Over ¾ of firms in the S&P 500 (SPX) have opened their books by now and according to Refinitiv 77% came in above expectations, 18% fell short and 5% were level, states Ian Murphy of MurphyTrading.com.
Based on this data talk of a recession may be premature but we should remember earnings are a glance in the rear-view mirror while stock prices are based on expected future earnings (ie. this quarter and next). A pause in debt ceiling wrangling impacted prices on Friday as extremists in both parties cautioned their negotiating teams about conceding too much (or anything at all in some cases).
The 52-Week Strategy had another good week with the price bar closing positive, yet ProShares Ultra S&P500 2x Shares (SSO) remains shy of the 1ATR line. The 2x geared ETF has not traded above this line for 16 months (arrow), and assuming debt negotiations are successful, and the US avoids a self-inflicted economic shock (not a foregone conclusion) we should get close above the 1ATR. But let’s not count on it, a week is a long time in politics.
The 52-week indicator on which the strategy is based (red line) finished above zero again, while the soft trailing stop increased to $46.36 after the close on Friday (highlighted). For the stop to be activated now a decline of 5% in the S&P 500 would be required.
Learn more about Ian Murphy at MurphyTrading.com.