Stocks End Mixed As Earnings Season Begins



Week-In-Review: Stocks End Mixed As Earnings Season Begins

The market ended mixed last week as the tale of two tapes has returned in 2020. Big money has flowed aggressively into the Nasdaq and Nasdaq 100 type big tech stocks as the rest of the market has slowly rallied. Last week, we saw a rotation out of the over bought and over extended leaders into other lagging areas of the market.  Netflix is the first big leader to report and the stock gapped down after lowering guidance. Let’s see how the market reacts to the rest of earnings over the next few weeks. For now, as long as support holds (21 and 50 DMA lines) the market remains in strong shape. 

Monday-Wednesday’s Action:

Stocks opened higher on Monday helping the S&P 500 briefly turn positive on the year before sellers showed up in the afternoon and sent a slew of tech stocks lower by the close. The Nasdaq Composite went from being up 2% at its high to close down 2%. The last time that happened was in 2000 when the dot com bubble finally burst. In other news, California announced it was closing indoor businesses, such as bars and restaurants to try and flatten the curve again. Stocks were mostly higher on Tuesday after JP Morgan and Wells Fargo kicked off earnings season, but once again, tech stocks lagged. Stocks rallied on Wednesday after Goldman Sachs reported a blow out quarter thanks to its fixed income business. In other news, Moderna announced some positive news in its fight against Covid-19 and that sent the stock soaring. On Monday the stock opened at 63 and hit a high of 88.37 on Wednesday!

Thursday & Friday Action:

Stocks opened lower on Thursday as the high beta (mostly Nasdaq and Nasdaq 100 type stocks) finally pulled back. After Thursday’s close, Netflix reported earnings and gapped down after the company missed earnings and lowered guidance. Stocks ended mixed on Friday as investors waited for a slew of earnings to come out over the next few weeks.

Market Outlook: Flood The System With Liquidity 
Global governments and global central banks stepped in with massive rate cuts and other “aid” packages to help “stimulate” both Main Street and Wall Street. So far, it is working as intended. As long as March’s lows hold, the market will likely move sideways to higher. On the other hand, if March’s lows are breached, then look out below. As always, keep your losses small and never argue with the tape.

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