42% drop in new student enrollment. Other top performers included Lennar Corp. (LEN) (+7.09%), Sears Holding (SHLD) (+6.27%), Stryker Corp. (SYK) (+6.03%), and Allegheny Technologies (ATI) (+6.02%). Supervalu Inc. (SVU), which posted earnings premarket, was the biggest loser. It fell 11.64% to new 52-week lows. Advanced Micro Devices (AMD) also posted a large loss, falling 9.03% after retesting last summer's highs on Monday.

The Nasdaq Composite ($COMPX) ended the session higher by 9.03 points, or 0.33%, on Tuesday and it closed at 2,716.83. Intuitive Surgical Inc. (ISRG) (+3.46%) followed gains in Apollo Group (APOL) and Sears Holdings (SHLD) in the Nasdaq-100. SHLD's gains came after its fourth-quarter outlook beat forecasts. Expedia Inc. (EXPE) (+3.33%) rounded off the top four. Citrix Systems (CTXS) (-2.52%) was the weakest performer in the Nasdaq-100, followed by losses in Priceline.com (PCLN) (-2.12%) and Sandisk Corp. (SNDK) (-1.95%).

The market is poised for another strong open heading into Wednesday morning followed a strong surge of buying in Asia and Europe that helped boost the index futures. The extent of the anticipated gap, however, will leave the indices extended and make a continuation of the rally difficult and any intraday buying should be more gradual than the premarket action. A more likely scenario will be price correction with the continuation of intraday strength focused in select stocks as opposed to the overall market. The Dow futures are currently forming a potential 15 minute Avalanche short setup in premarket trade ahead of the open.

Keep an eye out this afternoon for the Fed's Beige Book. This season's earnings will also start to pick up from this point onward and many are hoping to see a continuation of upward surprises.

Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.

Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.

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About the Author
Toni Hansen

Toni Hansen is president and co-founder of the Bastiat Group, Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.

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