Friday’s trading session can be summed up with one word: sticky. While the S&P 500 closed flat, although higher for the week, the small-cap Russell 2000 outperformed, ending at the very top of its weekly range.
The all-important U.S. dollar closed near its highs of the week, as well, putting in a bullish reversal on the weekly chart, and bond prices conversely closed at the lows of the week. Last week, I said that if the dollar is able to rebound after being in a downtrend since November, this should weigh on commodity prices and, ultimately, U.S. equities.
This will be the busiest week of the first-quarter earnings season. Key companies stepping up to the plate include:
Tuesday: Apple Inc. (AAPL), Twitter Inc (TWTR), Chipotle Mexican Grill, Inc. (CMG), AT&T Inc. (T)
Wednesday: Facebook Inc (FB), First Solar, Inc. (FSLR)
Thursday: Amazon.com, Inc. (AMZN), Gilead Sciences, Inc. (GILD), Amgen, Inc. (AMGN)
Friday: Exxon Mobil Corporation (XOM)
On Friday, Nasdaq 100 heavyweights Microsoft Corporation (MSFT) and Alphabet Inc (GOOGL) dragged the index lower following their earnings reports, falling 7.2% and 5.4%, respectively. This left some ugly marks on their weekly charts with notable bearish reversals.
The Nasdaq 100 led the market higher throughout much of 2015 with huge relative strength, but our first chart shows this trend has entirely reversed. The ratio chart of the PowerShares QQQ Trust, Series 1 (ETF) (QQQ), which tracks the Nasdaq 100, and SPDR S&P 500 ETF Trust (SPY) has been falling since December and is nearing the neckline of what may be looked at as a bearish head-and-shoulders pattern.
Traders should keep this chart in mind for perspective as we head into Apple’s earnings report on Tuesday.
Also front and center in my mind as we kick off the week is the chart of the NYSE Composite. As a result of the recent steep rally, the index has once again reached its 100-week simple moving average.
Considering how well this moving average held through the first half of 2015, it doesn’t take too much creativity to imagine that it may now act as a force of resistance.
The coming week will also be a big one for biotechnology stocks with some key earnings reports on Thursday.
The iShares NASDAQ Biotechnology Index (ETF) (IBB) overcame a layer of horizontal technical resistance last week and now looks to be attracted to the 2015 downtrend line, which currently resides around the $300 mark.
With large-cap technology names like Microsoft and Alphabet registering bearish reversals on their weekly charts and a slew of upcoming important earnings reports, this has the potential to be a make-or-break week for the melt up in risk assets from the January/February lows.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Like what you see? Sign up for our daily Beat the Bell e-letter and get Serge’s investment advice delivered to your inbox every morning! You can also download his 6 Keys for Successful Trading and Investing.
As of this writing, Serge did not hold a position in any of the aforementioned securities.