The Next Season

The interval after the long Easter weekend until Memorial Day typically involves plenty of "Sell in May and go away" quotes, headlines, analysis, contrarian cases, and plenty of other assorted goodies. 

Either way, this year the post-Easter trading period kicks off in the heart of earnings season.

Netflix reports tonight after the bell, a major market leader which has not only failed to crack under some broad market pressures of late, but one which is rallying as I write this and is just a few ticks below fresh all-time highs. Some more banks are also set to report this week, too, including BAC and GS tomorrow morning. 

Into this opening bounce, we are looking to see whether the S&P 500 Index retraces up to the scene of its rejection last Thursday, around the 50-day moving average currently at 2,350. If sellers step back in there, that would be a fairly textbook case of a failed bounce setting up some more broad market weakness. Small caps also remain a case, though the IWM is still duking it out at the $134 level.

As always, it is important to keep a cogent running list of relative strength names in the event that the broad market is basically finished going down (not an assumption I am making, just yet, though). Some mid-cap biotechs, for example, are turning in impressive mornings so far. One example would be Exact Sciences, a name we have been tracking for Members for quite some time now. 

On the EXAS daily chart, below, note the sound uptrend with price above all moving averages and threatening to explode higher today. Earnings are April 27th. But if the broad market firms up sooner than later, this would be a good name to watch for a move beforehand.