Playing the Waiting Game – Plus a New Momentum Trade

Amazon's earnings and the employment report will move the markets in the near term.

Image courtesy of istock.com

Stock traders are cautiously bullish this morning as the New York Stock Exchange Advance Decline line (NYAD) closes in on a new high. Behind the caution is tomorrow’s employment data as well as today’s earnings report from Amazon.com (AMZN), a core holding of our Weekender Portfolio and in which I own shares.

A new high on the NYAD would vanquish the bearish doubts on the market and could spur stock prices higher in the short term.

Stocks have gotten a nice shot in the arm lately from the bond market’s positive response to the U.S. Treasury’s announcement that it will decrease bond issuance over the next few quarters. The U.S. Ten Year Treasury Note (TNX) is treading water below the 4.5% yield area. A bullish reaction to the January employment report could push yields to a test of the 4.3% area and could boost momentum in stocks.

The CNN Greed/Fear Index (GFI) is still hovering in the Fear area with an early morning reading of 41. The recent rally in stocks began when GFI delivered a reading of 27. A reading of 41 with the market acting this well is quite positive as it suggests that good news could push stocks decidedly higher.

In today’s Momentum update I am offering a conditional trade on a stock which is scheduled to report earnings this afternoon. It features a financial services company in a popular consumer niche.

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