It was TACO Tuesday that sent the market sharply higher on Wednesday on news that the U.S. and Iran were going to settle on a two-week ceasefire brokered by Pakistan. Stocks rallied sharply on Wednesday before losing momentum into the end of the week as a U.S. delegation headed for Pakistan on Saturday for negotiations to end the Iran War. At this stage, the near-term market direction will no doubt depend heavily on how these talks play out over the weekend and, if they are not quickly terminated, into next week.
Meanwhile, all the major market indexes have regained their 50-day moving averages. This now serves as a reference for critical support. If the peace talks fail and the indexes reverse back below the 50-dma, the odds of a test of prior lows increase.
As the market awaits an outcome, one way or the other, from the weekend peace talks in Pakistan, earnings season is again at hand. The coming week will see several big-stock financials reporting as
Goldman Sachs (GS) kicks things off on Monday morning. Tuesday morning we expect to see earnings from
Blackrock (BLK),
Citigroup (C),
J.P. Morgan (JPM), and
Wells Fargo (WFC) with more to follow. Watch for any insights into the current private credit issues, particularly from BLK.
Away from the financial space, and among other big market stocks, we will see big-stock semiconductor equipment makerr ASML Holdings (ASML) report on Wednesday morning followed by big-stock AI semiconductor name Taiwan Semiconductor (TSM) on Thursday morning. Thursday afternoon features expected earnings from Alcoa (AA) and Netflix (NFLX) to keep the earnings ball rolling into the end of the week.
As this has been primarily a trader's market, where short-term moves resulting from the copious news volatility can create swing-trading opportunities, earnings season may offer the same thing but independent of the war news flow. Earnings reports often create high velocity high time-value trading opportunities as stocks react to earnings, both their own and those of close peers. For now, that may be the best the market has to offer until the current Iran War situation clears up, and there is no reason to rush things by trying to squeeze blood from a turnip, as Bill O'Neil himself was fond of saying in highly uncertain markets prone to neck-breaking shifts in direction.
The
Market Direction Model (MDM) remains on a
SELL signal.
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