Hi Everyone
Earnings season is in full flow and the markets are mildly whipsawing. This is typically a sign of bearishness, but we’ll have more information today as GOOG and GS make their earnings announcements.
Both stocks are forming Bear Flags, and a breakdown after their announcements could herald the start of a bigger move to follow.
If you’re trading directionally you’ll want to be careful while the big guns are still yet to report. If you like trading straddles, then there are a number that look good value right now while the markets are rangebound and Implied Volatilities still reasonably low.
My new OVI indicator turned down last night for all the indices (not surprisingly) but it’s hovering around the zero line for the Dow and S&P, and negative for the Nasdaq.
The Nasdaq is the most volatile of those three indices, indicating that tech stocks are vulnerable during this earnings season.
In an ideal world we’ll soon have a clear reversal signal (like we did last March where we had two doji bars followed by definitive reversal bars) so we can get stuck in on the short side, but as ever, we only move on a properly constructed breakout.
More soon.
All the best
Guy