Watch Key Resistance and Earnings Data

What a difference positive earnings make for the sentiment. Last week the sky was falling and nothing was going right for investors. This week we get some positive earnings reports and the rumored Spain bailout, and all is good for the markets. At least the story sounds good. The challenges are still in play and the earnings have been revised down to the point they now look positive. The year-over-year numbers are not quite as impressive as the current quarter numbers. The media is building them up to be more than they really are currently. That aside, the upside for the major indexes have moved off the key support levels and money flow has picked up again for some key sectors.

On Tuesday we were worried about the downside move in banks, but they were able to right the ship on Wednesday with KBE moving higher off support. KRE (regional banks) broke support at $28.58, but bounced on Wednesday as well. There were some great looking moves technically in stocks like Bank of New York, MTB Bank, Hudson City Bancorp, First Horizon and SunTrust. Watch for the opportunity on the upside if those follow through on the move higher. KIE (insurance) followed up the new high made on Tuesday with a gain of 1.2%. The brokers (IAI) finally made a move higher with a jump in Morgan Stanly, JP Morgan, Citigroup and others. We need the leadership from the sector if the upside has any chance of building enough momentum to break to a new high.

The dollar broke lower and the downside play on the buck hit the entry point on Wednesday. The euro upside play followed through on Wednesday as well. Australia and Canada currency is worth watching as a benefactor also. The weaker dollar has not impacted the price of crude oil of late, but it is something to watch going forward.

Utilities made a solid move on the upside on Wednesday as well breaking from the consolidation. The move above $36.85 was the entry point for the recent move or to add to positions. Next Era Energy pushed back near it’s high. Centerpoint Energy broke out to a new high as well. In fact, scanning the sector shows some solid moves in the sector short term on the upside. I like the sector, and we have been adding to our positions on the recent weakness.

The earnings parade continued after hours with Ebay down just more than 1% on their earnings. This¬†could be an impact stock for the NASDAQ 100 index today. Watch to see how it unfolds in the pre-market after investors digest the earnings data. American Express also announced with lighter revenue than expected and earnings in line with expectations. This is a stock that will influence the Dow in trading today and worthy of¬†watching as well. Verizon will announce earnings¬† before the open this morning and the interest is insight into Apple’s iPhone sales. Apple announces earnings next week and the news could be an indication of what to expect looking forward. This remains a busy week for earnings.

Homebuilders are pushing against resistance at the current high of $26 on XHB. Housing starts announced on Wednesday were up 15% boosting the outlook for the sector. The challenge for the sector remains available financing for buyers. Qualification issues are much higher of a hurdle for buyers and it could weigh on the potential growth in the sector going forward.

One interesting fact in trading from Wednesday is the price of gasoline dropped below support, and looks like it will continue to fall near term. UGA fell to support at $57.73 and closed at $57.82. The move to cheaper winter gasoline, refinery breakdowns fixed and increased supply have been the catalyst. Some speculate that with the election just three weeks away that the key battle states of Ohio, Florida, Wisconsin and Nevada will see prices back near $3.25 by the election. If that is true, the short play on the ETF would be a possible opportunity.

Whatever your trading discipline stay focused and use your stops as all the ups and downs work out.