Hey there, VWAP Legion!

If you haven’t heard yet, I’m on vacation this week, but that doesn’t mean I don’t have my finger on the pulse of this market.

I’m hoping to check in via Money Morning LIVE from the beach around 8:30 a.m. ET each day, IF my internet connection holds up, but fear not – if you can’t catch me there, I’ll continue to communicate what I’m watching in your daily This Is VWAP newsletter!

So today, I want to go over what I’m watching at the start of this earnings season – the most wonderful time of the year!

(By the way, if you haven’t seen it already, you can find the weekly Earnings Calendar near the bottom of the ThisIsVWAP.com home page!)

 


Check out the Earnings Calendar at the bottom of the ThisIsVWAP.com home page

 

We’ll talk about the names that’ll be on my Daily Warlock Watchlist today (and possibly Wednesday), and how they might set the tone for the next few weeks…

I’ll also go over a couple of the earnings reaction patterns that should be on every VWAP trader’s radar…

And finally, I’ll discuss what I’m watching from a broader, macro perspective – and the warning sign that could spook stock market bulls this week.

Earnings On My Radar Tuesday

Food & drink companies Conagra Brands (CAG) and PepsiCo (PEP) reported earnings this morning, and therefore should be on the collective radar of VWAP day traders in the short term.

But most of Wall Street will likely be keeping close tabs on the banking sector today.

That’s because financial heavyweights Goldman Sachs (GS) and JPMorgan Chase (JPM) also had a date in the earnings spotlight today.

With several more banks set to unveil their quarterly figures later this week, this pair of reports could certainly set the tone for the sector – and even the broader stock market – in the short term, providing clues to how the other industry titans fared in the second quarter.

With these earnings movers, it’s important to pay attention to pre-market highs and lows, as these often come back into play in the regular session.

I’m usually watching for notable gaps to the up- or downside out of the gate for these stocks, as it’s not uncommon to see a “Gap & Crap” (a gap higher and subsequent drop) or a “Dip & Rip” (a gap lower and subsequent bounce).

More specifically, keep your eyes peeled for these two patterns:

  • The Finger of God: When a stock tests and is subsequently rejected at the 1-minute VWAP, you’ll sometimes see a quick & dirty sell-off, like we saw with Riot Blockchain (RIOT) a few months ago.

 


RIOT met up with the KNUCKLE of God in April

 

  • The Checkmark of the Lord: Another name for the Dip & Rip, you’re looking for a stock that goes below the 1-minute VWAP… only to bounce off support at the multiday VWAP. That’s your first sign that the selling might be over already, like we saw with the ProShares Ultra Pro QQQ (TQQQ) – an ETF based on the Invesco QQQ Trust (QQQ) – recently.

 


TQQQ enjoyed the Checkmark of the Lord recently

 

In a nutshell, if it can’t get above the blue line, the sellers are in control.

On the other hand, always remember — stocks that report earnings and gap down usually find buyers! Nobody wants to be short post-earnings stocks breaking over the VWAP, Blanche!

Keep an Eye on the UVXY

In conclusion, I’ve been warning that earnings season could be a catalyst for a short-term breather for the stock market.

I don’t necessarily mean a nasty sell-off is imminent, but perhaps just a break from the rampant rallying we’ve done in 2021.

The 40-minute selling spree we saw last week could end up being the only respite we get, BUT I’ll be keeping an eye on the ProShares Ultra VIX Short-Term Futures ETF (UVXY).

This fund is DESIGNED to go lower, so when you see it moving higher, it often means fear is on the rise and things could get shaky for stocks.

 


Daily chart of UVXY – courtesy of StockCharts.com

 

That’s it for today, but I’ll be back tomorrow!

Make sure to tune into Money Morning LIVE at 8:30 a.m. ET each day this week – barring internet snafus, you might catch a glimpse of me from the beach or the casino.

Kenny Glick


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