Morning Market Thoughts
Good morning. The futures indicate a flat open as stocks continue to float higher. I noted in last night’s Strategy Session that the market just isn’t offering much chance for underinvested bulls to put money to work. But I did mention a few stocks to put on your radar.The investment banks have been building multi-month bases for much of this year after their post-election rally that took many of them up more than 30% before peaking on March 1st. The bases have been really constructive, with cups as long as 4 months, followed by volatility squeezes. Last Thursday JPMorgan (JPM) reported solid earnings that beat estimates, though the stock failed to break out. Instead, it pulled back for a couple of days before closing at an all-time high just yesterday. Recall that the company reported poor trading revenue due to persistently low market volatility. This isn’t a JPM thing; this is a market thing. All the banks will deal with this same problem, which is part of the reason that many are looking at starting bitcoin trading operations. You don’t find much more volatile markets than the cybercurrency market.
Through my chart analysis, I’m looking for a minimum move to around $108.50 for JPMorgan. But the other banks are not too far behind.
Morgan Stanley (MS) just reported earnings and, like JPM, reported lower trading revenue, but still beat estimates. Last week the stock pulled back around 5%, but yesterday MS reversed that pullback on higher than average volume. This morning the stock is trading higher and is likely to push through $50. My minimum target for MS is $54. I think it works.
Goldman Sachs (GS) also reported solid earnings this morning and is also trading higher. But as of yesterday’s close, the stock was about 5% below its all time high on March 1st. So GS has been a bit of a laggard. I suspect it will start catching up. As I see the chart, a breakout above $247 would put $270 in play.
Lastly, watch how Netflix (NFLX) trades this morning. The stock really started an earnings run a couple of weeks ago after breaking to a new high on more than twice average volume. That run looks like it’s going to continue after the company reported subscriber growth of 5.3 million subscribers last quarter. Earnings were a bit below expectations, but I don’t think that’s a big deal. Subscriber growth is the key metric, and guidance was actually raised for next quarter — to 6.3 million subscribers. Netflix is the obvious market leader in content streaming, and I don’t expect that advantage to go away anytime soon. Market leaders tend to keep leading unless a competitor manages to introduce a game changing product. There are competitors, but Netflix is really a staple of content streaming, with other services largely being seen as add-ons.
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Just a reminder about tonight’s follow-up live training session on Technical Analysis for Non-Technicians at 8 pm ET (5 pm PT). If you’re looking at this email, you’ve been notified that we are giving this course away to members. The non-member price is $297, and this has been our most popular course! You still have time to grab this for free by simply starting your 30-day free trial today. After today, this downloadable course will still be available — it’ll just cost $297. Even if you will not be able to attend tonight, the class is being recorded. You’ll be able to catch it later, after you’ve studied the course material. Check it out with the 30 Day Trial – https://stockmarketmentor.com/member-signup/?coupon=freetrialwebinar
See you in the forum in a while.
–Dan
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