Stock Rally Awaits End Of Earnings Cycle


We have refrained from updates in the short term stock traders portfolio awaiting the next cycle peak due in August.  Long term investors should still be 95% long basis the S&P 500 Index (SPY). Earnings season ends in early August and the upward momentum may fade over the next couple of weeks.


Oversold readings remain elusive despite slow economic growth. Double digit earnings growth in the 1st quarter is expected to be followed with solid but slower 2nd quarter growth. For now 3 to 4% retracements in the S&P & Dow are all we would expect until further along the mid-July to early August wave of earnings reports. Sentiment measures are stuck in neutral.


Political forces “normally” have little long term effect upon markets, but short to medium term the corrective phase previous posts here have warned about are occurring thanks to Trump’s lack of discipline and filtering. The main indices have avoided more than 2 to 3% hiccups since Trump was elected keeping euphoric buyers on the sidelines. It’s unlikely a 10%+ correction is at hand, although potential flash panics without economic repercussions have triggered 18% (2010), 22% (2011) and 50% (1987) panics in the past due to computer trading glitches.  Looking in the rear view mirror we see that earnings are strong and global growth is rising in the early innings of this new up cycle from 2016. Thus corrections should be limited and oversold sentiment readings should be buying opportunities in coming weeks. 2350’s SP 500 Index has been the 1st target zone, followed by 2300 & 2280’s as support levels to watch for oversold metrics. The KDelta Stock model is 20% invested while long term investors are back to 90% invested in equities.


Tech heavy Nasdaq continues to creep to new highs while the blue chip indices remain in a trading range. Great Tech earnings and strong European markets have been supportive, but once earnings season ends it would not be surprising to see a let down in tech leading to a larger general market reaction. 


The Stock Indices all bottomed at precisely the forecasted 5 and 8 week marks of this corrective period since early March. The claim we are in a mild market correction would be news to the Tech heavy NASDAQ (QQQ’s) that keep surging to new all time record highs on great earnings. The 4 Horsemen of Facebook, Apple, Amazon and Google (add Netflix if you want to say “FANG”) are powering this market aided by stellar growth in Adobe and almost anything that services E-Commerce. Tech mania will likely have a flash crash at some point this year on the first hint that a few leaders failed to beat their estimates. Watch out in 3 months at the next quarterly reporting cycle (mid July – early August) if prices are still appreciating faster than earnings.

We added more WEAT  to the commodity portion of our portfolio as Ags have surged in unison today. We are exiting our ALGN after an out sized 20 point gap higher peaking at 145 Friday that exhausted all of the huge year end 2017 gains we had targeted.


As stated in our March Newsletters, we expected a 5 to 8 week correction confined by 2 to 3% trading range for stock indices (3% is the current low). We are now about 7 weeks into this Health Care congestion. With Bonds moving higher (yields lower), there is little chance of stock indices hitting new highs as they had been each month. While tech stocks such as Adobe (ADBE) and our Align (ALGN) have been stellar performers along with FANG stocks Apple, Facebook and Google (Alphabet), we would hold off on most normal purchases during this corrective phase. If companies mention the word “Cloud” in their reports, you can bet there is a premium built into the stock price, otherwise you are selling buggy whips in the current short term environment.

We have orders for Wheat and Corn etf’s and will be watching Cocoa (NIB) for oversold levels as they are not well correlated to the stock market condition. 

During the Trump bump from November through early March stocks could not correct as there were just too many buyers on the sidelines waiting for a >5% correction to jump on the train. We stuck our neck out claiming that anything more than 2 or 3% was unlikely. That environment ended in early March even though no correction – even intraday – has surpassed 3%. Now investors and professionals are not as anxious to take a leap of faith. That is a good time to look for oversold levels to Buy, but several sentiment measures we follow are only on the oversold side of “neutral” and require more corrective action before we would target a zone for buying. Perhaps prices will decline further into the weak 1st qtr’ GDP numbers to be reported on April 28th. Currently we see this correction risk at 5 to 6% from the record highs. Seeing how stocks respond to the good earnings data will be an interesting test of market psychology as we suspect a tepid response until macro economic data improves and Trump makes more progress on his completely stalled agenda.

(Investors remain 90% invested basis SPY)

(Each KDelta Stock position listed represents 5% of a portfolio.)

KDelta Stock Portfolio: Open Trades

DateSymbolEntryExit TargetTrailing Stop

Pending Trades KDelta Stock Portfolio:

Stock Trade GTCEntryExitTrailing

KDelta Stock Model: Closed Trades

Entry DateTradeExit Date PriceProfit %% P/(L)
07-03-17Buy CORN 19.3307-13-1718.70(3.4%)(0.17)
05-17-17Buy NIB 22.6805-25-1717.680.44%0.02
03-16-17Buy BOX05-17-1717.685.24%0.26
03-16-17Buy CSCO 34.2005-18-1731.10(9.1%)(0.45)
03-16-17Buy PFPT 80.2805-17-1782.202.4%0.12
05-01-17Buy WEAT 7.0805-10-176.81(3.8%)(0.19)
04-20-17Buy WEAT 6.8805-10-176.77(1.6%)(0.08)
02-14-17Buy SIRI 4.705-09-174.82.13%0.1065
02-01-17Buy ALGN 97.005-02-17135.039.21.96
02-14-17Buy SNA 171.804-13-17162.2(5.6%)(0.279)
02-21-17Buy NIB 24.6504-07-1724.670.08%0.004
01-27-17Buy LITE 37.7503-22-1749.6531.5%1.575
02-28-17Buy YDKN/FNB 33.8803-17-1734.48(1.5%)(0.077)
03-21-17Buy WTFC 71.2503-22-1765.90(7.5%)(0.375)
03-17-17Buy KRE 56.3503-22-1752.3(7.2%)(0.36)
11-14-16Buy KOL 13.503-15-1713.540.3%0.015
02-14-17Buy IWM 137.903-08-17136(1.4%)(0.07)
02-13-17Buy DBC 15.903-08-1715.3(3.8%)(0.19)
02-03-17Buy SBUX 56.1303-02-1757.141.8%0.09
02-09-17Buy WEAT 7.3703-13-177.05(4.3%)(0.22)
02-08-17Buy NIB 24.9903-02-1724.00(3.96%)(0.2)
02-10-17Buy CORN 19.7803-09-1719.25(2.7%)(0.135)
02-08-17Buy CORN 19.6703-10-1718.96(3.7%)(0.19)
01-17-17Buy WEAT 7.2603-13-177.01(3.4%)(0.17)
12-01-17Buy WEAT 6.9203-14-177.011.3%0.065
01-27-17Buy GS 236.901-31-17230.21(2.8%)(0.14)
01-27-17Buy XES 23.2501-30-1721.90(5.8%)(0.29)
01-27-17Buy SPY 229.2701-30-17226.75(1.1%)(0.055)
01-17-17Buy CORN 19.3101-30-1719.11(1.04%)(0.052)
01-12-17Buy TBF 23.3001-30-1723.872.45%0.123
01-05-17Buy TBF 23.6801-27-1723.900.9%0.046
12-18-16Buy DBB 15.4001-13-1715.943.5%0.175
December0 Portfolio P/(L)Year 20163.1%%
11-14-16Buy SPY 216.29 11-28-16 221.162.2%0.11
November0.11 Portfolio P/(L)Year to date 3.31%
10-20-16Buy SNA 158.00 11-01-16 151.70 (4%) (0.20)
October (0.20)Portfolio P/(L)Year to date3.2%
09-09-16 Buy SNA 149.30 09-12-16 147.00 (1.5%) (0.075)
September (0.075)YTD=3.32%
08-19-16 Buy WEAT 7.94 08-23-16 7.70 (3%) (0.15)
08-04-16 Buy WEAT 7.84 08-23-16 7.69 (1.9%) (0.095)
07-11-16 Buy BAL 44.26 08-09-16 49.15 11% 0.55
06-06-16 Buy BAL 43.35 08-05-16 51.75 19.4% 0.97
08-02-16 Buy FXB 129.82 08-05-16 127.28 (1.96%) (0.098)
07-11-16 Buy AMTD 28.00 08-02-16 29.89 6.75% 0.3375
07-26-16 Buy CAT 81.20 08-01-16 82.10 1.1% 0.055
August results1.6% YTD = +3.4%
07-21-16 Buy CAT 81.01 07-22-16 79.00 (2.48) (0.124)
07-11-16 Buy WEAT 8.16 07-20-16 7.82 (4.17) (0.21)
06-06-16 Buy UNG 7.39 07-07-16 8.36 13.1 0.656
06-01-16 Buy UNG 7.0707-07-168.3618.2 0.912
July results1.2% YTD = +1.83%
June results (0.13)% YTD = +0.5965%
May results (0.355) YTD = +0.725%
April results0.12% YTD = +1.08%
March results0.36YTD=+0.96%
February results 0.605% YTD= +0.6%
January results = 0



Disclaimer and Notice:  This report may contain information on investments that are high risk and have substantial risk of principal loss.  It is for informational purposes only. Statements in this communication are not statements of fact are merely opinions or forward looking statements from a potentially biased source(s) that involve known and unknown risks, uncertainties and other factors that could cause actual future results to differ materially from any prior or projected results. Statements in this communication may be inaccurate and/or unsuitable for you.  You must perform your own due diligence.  Your investment decisions should always be made based on your specific financial needs, suitability, objectives, goals, time horizon and risk tolerance.  Any decision is at your sole discretion and at your sole risk.  You are advised to consult with your individual investment and tax professionals before making any investment.  Past performance is no guarantee of future results.

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