Stocks at Technical Inflection Point as Earnings Await

By Todd Harrison  JUL 08, 2013 12:08 PM

With the holiday behind us, investors eye the second-half horizon.

 


Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's a new day, a new week, and for many, a new month.  With the holiday stretch behind us and earnings dead ahead—starting with Alcoa (NYSE:AA) tonight—we'll have no shortage of news to digest as we swelter into the sweet spot of the summer.

Last Wednesday, we shared a laundry list of potential catalysts that could move the market.  A few of them are listed below, with updated observations.
Indeed, when we awoke last Wednesday, global markets were getting crushed and the stateside tape, sitting directly under our technical Danger Zone (updated below) had every excuse to trade lower—but didn't. 


We offered at the time that we might be learning a lot just by watching—the reaction to news is always more important than the news itself—but some offered the thin holiday ranks skewed the traditional dynamic, if in fact the dynamic is still traditional.  Still, rallies on lighter volume are typically viewed with suspicion; particularly if sell-offs occur on heavier volume.

All things considered, the next leg of the US equity market will rely on the fundamental metric, which arrives in the form of earnings.  Historically, the bigger the rally into earnings, the higher the bar becomes for companies to clear those hurdles, which is what we refer to when we discuss "field position." 

The S&P (INDEXSP:.INX) has rallied 5.5% since the June swoon low at S&P 1560 on June 24, for what it’s worth and so it’s said—right smack dab back into the middle of the June range.  Due to the upward slope of the November trend line, my trading parameters are in constant flux and updated in real-time on the Buzz & Banter (click here for a free two-week trial).

Random Thoughts:
R.P.

Twitter: @todd_harrison

Position in SPY.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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