Into the trading week, (July 16- )

The premise ahead of Friday’s rally was that of a dead cat bounce continuing from previous session due purely to the odds increasing of one by virtue of 50MA holding day 3 and lack of shorts conviction to press lower after 6 days of losses.  Once again upside risk headlines (below) got the better of the shorts.

  

The above notion was greatly enhanced by mildly positive (better than feared) China data dump overnight, but notably from what was discussed earlier in the previous days, ..” earnings expectations are depressed, thus any surprises (better than feared) and/or signs it’s not that bad should also be a market positive…” and “..the turning point for the market will be when bad reports start to turn and go ‘green’.  Simply, banks surprised with ‘better than feared’ reports fueling to squeeze the market as soon as the gates opened.   Most sectors were up >1%, but single stock action seemed to lag as far as strength is concerned.  Would have liked to see more activity in the ‘growth’ names as market pressed into resistance levels. (low SP1360's)

 

All of the above factors are elements of a dead cat bounce and not necessarily a market turn unless the heavy loaded earnings week ahead is greeted with the same ‘good enough’ sentiment.

  

Market also gets first July data points and Bernanke speak to trade around this week.