Earnings and Economic News Has Been Good. The Bid Will Strengthen Next Week.

October 12, 2012
Author: Peter Stolcers, Founder of OneOption
Author
Pete

Wednesday I recorded a webinar. I used my new trading platform to find trades. To view the presentation CLICK HERE

Nervousness ahead of earnings season has pushed the market down to support at SPY $143. That was a breakout level and after two tests it has been able to hold. As earnings season cranks up next week, confidence will grow and the bid will strengthen.

We’ve heard from AA, COST, YUM, JPM and WFC. The results have been good. The financial sector has been leading the charge and bank stocks are holding up fairly well this morning. European credit concerns have subsided and big banks should attract buyers.

The market has many positive influences. Credit concerns in Europe have subsided and Spain and Greece will both secure aid. China ramped up fiscal spending and the PBOC injected liquidity this week. US economic releases show gradual improvement and jobs are starting to recover. These factors will keep us in “risk on” mode.

Asset Managers are waiting for a pullback and they won’t get one. With each passing day they will get a little more anxious. They don’t want to miss a year-end rally and they will get more aggressive.

I did not see a bullish reaction to bank earnings this morning so I will wait before I allocate the remaining 25% of my capital. The late day selling pattern is still in force and it needs to be broken. When I see stocks rally into the closing bell, I will know it is time to step up.

The economic news is light next week and earnings will be in focus.

Look for opportunities to get long and wait for support. We could test SPY $143 late in the day, but I expect that level to hold.

If we simply flat line at this level, I would consider that a bullish sign. A base at this level would pave the way for a rally next week.
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