Stocks Are Preparing For The Earnings Season

The beginning of 2024 has brought some cooling to the bond markets, with yields of 30-year treasury bonds bouncing to around 4.2%, after which expectations of the market stabilized. According to the Fed funds futures, the consensus forecast for the interest rate in July 2024 is set for either a two or three-step decline in the interest rate.

Employment data in December was stronger than expected: 216k against 170k forecasted, which potentially might lead to an uptick in inflation, too. The market, however, seems to ignore the strong data, as a hawkish scenario doesn’t look realistic anymore. Thus, bulls might take control of the situation, given that the earnings season is approaching.

However, now momentum is trimmed across all major markets, as investors wait for more information. Tech stocks and crypto assets are already discounting the upcoming bullish market, while metals and other commodities consolidate.

In this review, we will focus on two potential interesting ideas for upcoming weeks from equity markets. It would be stocks of Nvidia and JP Morgan Chase and Co.

NVIDIA

NVDA had emerged from a large trading range, boosting the momentum ahead of the earnings season. With earnings to be published in February, NVDA might enter the “pre-earnings” rally. The estimated earnings-per-share of 4.15 drives momentum trading. AI narrative has been the strongest driving force behind tech stocks so far, and this trend has a chance to continue in 2024.

Technically, the price may retest the $500-505 price area before taking off to $620 and higher.

JP Morgan Chase

JP Morgan Chase and Co. is the leading investment bank in the United States and sets the tone for the financial sector. Earnings for JPM will be released on Friday, January 12. The company was consistently outperforming its guidance in 2023, so it has a clear bullish directional bias from the market.

However, to sustain an intermediate-term trend, it might pull back to the dynamic support area of 157-167 first, as shown at the chart below. The price area of 190-200 may serve as a target area. However, it’s extremely difficult to correctly predict targets in the bull markets, as price may easily advance further than expected.