The rally in stocks has stalled as we approach the onset of Q1 earnings season. Earnings unofficially kick off on Monday, April 11th when Dow-component Alcoa (AA) reports after the closing bell.
The flow of earnings news will turn into a flood the following week.
I'm not adding any new plays tonight. Stocks are short-term overbought and struggling with overhead resistance. The major indices look poised for profit taking. Positive earnings news is already baked into the market. Companies are going to have to really deliver better than expected results to keep this rally alive. Odds are pretty good that the market could see a correction lower in the second half of April. We will definitely see some individual stocks get crushed lower on disappointing data. I'm reluctant to open a bunch of new bullish positions here.
I would encourage investors to take a step back for the next couple of weeks and see how stocks react to the Q1 earnings data. Any pull back may end up being a new bullish entry point but at the same time a drop in the market now will look like a potential bearish double top pattern.