All That Good News to Begin Earnings Season

Now that JP Morgan has reported earnings, Q1 earnings season is officially here. Banks usually kick us off and we saw a slew of solid reports to end last week. So far, rumors of more banks’ demise are not panning out. And let’s not forget about the benign CPI and PPI reports last week, further confirming inflation’s demise. However, with oil rallying, that tailwind has dissipated.

With all that good news, the stock market should have soared, right?

Below is the S&P 500. Look at the far right of the chart. The big green day was last Thursday, but that was really it. A 2% rally which I am not thumbing my nose it, but given the backdrop, you would have thought more. And let’s be realistic. Stocks have rallied 6% over the past 30 days into earnings season. That’s not the usual ingredient for an earnings season rally. More than likely, we will see ups and down without much upward movement. And we may even see a few “sell the news” events in stocks that rallied even more strongly into earnings.

Tuesday is tax day, the 18th. It is not the 15th this year. Don’t forget to file your return regardless of whether you have the ability to pay. File the return or file for an extension to October 15th. If you need an extension, make sure you pay your taxes tomorrow.

At this point there aren’t many last minute tax savings tips, but you can still contribute to a Traditional IRA. $6000 plus $1000 if you are over age 50. And don’t forget about your HSA contributions. $7300 for a married couple.

Finally, both tax day and the day after are seasonally strong days for stocks. The theory goes that brokerages and mutual fund companies see a flood of IRA contributions on top of what they already get from 401Ks and those monies get invested right away. That gives the stock market a bump roughly 80% of the time.

On Friday we bought levered S&P 500.