The market deep drop last week was viewed by some as a surprising sudden move. Those perhaps who have listened to my outlook reports may know that the shift actually began in September. What is next will be determined by trader and investment mood more so than earnings in my opinion.
If we are to trust that earnings are getting better and the economy is improving well, we may look at the current events as bottoms. Yet I would not be so quick to asses it so because it's been 2 years that we had a true test of these levels and a pullback of such severity usually gets tested again before a bottom is determined. In fact I believe that Friday's gap up and bounce, which got its momentum from the housing report, may have been also in anticipation of this coming week's earnings reports so earnings misses or outlook shifts may drop it with equal momentum once again.
So far we've had a mixture of up and down guidance from reports and as I mentioned before, the end of year positioning is not yet over, in fact it's just getting into full swing. Therefore more fluctuation may become evident in the markets as we approach December.
Nevertheless, this week is in focus and on everyone's radar for now and watching what happens next will be more revealing perhaps than any other week ahead. So for now, this is what I see:
Below you may find the video: