Considering the mass S&P Euro downgrades, the market emerged with only minor scratches from last Friday’s selloff. It wasn’t too long ago, when the U.S. was moved of AAA, that the Dow dropped 400-500 points a day.
However, on Friday, it was only rumor, today it is reality. The news did put the recent run-up for stocks on pause. This is the second attempt for the indexes to move beyond August’s crisis selloff point.
The Dow, S&P, and NASDAQ are undeniably headed into a field of technical debris should they advance much more. The EU crisis, the pending debt ceiling debate part two, and earnings could work together to put stocks in a range bound holding pattern in the near-term.
Top Equity News expects traders to follow the lead of Q1 earnings guidance as profit forecasts are updated for current business conditions. At the start, things aren’t looking too good as the number or downward revisions are at a 10 year high; 3.5 lowered outlooks for every upbeat projection.
Hopefully, the majority of industry/sector leaders can deflate the growing consensus that eps growth has topped out. Then traders can chip away at resistance and continue moving up.
However, the process could take some time as our market metrics are flattening out too. This confirms TEN’s view that a sideway market is likely to take over soon. If we are right, we would suggest buying the dips until the uptrend is cracked. NASDAQ 2650, Dow 12,200 and S&P 1260 are the first levels of support where adding to positions might pay off.
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