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With the close of the quarter, investors are now on the verge or earnings season, where we shall see if expectations of the market for a discernible improvement in business activity is justified. The charts seem poised to move +/-10% in either direction.

Interpretation 1:

Interpretation 2:

One could also make the case that we are in a sideways consolidation, that this is the “correction,” and that a break out of the 93 to 96 level, the SPY should advance as high as 106.

I tend to lean on the bearish side for various reasons.

  • The large run up on low volume leaves markets due for a correction.
  • Very little room for error in terms of upcoming expectations, I’m getting a “buy the rumor sell the news” feeling.
  • The 15/30 SMA have been very predictive this past year, and has just crossed to the down side.

Either way, the market looks like it is about to move 10% in either direction, earnings will undoubtedly be the catalyst.

Disclosure: Short SPY