I just wanted to write a headline like the ones all over the financial pages today. The interesting part is how much the deal looks similar to or worse than the one proposed several months ago by the EU and the IMF. I am not sure this is good for Greece or the EU, but only time will tell and from my view this will fade into the background relative to any impact moving forward. Maybe now investors and markets will look forward to earnings and the data that matters versus outside market events. Tomorrow may start a new day with a new view.
Earnings take center stage. JP Morgan and Wells Fargo are tops on my list of must see numbers. JP Morgan looks in better shape to beat expectations, but both will impact the financial sector (XLF). Both stocks had moved below the 50 DMA on last weeks selling, but with the bounce over the last three days have reclaimed a level above the moving average. The numbers will be released in the AM and we will get a good view of what to expect looking forward. YUM brands is after the market closes tomorrow and will offer some insight into the consumer/restaurant side of things. CSX is also after the close and will show how the railroads/transportation is faring in the current environment. Busy week for earnings overall. My expectations are for better than expected numbers which have a low bar to jump.
Technology, consumer services and basic materials were the leaders on the day. The financials were not far behind, but the bigger question in my view is… sustainability? What is the big picture shaping up to be as we go forward? Do earnings now take the driver seat for stocks? Is China no longer an issue? Settling one worry doesn’t automatically remove all the others from the picture. We are still looking at this with a day-by-day perspective.
Looking at the scans for today the usual suspects show up with the NASDAQ 100, biotech, financials and healthcare making a positive showing relative to the charts and the leadership potential. Some moves of interest were short crude (DWTI) moving higher, Natural Gas (UNG) following through on bottom reversal test, Short euro (EUO) returned to the upward trek, India (INDL) making another attempt at completing a reverse head and shoulder pattern, and corn (CORN) adding nicely to the upside move. Add the nice return for the small caps (IWM) and it was a positive looking day across the scans. Volatility index (VIX) fell to 14 moving well below the 15.5 level we were watching to start the week. Anxiety is all but gone on the buying today. Again the word is sustainability of the move.
Tomorrow will offer me more insight than today if we can follow through on the move and earnings add some positives to the financial sector. One day at a time… for now the bias is back with the buyers and the worries are getting pushed to the side. Confidence and clarity are the key.