Earnings season will start soon

Wednesday with the release of Alcoa’s results will mark the official start of first quarter earnings season. As usual when the big banks and techs start reporting, we will have a more clear view of how big companies are faring. Expectations for this season are very low due to the impact of the stronger dollar on companies’ bottom lines. Although the market has already priced in earnings negativity, if the recent string of weak economic data continues, it will be hard to justify current valuations, and we may see further deterioration ahead.
This has been a difficult time for trading, with few stocks making solid breakout moves. The weakness can be seen in market leaders, which recently have stalled or cracked. Furthermore, the selling has been high across all sectors, sending the number of distribution days to an exceptional high level. Anyway, if you know how to spot and play earnings, this period offers a unique opportunity to take advantage of the recent market weakness.
Expectations overall are low, but selectively one can find stocks that will truly surprise the market and therefore start making new multi-year highs. Never forget the date when your company(ies) report and start preparing your trading arsenal tools to embrace this next season.

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