Stocks Rally As Earnings Season Begins

Not much changed from my comments last week. Stocks went from being overbought, to being very over-bought in a matter of a few weeks. The fact that the market refuses to fall in a meaningful fashion clearly shows you how strong the bulls are right now. Stepping back, it is important to keep a cool head and remain cognizant of the fact that the market is very over-bought and due to pullback. Buying up here, after a big move, is not prudent and it is a matter of when, not if, the market pulls back. The first important level to watch is the 50 day moving average for the major indices. Last week I noted that the semiconductor stocks ($SMH) fell while the broader markets rallied. Someone most of have been reading because, since then, Semis rallied hard and are now back above the 50 DMA line. Stepping back, the market remains very strong as we head into earnings season. Remember, in bull markets, surprises happen to the upside, not the downside. 

Mon-Wed Action:

Thur & Fri Action:

Stocks were mixed to slightly lower on Thursday as the market paused to digest its recent (and very strong) gain. Morgan Stanley (MS) reported stronger-than-expected earnings which capped off a bullish start to earnings season from the big banks. So far, most of the big banks rallied after reporting earnings which is a bullish sign. Separately, some people were concerned about a government shut down. Congress has until Friday night to avoid a shutdown. Historically, a government shutdown leads to a short-term pullback for the market. Stocks were quiet on Friday as the market waited to see what would happen in D.C. with respect to the government shutdown. The official deadline is Friday at midnight.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. We’ve All Hit A “WALL” Before. Learn How To Break Your Mental Walls & Accomplish Your Goals…Learn More Here