Stock Market Corporate Earnings Seasons Starts In Earnest

Stock-Markets / Stock Markets 2010 Jul 20, 2010 - 01:56 AM GMT

It appears the market has been waiting for this for a while as it's going nowhere these days. Since last Monday the market is basically dead flat. This includes the nasty 261 point down experienced Friday. Tonight we get the truth on things from International Business Machines Corp. (IBM) and Texas Instruments Inc. (TXN), two very closely watched stocks that tells us whether the economy is humming along or not doing so well.

We know that overall the earnings have not been greeted well by traders and investors. Strong volume selling on many widely respected and widely held stocks such as FedEx Corporation (FDX), Nike Inc. (NKE), Bed Bath & Beyond, Inc. (BBBY), Best Buy Co. Inc. (BBY), and others. We did some great stuff from Intel Corporation (INTC), but the stock has barely been up since its report a few days back. The bottom line is that earnings have not been greeted with good action. The bulls need to turn that around and fast or they'll start to lose some heavily weighted big time stocks.

In addition, when those big stocks fall, the stocks that are affected by them in the food chain get hit, so we need to get some strong guidance from the Apple's, Texas Instruments', and IBM's of the world. Again, losing these stocks would be a harbinger of lower stock prices in the overall market. This whole week is loaded with important stocks, and I'll name a few more, but AAPL, TXN, GS, and IBM are huge over the next two days. We also get reports from the likes of Harley-Davidson, Inc. (HOG), Johnson & Johnson (JNJ), Pepsico, Inc. (PEP), Peabody Energy Corp. (BTU), Whirlpool Corp. (WHR), Yahoo! Inc. (YHOO) just tomorrow alone. Wednesday we get Intuitive Surgical, Inc. (ISRG), Starbucks Corp. (SBUX), The Coca-Cola Company (KO), Baidu, Inc. (BIDU), F5 Networks, Inc. (FFIV), eBay Inc. (EBAY) to name just a very few. It is a huge week for the market, and how these stocks are treated on the numbers about to be reported will be telling about whether we break above 1080 or below 1060 with force.

I know that if we look at things from just a purely fundamental perspective, we probably all agree that the market should be dynamically lower in price. And just because it's not yet, doesn't mean it won't be down the road. Maybe things get bad down the road and we're only holding up for the short-term. It's impossible to say at this point in time. Longer-term doesn't seem as if there's anything good here. However, remember the most important market mantra of remaining agnostic at all times. Things don't look good but you never know folks.

Apple broke down today below its trend line at 247. However, they have earnings tomorrow as I mentioned earlier in this report, and they could recover this critical level in a heartbeat. Never count Apple out. It's bad behavior to see such an important leader lose important support and that can't be denied. This earnings report is their last chance to get back above, or it's lights out from this leader. The market can't afford to lose too many leaders such as this.

Goldman Sachs (GS) is also riding a thin line, and we'll know tomorrow what they have to say about things. If you lose Apple and Goldman Sachs, well, you get the picture. Wouldn't exactly be a good thing for the stock market unless you're a bear. Apple losing its trend line today is interesting in that it's happening one day before the report. Does someone know something? Sadly, we're all trained to think that way because of how the market functions. Bottom line is things are at an important juncture for this leader. It needs to recapture 247 pronto.

The market was oversold coming in to today's action on those shorter-term 60-minute charts. The market almost always rallies at the first taste of oversold, but not always so quickly on these 60-minute charts. It was quick this time. A lot of unwinding took place with today's action thus things are set up to fall IF we get bad earnings over the next two days from the stocks mentioned above. On the other hand, we're not overbought and thus good earnings could take this market through the 1080 pivot and carry us back to the top near 1100. The market rallied up and fell back only to come on strong again as they wore on. We finished up for the day and now we need to see what the next two days give us. Things are neutral on the oscillators, thus both sides have the room to make the move through their critical pivots. With this market being in the middle of nowhere, it's important not to play too hard either way. Today set us up for either side to take advantage, but in the end it still leaves us pretty much nowhere. Let's see what the next two days bring us.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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