Dan Passarelli, CEO - Market Taker Mentoring

This is the real kickoff of earnings season. It started kinda in beta, I guess you could say, last week. But this week we have literally hundreds of announcements out each day. Next week is going to be about the same. Week after that is going to be about the same. So things are really happening. Now this is going to be a very unique earning season for a couple of reasons, and they both have to do with the Fed. So we have a Fed meeting this week and the Fed is likely to announce a 75 basis point hike in interest rates, could possibly even be 100 basis points. So that's going to have two big effects on earnings.

First of all, we've got both the cyclicals as well as growth stocks announcing earnings over the next couple of weeks. We have companies like Coke and McDonald's and UPS and 3M's as well as GE, all those real cyclical stocks announcing really just today. And then we're going to have a bunch of growth stocks too. This week got Apple and Amazon and all those. And so the market is going to be watching closely to see how the cyclicals are performing against the growth stocks because when interest rates go up, that tends to tip the scale more in favor of cyclicals and away from growth stocks.

We're going to see which of those two broad categories is outperforming the other, it's a very pinnacle week. Now the second thing for all you earnings traders out there, especially those who trade our Total Earnings Domination system: Monday and Tuesday are going to be very interesting days for trading earnings, and I think some advantageous days because volatilities are up across the board somewhat in anticipation of the Fed announcement. And that means that when volatilities collapse, they might not collapse quite as much, which is especially beneficial for earnings time spread traders who are long the back volatilities because they might not crush quite as much. Now the front, they might not crush quite as much either, but those back volatilities hanging in there are really really beneficial for times spread traders. So it's going to be a little bit different this week.

It's going to be very unique and it's going to be a very key earnings week relative to almost any I've ever seen. So I'm excited. I hope that helps.