A1 Trading Company

April 22, 2024

Will Big Tech Earnings Save Indices?

Frank Cabibi

This week is full of earnings from big tech as we wait for Google, Microsoft, Meta, and Tesla. This month has been mostly in the red and are coming off a 6-day losing streak in the S&P. With tensions in the Middle East escalated, earnings hopes to save the markets.

EdgeFinder Analysis

Silver sits at a stronger bullish reading than gold as the trend score declines this morning. Unlike gold, other metals tend to perform bullishly off healthy economic data. It is also correlated to gold in the sense that geopolitical tensions work in silver's favor.

Iran was attacked by Israel in a retaliation response to Iran's missile barrage earlier last week. The stock market is still not showing signs of a shift towards optimism due to these strikes from both countries. Gold is up, yields are falling and dollar is falling too.

There are several levels of support that the S&P could test on the 1D timeframe. Price tested the $4,927 level on Friday and is stuck between support and resistance. The move looks indecisive as we have mixed feelings going into the week.

Although it looks bearish in the short term, a 10% pullback sounds like a healthy retracement from the overextended highs we've experienced in the past handful of months. A pullback of this magnitude would only be giving back what the index has made this year.

Among dollar pairs, GBPUSD is the strongest bearish reading on the EdgeFinder. A -11 score shows a slight improvement from Friday which was -13, but it might not be enough to flip the sentiment around. COT shows an aggressive positional change to bearishness this week while retail remains majority long this pair.

One factor that could help this pair's optimism lies in the US earnings this week. Big tech is set to report in the next few days and will likely cause some sort of volatility to the mix. Beats on estimates are important, but we also need to pay attention to the forecasts for next quarter as well.

Retail Spotlight

Crypto, metals, small caps oil and NASDAQ are now the majority long positions from the crowd. GER30, USDJPY and UK100 are the top shorted assets. Traders might be looking for a reversal in the US indices, thinking it has dropped substantially.

Smart Money Spotlight

COT shows an aggressive buy on the S&P and bond prices. The dollar saw minimal interest last Friday. Among the top shorted assets from smart money, we have GBP, CAD EUR and CHF. All of these currencies are forecasted to see lower rates before the dollar.

Fundamental Spotlight

Despite economic growth and steady labor conditions, investors still seem to think that stocks will be on the decline in the next 6 months from now. The next report will be on Wednesday to see how much this gap has changed and whether or not we get any improvement from the bearishness happening in the markets.

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