As discussed in Thursday's Trader's Daily Notebook, the regular session's E-Mini S&P 500 futures (Es) auction was relatively quiet. We expected traders to remain on the sidelines ahead of the afternoon's earnings barrage, and based on the 10-handle range and roughly 950,000 contracts that changed hands, the sidelines are indeed where most active traders spent their day.
On the earnings front, traders appear to be pleased with results from Amazon (AMZN) , Alphabet (GOOGL) and Cerner (CERN) . But notably less so with results from Baidu (BIDU) , Intel (INTC) , KLA-Tencor (KLAC) , Microsoft (MSFT) , Starbucks (SBUX) and Skyworks (SWKS) . (Alphabet and Starbucks are part of TheStreet's Action Alerts PLUS portfolio.)
Without getting into the results of each company, let's remember this market is dominated by folks attracted to momentum. So expect more attention to be paid to a name like Amazon, which traded more than 30 handles higher in the post-market session, than to a name like Microsoft, which traded off a buck from the close, but only pennies from Wednesday's close. The bottom line is whether you, I or the bear to your left likes it, traders are currently more concerned with highlighting the good than dwelling on the bad or dull.
To those who emailed asking whether I'd consider chasing Amazon (assuming its bullish gap holds into Friday's regular session) on the long side, I have absolutely no intention of trading AMZN in the immediate future. While the stock obviously has amazing momentum, and my guess is all eyes will now be focused on the big figure ($1,000), I see little edge in trying to buy a stock so incredibly extended from its short and intermediate timeframe moving averages. And before anyone asks, the only way I'd ever consider trying to fade this sort of gap is if price was trading beneath its opening print and VWAP after the first 15 to 30 minutes of regular-session trading.
Friday's earnings calendar is a bit quieter than Thursday's, though we are slated to get results from Chevron (CVX) , General Motors (GM) and Exxon Mobil (XOM) . Of the three names, only GM is above its 200-day simple moving average. And despite the negativity surrounding any auto company not called Tesla (TSLA) , I think GM looks fine above $35 (using the backdrop of the 200-day SMA as a protective stop).
As far as Chevron and Exxon are concerned, I've no interest in either given the crummy state of light crude oil futures, and the fact that neither stock is above its 200-day SMA at a time when all major indices are at or near swing highs. If I were forced to make a play on either name, I'd buy XOM with a close under $80 as my stop. Chevron, in my view, should be tossed on the back burner until it can be bought closer to $98, or shows renewed strength above $110.
Moving on to Friday's Es auction, we'll end the week with a focus on 2383. As long as the contract opens and holds above that figure, we'll look for a push toward 2391.25. Acceptance above 2391.25 shifts our focus toward 2397.50 and new contract highs. But given Wednesday's stalled momentum above the low 2390s, I'll be slow to trust any strength toward the big figure (2400).
A failed trade from 2383 to 2381.75 opens the door to a bit of selling. Nothing serious, I suspect. But I wouldn't be at all surprised to see the contract test 2375, before stabilizing and ending the week back above the low 2380s. For now, all signs continue to suggest higher prices are in our future.
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