It’s the most important week of the trading year.
That might sound like hyperbole. After all, it’s been a crazy year so far in terms of news.
So, why do I say this?
Simple. Earnings season is kicking into high gear.
Earnings season is when publicly traded companies tell the world how their businesses performed the previous quarter. We learn how much companies grew and if they turned a profit.
A weak earnings season can derail the market. A strong one can push the market to new highs.
This week, a slate of big, important companies are set to report.
This afternoon, Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA)—three of the “Magnificent Seven”—will report earnings.
Tomorrow, Apple (AAPL) and SanDisk Corp. (SNDK) will share results after the bell.
SNDK is currently the “true market leader (TML)” of the market. So, how investors react to SNDK’s earnings will tell us a ton about risk appetite.
This week’s slate of earnings reports could provide the spark for the market’s next major leg up. You see, several of the market’s most important ETFs are setting up for huge moves.
For starters, the Technology ETF (XLK) has spent the past few months consolidating and is now just starting to break out.
Strong earnings reactions from MSFT and AAPL, in particular, could really light a fire under the group:
Source: StockCharts
The Communications Services ETF (XLC) is also setting up nicely. It’s spent the past several months consolidating, building out a massive base.
A strong earnings reaction from META could be just what this group needs to break out of this sideways action:
Source: StockCharts
Finally, we have the Consumer Discretionary ETF (XLY), which has been basing since September:
Source: StockCharts
A strong earnings reaction from TSLA, which reports today, could provide the spark for the next leg up.
In short, three of the market’s most important “risk on” groups are setting up for major moves higher.
In my Express Trader advisory, we’re already positioned in a mix of strong setups—from sector leaders hitting multi-year highs to a recent IPO with big breakout potential.
If earnings season sparks a broad move to the upside, any one of these positions could accelerate quickly.
You can learn more about these stocks—and gain access to my three strongest trades each week—by joining us in Express Trader here.
Justin Spittler
Chief Trader, RiskHedge
