The Shakedown 10/13/19

Partial Deal + Earnings Seasons

Another wild week in the market that was capped off on a high note with a big market rally on the back of a partial deal with China. We saw an early dip this week on Trade War related headlines and rose in the latter half when the positive headlines started hitting the wires.

Trump said the US has come to a "very substantial phase one deal" and that "phase two will start almost immediately" after the first phase is signed. Phase one will address intellectual property and financial services concerns, along with purchases of about $40 billion to $50 billion worth of agricultural products by China. The S&P rose more than 1% on the news.

While Friday's rally clearly indicates that the market is happy for the moment with the partial deal, there is a growing consensus that the positive sentiment isn't the clear cut signal the Trade War is over, with no clear timeline for removal of the existing tariffs. That being said, we should expect volatility to stick around along with the headline sensitivity to remain.

From a price action standpoint, the broad market breaking a major inflection point to the upside is always positive news. I would expect some consolidation of Friday's massive move as the market needs some digestion. After a huge day Friday, it makes Monday tough as many stocks made their move in the market strength. I would imagine to be more hands off in the beginning of the week and getting more active as the week goes along, but we'll see as always. 

Earnings season starts up Tuesday and it's the best part of every new quarter. There will be tons of action every day as the season kicks off Tuesday with the banks.

Some reports I will be watching closely this week are Goldman, Johnson & Johnson, JP Morgan, Well Fargo, Citi, Blackrock, Netflix, Union Pacific, Atlassian (TEAM), Intuitive Surgical, American Express, United Rentals and Schlumberger. The fun really gets going the following week when more tech stocks report.

If you are swinging a stock and holding a position overnight, YOU MUST KNOW WHEN THEY REPORT EARNINGS.

That is no one's job but your own. 

A Few Short Setups

PFPT Long

Wow, last week's trade of the week PFPT did a whole bunch of consolidating below the resistance level, giving us an inside week. I have been vocal about my love of this weekly chart, but with the inside week below the resistance level, PFPT is officially ready to go. Looking for volume to ramp through 132 first, then 133 is the technical trigger we need to see break.

Trigger: $132/133

Stop: $126.89/124.89

Target: $145+

Hope to see you in the chat Monday!

Watchlist coming in the following email.