Thursday Is Going To Be A Crazy Stock Trading Day

Let’s first begin by announcing that JP Morgan (JPM) posts earnings in the AM Thursday, dictating how the market will do for the rest of the day.  It’s a shame that the entire market will trade off of this slug of news, but that’s just the way this market is.  JPM’s EPS is supposed to come in at +0.32 per share, a little under half of what it was at this time last year (+0.68 per share).  The scenarios fill themselves in:

1. If JPM posts a better than expected earnings and shows a smaller amount of write downs expected from Q4 to Q1, the market will fly high.
2. If JPM posts at or below the expected earnings and shows an equal or greater amount of write downs from Q4 to Q1, this market will be six feet under.

With that said, Google (GOOG) earnings come out after hours Thursday, and in my opinion, they’re going to blow away the opposition.  Not many have talked about a better-than-expected scenario for GOOG yet, but I think GOOG is the only salvation included in the earnings reports if the market (and JPM) gets ugly Thursday.

The setups Wednesday, however, were right under the noses of many traders off the open.  I, particularly, did not have the nut sack to take on such buys as Ultra Financial ProShares ETF (UYG) (holding S1, or $3.14, that was outlined in last night’s chart) off the open, but I did manage to scoop up PowerShares DB Double Long Crude Oil ETN (DXO) around 11 o’clock this morning in anticipation of DXO getting back to the top of its $2.90 - $3.24 price channel it’s been stuck in for nine days.  At the TweetDeck, @torbelum and I discussed with various other traders as to why he and I chose DXO for a pop in the next coming days.  My main reasoning behind my snag at $2.94 today was because even with our supply of oil being extremely high and demand lagging like crazy, DXO has stayed within its respective price channel.  This leads me to believe that as Crude Oil becomes a hotter commodity going into the next couple of months, DXO should increase in price like crazy.  Breaking out of the channel to the downside, however, will lead me to sell out of it and re-enter on the price dip.

In my technical analysis last night, I posed the importance of the 50D SMA in regards to the S&P 500 (^GSPC).  During today’s choppy session, the $SPX tested the 50D SMA off the open, during the 10:30 to 11:30 time period, and during the 2:30 to 3:30 time period as well.  From there, the $SPX took off in a fit of fury (or stupidity) and broke the 20D SMA resistance as it nears the 860’s resistance-wise.  Check the chart:

$SPX  20 Day, 60 Minute

A good daily wrap-up of Wednesday’s trading session is outlined to the “T” from last night’s closing statement: Keep your eyes on the late day Economic Data.  I truly feel that Thursday will be a news-based trading day and particular hard on longs.  Bulls need to pull a WTF Pattern if there is any major breakdown below the “Nifty 50″ on the $SPX.  All in all, Thursday is going to be crazy just like all the other trading days during earnings season.

Going down the list, the Economic Data caused news-based trading Wednesday, making the tape a difficult and choppy one.  The day hit longs hard off the open and towards the close, with a couple of drives to the endzone but with no success (the failed bullish breakouts that occurred throughout the day).  The WTF Pattern then got called in to play quarterback with the 50D SMA playing tight end.  All in all, they connected for a pass at 3:00pm and celebrated their touchdown at market close.
Charts of tickers I’m watching closely going into tomorrow:

TITN  30 Day, 60 Minute

PCX  30 Day, 60 Minute

SLX  60 Day, 60 Minute
I’m also looking for SanDisk (SNDK) to breakout in price and volume accumulation on positive market action, DXO to hold on to its $2.90-$3.24 price channel in order for me to stay in it, and UYG to breakout to its $3.75 resistance level.  Direxion Financial Bear 3X Shares ETF (FAZ) and UltraShort Real Estate ProShares ETF (SRS) are still tickers to watch closely, for if we experience a huge market swing to the upside Thursday, these two may take the upper hand into options expiration and Consumer Sentiment (9:55am) Friday.  Just a thought.

In conclusion, Housing Starts (8:30am) and Jobless Claims (8:30am) will probably not sink in until Friday due to all the JPM earnings hooplah Thursday.  In otherwords, Friday will be nuts.

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