Author Larry Berman
Posted: 26 Apr 2012 re-posted from etfcm
A few sloppy earnings reports from XOM and UPS could take some steam out of yesterday’s rally, but we still look to a test above 1400 as a reasonable risk in the next few days. For those that are shorter-term in nature, look to establish trading shorts if we make the test and close back below 1398 (61.8% retracement of 1422-1357 decline).
European banks are under pressure again today as Deutsche Bank’s earnings miss, weaker economic sentiment in Europe (really, what a shock!), and watching Spanish and Italian bond yield trickle up towards 6.00%. It is clear the earnings momentum trade is getting exhausted and small cap growth (IWO) is showing continued evidence of distribution. We anticipate a larger corrective phase in the coming months taking the S&P 500 back towards unched (1257) on the year. Recall that was the closing level in 2010 and 2011.banks