ESP Tuesday: Stocks Pause Ahead of Earnings and Data

If things are so bad then why is money is sneaking into the market? Plus a new pre-earnings trade with a nifty setup.

Image courtesy of valuewalk.com

AMZN, Apple Earnings plus PCE and NFP are making traders nervous, but money is still sneaking into the market.

Aside from the ongoing geopolitical and tariff related volatility, investors are now waiting for Apple (AAPL) and Amazon (AMZN) earnings which will preceded Friday’s inflation release (PCE) and Non-Farm payrolls numbers.

One would expect that at some point there would be some effect on NFP from the DOGE related federal jobs cuts. But given the way the statistics are calculated and the high number of related court cases it’s hard to guess whether the NFP numbers will reflect the DOGE effect. For what its worth, the consensus new jobs number is somewhere between 130k-140k. PCE estimates are for a 0.3% month over month rise and a 2.7% year over year increase.

Weaker than expected jobs numbers, especially if combined with a better than expected PCE might go a long way toward getting the Fed to cut rates.

Market Update

The S&P 500 (SPX) is continuing its climb above 5450 and seems headed for a test of the 200-day moving average. A sustained move above the 200-day moving average would reject the notion that we are in a bear market. Note the recent rise in both the ADI and OBV lines as money sneaks back into stocks.

Meanwhile, the New York Stock Exchange Advance Decline line (NYAD) continues its steady climb suggesting that even though there is plenty of negative talk, money is moving into stocks. Of course, given the upcoming earnings and Friday’s jobs and inflation numbers, things could change in a hurry.

The U.S. Ten Year Note yield (TNX) has quietly broken below its 200-day moving average this morning suggesting that the bond market is starting to bet on positive surprises on Friday.

This morning, I am adding a new trade in a stock with excellent upside potential ahead of earnings.

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