So long 1020...

It is pretty safe to say that we probably won't see SPX 1020 or below any time soon before key earning reports coming our way in the next couple of weeks.  The premise started into last Thursday's trade from our trading history and bottom sentiment, "an uplift into a new month"  has played out nicely and leads to eye balls to 1100 not <1000…(“…a chance of a bounce on this relatively quiet data week after a liquidation into month's end coming into earnings is a possibility“ and ..“The doom and gloom is excessive and most measures of market sentiment prove it as we are at March ’09 lows or at 2010’s in other sentiment readings”).

The Bears, once again are probably surprised by today's late day strength because pretty much everyone expected a quiet day to consolidate the strong gains from yesterday or even a snapback.  We simply got what we were hoping to see and that was the buying at days low (dippers came) ..,“Sidelined money will probably wait for 'dips', instead of an outright chase of equities from here“.  Some resiliency and shrugging off potential bad news flow is also evident.  Take Whitney’s D-grades today of MS/GS and still the financials managed a slight gain and this even after a 4% group move yesterday!.

This weeks gains have caught quite a few off guard, simply because of the magnitude of the size of gains.    Yesterday’s pop did not surprise us, but rather the way it managed to hurdle all the way to SPX 1060 surprised past important 'R" at 1040/1050.    This goes to show that market can and will always surprise you in unusual ways from time to time.    Right now, in light of the consecutive days of momentum, nobody is expecting anything further at this point.     We all need a reason to move this market higher now and this coming EPS season may just provide such a catalyst.   Of course, the "double dip" folks aren't going to let the bulls have their way so easily, but we can't be on our heels waiting for their new ammunition to come.   It's should  be an interesting battle in the coming weeks.   One thing we are happy to see at this point is that we have just seen a new trading range.

We know there's quite a few negative 'soft'  headlines coming into the market last little while and nobody is even daring to point out any positives.    Euro has been pretty steady during the last little while and this can be a sign the Euro zone is slowly healing.  Trichet-ECB did nothing wrong again today for 2nd consecutive after first debacle as you recall.  The closely followed TSY here since last week, $TNX (10yr over 300bps today)  has creeped just above the recent range and it's interesting to see if it can make it to next level of resistance to solidify the equity market's bullish stance.   In addition, Crude Oil has not been impacted much by the recent worry of Economic slowdown and that's another good sign.   Finally, we haven't seen any major downside pre-announcement from any major corporations and the warning period is about to end.

All of the points above suggest that things may not be that bad and this market may have not be on a straight ticket to SPX 950 like many were suggesting.    At today's current level, we won't be chasing anything as all of our trades now will be very limited to intraday setups.    However, if the market decides to drift down next few days off low volume, we'd be happy to enter some positions for a trade while waiting for new eps trades.  SPX 1075 next step to bust before too many 1100 thoughts.  Bottom line, we are all just preparing for what the coming earning season has in store.