Markets Chop In Expectation of Earnings

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Alex Partida

Oct 27th 2022  .  3 min read

Coming into the session

Indexes spent most of the night going sideways below the 50-day simple moving average (SMA) at 3,862 on the S&P 500 futures. This price action indicated selling pressure at the critical level, as every time it was probed, it sold off. Understanding the early signs of sentiment shift can help create a game plan for any trading session.

Roller Coaster Ride Begins

The bearish sentiment was pretty apparent as soon as the opening bell sounded. Selling pressure was overbearing to begin the day and sent the indexes lower right out of the open. One index in particular that led the way down was once again the Nasdaq. Technology is relatively weak due to the earnings that have taken place this week. 

The rest of the day was spent trading between 3,862 and 3,820. This 40-point range was likely where big money on Wall Street was getting positioned before the tech giant’s earnings report. Often when a significant catalyst is looming, the more prominent players on Wall Street are moving around money which causes a rangebound type of day. 

Roadmap for Friday

Targets for Friday will depend on where the market opens after the crazy after-hour price movement. Wherever the market opens, the 21-day exponential moving average (EMA) at 3,765 will be a massive level to watch for. This daily mean level will be used as the line in the sand moving forward. 

If the market falls below the 21-day EMA, the overall market should find some vulnerability as fear may rise in the market.

Big tech earnings

Amazon was the first tech giant to report after the close. Their numbers were a little underwhelming, and the indexes quickly reflected that. Amazon reported a beat in earnings per share (EPS), but that was the only highlight worth mentioning. The expected EPS was $0.22, and the financials came in at $0.28, beating by $0.06. The real issue with their report was the net sales. Amazon was expected to see a figure close to $155.52B but fell short, revealing an underwhelming $140B. Amazon shares have since fallen 20%.

Apple was the next tech giant to report after the closing bell. The numbers that Apple came out with were good, but tech is still down overall. Apple reported an EPS of $1.29, beating the expected $1.26. Revenue was also higher than anticipated; data revealed $90.15B when the expected was only $88.64B. This report has provided the market with some support from the Amazon report, at least for now. 

Session ends negative on the day

At the market close Today, the Nasdaq and the S&P 500 were negative at the end of the session. The S&P 500 closed down 0.61%, losing 24 points, while the Nasdaq closed down 1.67%, a loss of 183 points. The Dow Jones was the strongest, ending green on the day, up 0.54%, adding 171 points.

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