Mish's Market Minute

Has Earnings Season Slowed Market Volatility?


The first half of Wednesday saw minimal movement in the major indices, due in large part to the anticipation for the FOMC minutes that were later released at 2pm ET. However, like the prior FOMC report, it stuck to the same slate of ideas. Interest rates will stay near zero and increasing inflation is fine as the economic recovery stays in the Feds spotlight.

This was a positive signal for the market that sparked an unexciting level of late-day buying. In terms of the market movement, the Russell 2000 (IWM) closed over Tuesdays opening price, while the S&P 500 (SPY) had a slim break out to new highs before settling just under its prior day's close.

With that said, the market has yet to make any substantial moves in either direction, with a large number of earnings reports still to be released through the remainder of the week. It can be tough to predict the behavior of an equity's price action after earnings, since positive earnings reports can still trigger selling if investors were expecting additional gains or growth from the report. This can be seen in Microsoft (MSFT), which reported beyond analyst's expectations, yet sold off on Wednesday. Although this is just one example, it shows that, from a technical side, earnings are often best to steer clear from unless they are specifically involved in your trading strategy.  

This is possibly another reason for the lack of overall market volume, as investors are sitting patiently until the thick of the earnings season is over. With other large tech companies, like Apple (AAPL) and Facebook (FB), due to report earnings after Wednesday's market close, we could see more market volatility near the end of this week as traders' earnings fears lessen.

ETF Summary

  • S&P 500 (SPY): Needs to hold over 418.25
  • Russell 2000 (IWM): Looks good if holds over 226.69
  • Dow (DIA): 342.43 high to clear
  • Nasdaq (QQQ): 342.23 high to clear
  • KRE (Regional Banks): Support 66.95
  • SMH (Semiconductors): 242.41 support the 50-DMA
  • IYT (Transportation): Closest support the 10-DMA at 264.39
  • IBB (Biotechnology): 154.68 support
  • XRT (Retail): Like this to hold over the 10-DMA at 92.24

Forrest Crist-Ruiz


Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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