Lesson of the Week: Inflection Points

Sunday Newsletter April 23, 2017

Chop chop chop! The S&P had an 'inside week' meaning it didn't take out last week's high or low -- just stayed inside its trading range. Inside week's are symbols of consolidation - buyers meeting sellers. Which quickly brings me to....

Lesson of the Week: Inflection Points

The market is reaching what we call an "inflection point." In trading, an inflection point is when a security gets to a level of tightness where it is an absolute battleground between buyers and sellers. Eventually one side wins the battle and a sharp move higher or lower usually follows. 

If you're long you like how we couldn't even test the $232 level, rebounding off support after closing the previous week at dead lows. 

If you're short you know the mini-downtrend is still in full effect. You're loving how the 50 SMA has become heavy resistance, just blocking every uptick into it like Hakeem Olajuwon. As long as that is support-turned-resistance, we are in this mini downtrend. We need to clear it defiantly to ensure the next move is up. 

I would expect our reaction to this inside week to be the deciding factor of this inflection point. 

Earnings Watch

Over 1,000 companies reporting '17 Q1 Earnings this week.

Some heavy hitters Thursday

... not talking about GPRO

Monday: HAL, HAS,KMB, EDU, SOHU, AA, ESRX, TMUS, BOH, WHR

Tuesday: MMM, AKS, BIIB, CAT, KO, LLY, JBLU, LMT, MAS, MCD, NVS, VLO, T, CMG, PNRA,  X, WYNN

Wednesday: ALK, ANTM, BA,BLMN, DISH, DPS, HAIN, HSY, HES, HUN, PEP, PG, QSR, STX, TWTR, UTHR, AMGN, BWLD, EQIX, FFIV, LVS, PYPL, VMW

Thursday: ALXN, CELG, BMY, CMCSA, DPZ, DOW, MPC, MDP, RTN, UPS, GOOGL, AMZN, BIDU, EXPE, GPRO, INTC, SWKS, SBUX, WDC

Friday: XOM, IDXX, SAVE

Onto some charts!

Trade of the Week: JAZZ Long (again)

JAZZ, our trade of the week from last week, is looking even BETTER after a week of healthy, sideways consolidation.

Earnings 5/9

Trigger: $155

Stop: $150.49

Target: $170+

It will be very interesting to see which direction the market chooses at this inflection point. A decisive break higher and we're back to a healthy swing trading environment. A decisive break lower and caution remains. I am personally saving all my bullets for these earnings setups to develop.

As the great Kendrick Lamar says: 

"MF I got winners on the way..."

$$$