October 13, 2023

Markets:

Stock futures were slightly lower early Friday as traders pored through major bank earnings.

S&P 500 futures nudged less than 0.1% higher, while Dow Jones Industrial Average futures shed 0.1%. Nasdaq-100 futures lost 0.4%.

JPMorgan Chase and Wells Fargo kicked off third-quarter earnings for major financial firms on Friday. Shares of JPMorgan Chase gained 1.1% after the company topped profit and revenue expectations. Wells Fargo rose 2.2% in the premarket after surpassing Wall Street’s earnings and revenue expectations.

Shares of Citigroup jumped 3% after posting higher-than-expected revenue, fueled by solid growth in both the institutional clients and personal banking.

Besides fears over potentially disappointing earnings and another potential rate hike, investors have also turned their concerns to the ongoing Israel-Hamas war, which could potentially threaten global oil supply and prices.

Even though the three major averages ended Thursday with losses, they are each on pace for weekly gains. The S&P 500 is up 0.9%, while the Dow is up nearly 0.7% on the week. The Nasdaq Composite is the outperformer of the three, up 1% through Thursday’s close.

Portfolio:

We enter the new trading session holding set-ups in AMC, ACMR, NTNX, PATH, AX, and TH.  

Now that earnings season has officially begun, we have an additional catalyst for the fourth quarter that promises to create new opportunities. We've emphasized it before, and it's worth repeating: the fourth quarter typically offers outstanding trading prospects. The market's path to an upward trajectory is clearly visible, the prevailing trend is still favoring higher prices, and we are witnessing this theory materialize.

Yesterday price action caused some turbulence for traders, but we did manage to make a decent recovery by the end of the day. We had provided an update early yesterday afternoon on what to watch for. We anticipate a period of consolidation, especially in the Nasdaq, before the next significant move. It's typical for price action to exhibit some choppiness in the lead-up to earnings and the initial stages of reporting. Expect some selling, followed by a consolidation phase, before a potential rally.

Although it's Friday, and we generally avoid initiating new trades on Fridays, it's essential to remain vigilant as the market remains active. Based on early activity, we anticipate another outstanding week ahead.