1:00pm (EST)

Shares of Square (SQ) are down 3% ahead of the company’s earnings report due out after the close. Despite the pullback, the technical picture remains extremely bullish as the major moving averages are all in a very strong uptrend. Shares are pushing fresh support at $18 with risk to $17.50-$17.25 on continued weakness and close below $18. Resistance is at $18.50-$19.

As you can see, shares made a dramatic move from $15.04 to $17.15 in late February following a smaller than expected loss for the quarter. More importantly, the company forecasted a profit of $0.15-$0.19 for 2017 while analysts were previously penciling-in losses of up to 31 cents.

Square also said FY17 revenue would come in at $2.09-$2.15 billion versus estimates for $2.12 billion. For the recently ended quarter, Wall Street is expecting a loss of 8 cents on revenue north of $450 million.

The company has topped forecasts the past three quarters but reported a larger-than-expected loss in the year ago period. Although the year will be be profitable for Square, a loss for the quarter might spooked investors that don’t know the story. In any event, I always like to see back-to-back improving, profitable, quarters for a company before possibly buying a stock.

I trade options way more than buying a stock, but I do have some positions in my retirement account. Covered calls, or actually selling calls and puts on Square are also trading ideas when it comes to establishing a possible position. However, after making a quick 37% in just under two weeks, I would rather wait until after earnings to reestablish a possible position.

I’m more bullish than bearish on Square and there is chatter of a debit card coming soon. Another surprise quarter, or two, and deeper business development deals will be bullish catalysts going forward and something to watch for.

As far as the market, futures were slightly weak throughout the night and into the open with the opening losses limited. Near-term support is holding but the action in the small-caps is concerning.

The Dow is down 25 points to 20,925 while the S&P 500 is slipping 6 points to 2,384. The Nasdaq is lower by 31 points to 6,064 and the Russell 2000 is off 9 points to 1,389.

I have a New Trade as I mentioned we would go short IWM if shares fell below $138.50-$138.25.