"Amateurs sit and wait for inspiration, the rest of us just get up and go to work."
- Stephen King
After moving out of the recent trading range the market is consolidating as it awaits the onslaught of major earnings reports over the next two weeks. Reports from American Express (AXP) and Alcoa (AA) are seeing positive reactions, and Amazon (AMZN) is upbeat in response to Jeff Bezos business update. But the next big report is Alphabet (GOOGL) on Monday night and the market isn't likely to do much until then.
While we wait for earnings two other issues are taking center stage. First is a surge in oil, metals and commodities. Nickel and Aluminum are trading strongly in part due to Russian sanctions and in part due to general trade war concerns.
Oil is also strong and that is driving Asian markets higher overnight. The Saudi target of $80 now looks like it is possible and that is keeping a bid under the energy group.
The other issue that is in play right now is pressure on bonds. Rates are inching up and concerns about an inverted yield-curve are growing. The iShares Barclays 20+ Year Treasury Bond Fund (TLT) is slipping below recent support levels and is close to testing its 50-day simple moving average again.
The market hasn't focused on bonds or the Fed much the last two-months as trade issues and political concerns have grabbed the headlines, but this pressure on bonds is going to be a concern if it continues. Keep on eye on the $119.50 level of the TLT which is the 50-day simple moving average. The 7-10 year Treasury Bond Fund (IEF) has already broken its 50-day and is approaching recent lows.
Bonds may be a headwind but technically the indices remain in healthy shape. They are consolidating Monday's breakout from the trading range and can afford to give back some groups as things set up for the barrage of earnings that start next week. Some downside at this point would actually be a good setup for a positive response to next weeks' action.
At this juncture I'm not expecting any major moves in the indices. I'm focused on picking off some trades in individual stocks while we wait for more earnings to set the tone.
This market is resting while we wait for earnings season to continue. Don't be in a hurry to make big market calls. Focus on smaller trades for now.