The market lost some ground to the bears on Friday, but for the week it was flat. The bears could not take out 1250 support and the bulls could not take back 1301 resistance. And those will remain the prices to watch until SPX can break out of its range.
But I am not so certain that a break-out from that range will occur soon. When you think about it; the economic news is slow this week - aside from a few CPI and GDP reports in Europe. But overall there is no major economic news set to be released this week. And I think you would need major news to break SPX out of this range. Then the following week is holiday-shortened and also unlikely to provide a major move, since earnings season starts shortly after the week concludes. So without catalysts, the market may stay stuck in a 50 point range for the next few weeks.
And that does not bode well for the bulls. In the past, earnings season has been reason to celebrate. In fact, for the past two years, earnings season has been great to stocks. But based on results last week by two big tech companies, Oracle (ORCL) and Micron (MU), this earnings season could be a disaster. And the worst part about the Oracle and Micron reports was that the releases were not all that much different from reports the companies gave quarters ago. By all accounts the quarterly results were fine, not great, not bad, but the stocks sold hard.
Despite a two month decline, and heavy selling in technology last week, professional money is bullish. In fact, there is not a bear in the bunch. And why would there be, Apple (AAPL) is coming out with two new iPhones this year.
In a poll conducted by CNN, 26 advisors from firms like Morgan Keegan, Goldman Sachs and Wells Fargo were asked about the market. And they are all bullish. More importantly, not one of these guys expects the market to finish below 1350 this year (now 1265) or for the 10 year to be below 3% (now 2.9%). And many still have SPX with an EPS over $90.
While the market could head lower from here, the big investor's outlook remains bullish and now may be a great time to buy beaten down industries. One area of the market that has been decimated over the past two months is silver miners. But there is reason to believe that the decline is near, or it has ended.
The indices have fallen through a number of support levels on this eight week decline. The bulls have stabilized the descent over the past two weeks but now they need to start to take out areas of resistance over the next two weeks - 1301 being most paramount.