Don’t look now but we’ll have the biggest week of earnings yet for Q2. Some of the biggest names will come out with their results which may help shape the sentiment and direction for the next few months. These include Apple, Facebook, Baidu, Broadcom and Panera Bread and Las Vegas Sands.
Also, some industrials, energy/gas and consumer stocks will give us an idea of how things are going. Make no mistake, the market is the one doing all the ‘talking’ (or at least what we should be listening to). Earnings season lately has been defined by the haves and the have nots, that theme has not changed.
The news has been driving markets of late as the sentiment moves from bullish to bearish and back. The put/call ratio hits some extreme levels and the markets reverse quickly to burn off the extreme. Checking on the chart we see the range narrowing, the bollingers coming in as well.
This would normally indicate some level of complacency is setting in, and we do see that with the VIX as well, hovering near 16%. Strikingly, the VIX is not even close to the lows printed in March where on the 16th it read 13.66. So while this recent drop in volatility is concerning it has clearly fallen and has resistance to deal with. Basically and big whack can come out of nowhere and not even challenge the current trend.
Apple is a big earnings report this week. No doubt they will set the tone for the markets on that day and the coming weeks. The quarterly results may already be baked in the price but it’s the talk and enthusiasm over the future that maybe the catalyst.
While each side (bull and bear) have dug in their heels ready for a big move in their direction it’s not difficult to see from the chart some big movement could be ahead. Here is a great analysis of Apple from a recent webinar put on by OptionsProfits/Thestreet.com, where Stephanie Link, Jill Malandrino, David Peltier and others extract out the truth and facts behind what we could see with Apple ahead, the catalysts and other collaterals. I encourage you to watch this.
