Certainly for the first hour and a half it appeared as the stock market was ready to catapult itself higher. However, sellers had a different idea. It appears the NASDAQ is having a difficult time keeping itself above the 5000 level. Volume ended the day mixed with volume ending higher on the NASDAQ, but lower on the NYSE. Both the NASDAQ and S&P missed a day of distribution. Not a great way to start the week as we would prefer the market to start lower on light volume rather than pulling back from gains. This market is far from textbook thanks to ZIRP and QE, but we have to adapt to any scenario. Thus, the end result today is neutral. Our market models continue to remain in neutral until see confirmation of price and volume from the indexes. On the bright side, small caps were able to end the day in positive territory. We will have to wait and see how this market proceeds further before our market models budge from their neutral position.
Now we await earnings from the big banks. A big question out there is how has the dollar strength altered how these banks report earnings. A great source outside of AAPL for S&P 500 earnings has been energy and financials. Will these big banks like GS, C, JPM, WFC, and BAC be able to deliver what the market needs? These banks are in position to push higher believe it or not. GS is knocking on the new high doors and BAC is looking to break a big downtrend. C is even poised to breakout of a handle area. Given how energy is not likely to post a solid first quarter perhaps what many bank charts are anticipating is a solid first quarter from financials. Stay tuned.
Expectations is for this first quarter earnings season to be abismal. The exploding dollar is likely to put a ton of pressure on multinationals. Falling crude prices should have put a dent into energy earnings. Aside from AAPL saving the day who else is left to pick up the slack? Not that many ut there who are able to do so. However, given expectations are so low it will be MUCH easier to beat estimates. If there is one thing we know consensus tends to be wrong. Just look at how many never get the non-farm payroll figures right even when they are slightly outside consensus. If earnings are even remotely better than anticipated do not be surprise a flood of buying hits this market.
We do not know whether or not better than expected earnings will be a catalyst or even come true, but one thing is certain is we will follow the direction of this market.
Today was not a great start to the week, but we do have four more days left. Keep griniding and stay on top of your exit and position strategy.
