Stock Market Analysis: Quarterly Earnings Time

This time of the year we are getting the quarterly earnings from companies with their earnings from the second quarter of the year. The quarterly earnings are reported each quarter throughout the year for public companies where they report items like their earnings per share and net income. These reports give investors insight into how well the company is performing. Many times, the earnings season will be considered strong or weak as the economy strengthens and weakens and companies report better or worse performance numbers. These reports will also cause the overall markets to have both bullish and bearish days as the reports are made. These can be especially important if the companies that are reporting are big companies where their performance can be seen as an indication of a strong or weak economic condition overall.

We are also seeing some impact on the market from the increase in the cases of the Covid-19 virus. This week we saw a bit of a rise in the deaths caused from this virus. Due to this rise in cases, we are seeing some areas of the country once again begin to mandate the use of masks. A rise in cases could be a concern, especially if it leads to another shut down of the economy. Hopefully, that will not be the case, but investors can become cautious, nevertheless.

This week we saw several reports come out that are an indication of the potential for growing inflation. We had reports like the CPI, the PPI as well as retail sales numbers released. In the case of this week, we saw a slight increase in these costs which may be an indication of potential inflation moving forward. This upcoming week will not have as many reports coming out, but we still will keep an eye out on what people are saying about things like inflation, employment and the overall economic condition.

Today we are going to look at the daily chart of the DJ-30:

DJ-30:

Since last week we have seen the markets trade mostly sideways except for Friday where we saw the bears come in and really control most of the trading for session. We are currently sitting near the level of resistance where the market will need to decide as to what it wants to do. Good news may cause the bulls to push prices higher while bad news could be the catalyst for a more extended move lower. While we are still in an overall up trend, we will want to look for signs that this trend may be changing. Placing new lower lows and lower highs will be key to identifying when the bears may be gaining strength.

While we are experiencing earnings over the next couple of weeks, we need to make sure we are using good risk management in case the prices begin to change direction. Make sure you are following your entry and exit rules as you look for new opportunities.

Bill Poulos is a financial educator, former General Motors executive and published author. When he retired in 2001, Poulos and his son Greg founded Profits Run, Inc. Profits Run shows beginners how to invest wisely with minimal risk. The company educates investors through various wealth management publications. Automatic Income Engine, Rapid Income Engine, and Premium Income Alert are some of the products implemented by Profits Run to help investors trade smarter with minimal risk. Poulos contributes to a variety of online news sources, providing information on the stock market. Bill married his high school sweetheart, Karen, in 1969. They live in Michigan, where Profits Run is located.

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