Weekly ETF Rewind: Market Direction Could Be Determined This Week

A quick look at the Relative Strength charts below highlights the divergence in performance we saw last week between the NASDAQ100 (QQQQ) and S&P 500 (SPY). Nevertheless, both ended the week undeniably lower, with the QQQQs down -1.9% and the SPYs off some -2.1% for a fourth week of losses. In spite of the declines, a possible short-term bottoming process on declining volume really only left Real Estate (IYR) clearly oversold among the tracked sectors.

(Click Image to Enlarge/ Glossary)

Week Twenty-Nine of 2009 kicks off the opening of the potentially catalytic second quarter earnings floodgates and includes a very busy economic calendar, as follows:

• Yahoo! - U.S. Economic Calendar
• Yahoo! - U.S. Earnings Calendar

Note that is also an options expiry week, and that the last FOMC minutes will be released. I suspect this week may prove seminal in setting the course of the market's next move one way or the other. Have a Terrific Weekend!

Click to enlarge:

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Comments

[whidbey:]

Your a nice person to be so gullible. The barons of wall street will not know what they want until they see what Congress is willing to give them in added love gifts and concessions this fall.

As it stands now the boys know that they can not pull off the recovery (it is either missing or dying), so they are looking for second best:: let us see, can we get more cold cash for our bankers, or must we live within our means (pretty limited). The match is on for the strangle hold and they know it. All this comes only in the fall when Obama must fish or cut bate (Congress too, but god what a group of idiots with not leadership). Obama is a cutter and he will go for the second stimulus. Then and only then will be know how the wind blows. I think it looks like a hurricane right on to 2014.

Jul 12 08:41 PM

[Tom Colangelo:]

The market will continue to move sideways based on the numbers and guidance given this week BECAUSE:

1) FIRMS will say nothing or say that the outlook looks better than the recent past. It would be a SELF-FULFILLING PROPHESY if companies with weak Q2 results give negative guidance for Q3. A literal death wish for any firm saying that they won’t improve their numbers even though the economy is beginning to level out and the stimulus is still gaining momentum.

2) The banks will report good numbers because they talk to Geithner EVERY DAY about how they are doing. He is protecting the $1 trillion we have given to banks and financial institutions and for his own sake, must know how the banks are faring. If they were in trouble, we would know about it already because nobody likes surprises.


3) Q2 earnings will be presented as improving month-to-month versus the less favorable Y-O-Y. You will be sold on how things are improving and to forget about t he Y-O-Y because it is not valid in this recession.


The market will meander until Q3 reports. In the mean time, get dividends while you wait for the market to move. Take advantage of this by getting into a strong position in some of the things that we CANNOT DO WITHOUT like:

OIL – BP (Yield = 7.43%), RDSB (Yield = 7.11%), etc.

UTILITIES - ATT (Yield = 7 %), VZ (Yield = 6.4%), VOD (Yield = 6.2%), NGG (Yield = 5.9%), CHL, etc.

FOOD - ADM (Yield = 2.1%), MOO (Total Return = 23.7%)

BANKS - NYB (Yield = 9.3%)

I hold positions in all of the mentioned stocks.

Good Luck.

Jul 12 09:22 PM

[j_remington:]

Shorts will be hoping for a decline to cover into.

Jul 12 11:42 PM

[AndrewBaker:]

Yes, this week could see a rise on fabricated bank results. If so, that would be disgraceful, as those involved encourage people to once again buy stock in companies that are effectively bankrupt except for our tax-dollar bail-out funds, which themselves are being used to ramp these stock prices upwards against the true condition of the businesses involved and which is dire.

I hope the market does not fall for the lies that have already been written and are just waiting for publication. Take stories of profits with a large pinch of salt, and refuse to believe that there is future growth just around the corner. You know is isn't true, so don't bank on it.

Jul 13 02:22 PM

[Old Trader:]

Andrew,

It'll be interesting to see what the financials that AREN'T big into trading and M&A activity (the non-I Banks, in other words) report. Given the run up in the markets, as well as the volativity, and adding increased capital raising as firms took advantage of slightly easing credit markets to shore up balance sheets, its almost a given that that segment of the market will put up good numbers, from an operational standpoint.


On Jul 13 02:22 PM AndrewBaker wrote:

> Yes, this week could see a rise on fabricated bank results. If so,
> that would be disgraceful, as those involved encourage people to
> once again buy stock in companies that are effectively bankrupt except
> for our tax-dollar bail-out funds, which themselves are being used
> to ramp these stock prices upwards against the true condition of
> the businesses involved and which is dire.
>
> I hope the market does not fall for the lies that have already been
> written and are just waiting for publication. Take stories of profits
> with a large pinch of salt, and refuse to believe that there is future
> growth just around the corner. You know is isn't true, so don't bank
> on it.

Jul 13 07:28 PM