Will Earnings Season Push the Index to Report Highs?

Dow Jones Worth Outlook:

Dow Jones Forecast: Will Earnings Season Push the Index to Report Highs?

Current value motion has seen the Dow Jones inch towards file ranges even after the reflation commerce was placed on pause amid declining Treasury yields. The transfer highlights shocking resilience from the index, an encouraging growth given the underwhelming buying and selling situations. Now inside attain of recent highs amid a lull in market exercise, the Dow Jones will seemingly flip to earnings season for affect because the month progresses.

Dow Jones Worth Chart: 4 – Hour Time Body (Could 2021 – July 2021)

Fortunately for bulls, earnings season started with a powerful begin after JP Morgan (JPM) and Goldman Sachs (GS) blew previous analyst estimates Tuesday morning. Earnings from the nation’s largest banks mark the official begin to earnings season which is able to run to roughly mid-August. Within the month to return, the overwhelming majority of S&P 500 and Dow Jones constituents will report and provide essential perception to market members.

S&P 500 Earnings Calendar

Supply: DailyFX, Bloomberg, Margaret Yang CFA

Whereas earnings present a possibility to check out macroeconomic themes impacting single shares, the interval additionally permits for elevated volatility in single shares that may typically spillover into the broader indices. With quantity and volatility trending downward throughout the summer time doldrums, the upcoming earnings season presents an attractive prospect for merchants seeking volatility. Ought to quarterly outcomes are available considerably above or under Wall Avenue estimates, the resultant value motion may assist revive volatility extra broadly.

That being mentioned, a string of robust quarterly studies may additionally assist propel the Dow Jones to new heights above the 35,092 mark which is narrowly above the present buying and selling value. Both method, merchants and buyers ought to regulate upcoming earnings releases as they posses the potential to affect fairness market value motion.

Significantly for choice merchants, implied volatility crush, or IV crush, following the upcoming company studies could also be notably extreme given the decrease baseline of implied volatility throughout the market. Within the meantime, comply with @PeterHanksFX on Twitter for updates and evaluation.

–Written by Peter Hanks, Strategist for DailyFX.com

Contact and comply with Peter on Twitter @PeterHanksFX