February  9,  2011

Hi-

This is Mark Vickery, taking over for Sheraz Mian while he is away.

Let’s face it: while 7 straight days of market growth is obviously a good thing (for all but short-sellers), it’s a long enough period of time to make an investor begin to look over his or her shoulder. Are there Bears about to launch an attack?

To better answer this, we should consider the terrain. Clearly, drought conditions in China have had practically zero impact on U.S. markets, and post-Chinese New Year, Asian markets have largely shrugged off this news as well. And even though last Friday’s employment report was a disappointment, other news — such as the stellar ISM surveys for Manufacturing and Services — was favorable, as was the unemployment headline number jumping down from 9.8% two months ago to 9.0% in January.

Today, Fed Chairman Ben Bernanke appears before the House Budget Committee, and while no one is really anticipating a clearly defined exit strategy from the Fed’s involvement in the U.S. economic recovery, we expect major parsing of the Fed Chair’s message from the hearing.  While he’s on the Hill today, Bernanke’s ears may be burning, as Rep. Ron Paul (R-TX) heads a session of the House Financial Services’ Domestic Monetary Policy and Technology Subcommittee. The former presidential candidate has been a major critic of Fed policies.

Cisco Systems reports earnings after the bell today — one of a handful of major companies yet to report this earnings season — but is unlikely to affect the market during regular trading hours today. New Purchase Applications from the weekly Mortgage Bankers Association and weekly crude oil inventories will also be reported today. Both surprised to the upside last week and the upward trends are likely to continue, but not by as much.

Are any of these developments likely to usher a major correction in the markets today, allowing the Bears to feast? Chances are, not too much — especially considering the Budget Deficit gets released tomorrow and the Trade Deficit comes out Friday — both of which have the potential to pack a much bigger whallop to market momentum.

All in all, earnings season continues to downshift today. This puts a somewhat brighter spotlight on Bernanke’s testimony.

Mark Vickery

P.S. What is Zacks Ahead of Wall Street? To find out more about Zacks Ahead of Wall Street, click here.
 
Zacks Investment Research