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ETF SPY: Earnings Is At The Forefront Now

Technically Speaking

RSI- the recent high is a very strong resistance point and it will be interesting to see if the stock can push through now. The recent low barely pushed below the '50' line and this may reveal more strength. The RSI has remained bullish even in the recent down turn.

MACD- also in bullish territory, the MA's have plenty of room to continue to move up. The MA's may move between each other for a time but presently it looks like the two are going to move parallel. If this is true, it means the stock will continue to move up.

Bollinger Bands- as the stock gaped up and rode the upper band, where it moves now will be important. I believe it will continue to hug the upper band or at least move sideways, but I do not think it will move down.

The stock break above the important resistance level is the most important observation to watch in the short term.

Current Events

Its all about earnings.

Financial results, which begin after the market closes on Tuesday with aluminum company Alcoa (AA), are expected to be only slightly better than the third-quarter's lackluster results. As a warning sign, analyst current estimates are down sharply from what they were in October.

That could set stocks up for more volatility following a week of sharp gains that put the Standard & Poor's 500 index (^GSPC) on Friday at the highest close since December 31, 2007. The index also registered its biggest weekly percentage gain in more than a year.

Negative-to-positive guidance by S&P 500 companies for the fourth quarter was 3.6 to 1, the second worst since the third quarter of 2001, according to Thomson Reuters data. Back in October, earnings growth for the fourth quarter was forecast up 9.9 percent.

Fresh from the long legislative fight to prevent a "fiscal cliff" of tax hikes and spending cuts, President Barack Obama warned on Saturday that the United States could not afford further budget showdowns this year or in the future.

Obama, who returned to Hawaii for a family vacation shortly after the House of Representatives passed a compromise bill on Tuesday, said in his weekly radio and Internet address that the new law was just one step toward fixing the country's fiscal and economic problems.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.