Make Or Break...Technicals And Earnings On Tap Showing This Week Means

By on January 19th, 2010 2:03pm Eastern Time
After earnings announcements from Alcoa Inc. (NYSE: AA), Intel Corporation (NasdaqGS: INTC) and JP Morgan Chase Co. (NYSE: JPM) did not live up to expectations and their stocks fell, the market is beginning to get a little nervous. We have seen the market have some recent sharp declines on these earnings, each following day it has bounced back and recovered most of its losses. What we are seeing here is the market either putting in a technical topping pattern or beginning to lose its mojo (energy). This four day week looms as the major week to dictate which way this market goes.

Why is this the week to make or break the market? Because Wall Street is beginning to get nervous over these disappointed earnings announcements. In addition, this week sees a mega ton of announcements that will either confirm or deny the earnings announcements from AA, INTC and JPM that already hit The Street. Wall Street awaits Intl Business Mach. (NYSE: IBM). They will report earnings after the bell today. Earnings whisper numbers hover around $3.50 for the fourth quarter of 2009. In addition, the stock has just hit a new 52 week high today. In general stocks that move up or hit 52 week highs into earnings see approximately a 65% chance of a pull back. Watch closely with IBM as it will set the tone for tech tomorrow.

IBM is just one of the companies reporting this week. Wednesday, prior to the open the market will get earnings from Morgan Stanley (NYSE: MS), Wells Fargo & Co. (NYSE: WFC) and Bank Of America (NYSE: BAC). Watch for the credit card defaults and other issues on the credit side with these banks. Wall Street and Main Street have been on a different track of late. Recent earnings are beginning to make people wonder if Wall Street got too far ahead of Main Street. These bank earnings will show much more clearly if this is true.

Later this week earnings from Goldman Sachs Grp. (NYSE: GS), American Express Inc. (NYSE: AXP), Google Inc. (NasdaqGS: GOOG) and General Electric Co. (NYSE: GE).

The key to looking at this market and whether or not it is topping or getting ready to blitz higher is in these reports. The market is on edge and will bet analyzing these to see if a recovery is truly underway. As the Chief Market Strategist at, I feel this market is near term overbought and due for a pullback. However these reports will tell the tale. Watch closely. Live, Learn, Profit!

Gareth Soloway
Chief Market Strategist

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