EARNINGS SEASON

With the Alcoa (AA) earnings after the bell today, we have officially entered into "earnings season". The earnings should be weaker due to the problems in Europe over the last 6 months. We should start to see some of the affects of the global slowdown start to show up into some of the earnings. Be careful not to look at just the numbers that are released...or especially the initial "hit" or "miss". Many companies lower estimates earlier in the quarter only to come in on earnings day and blow away those lowered estimates. It is part of the Wall Street game. I don't usually care about the numbers that are reported. I'm more interested in the movement of the stock after the numbers are reported. I don't usually like to get into trades before the announcement (although this can be highly profitable...IF you are right). I think that trading the announcement is one of the biggest forms of stock market gambling due to the fact that the stock can literally go anywhere on the announcement...whether the numbers are good or bad. I love to try to read the institutional reaction to the numbers to see if they are buying the news or selling the news.

The market has moved a bit sideways over the last few trading sessions. This leads me to think that the market still has one more push up to those levels in the previous postings. This doesn't mean that I'm bullish on the markets...at least not yet. Google's move down today was very bearish. The VIX was up today on an up day in the market. This doesn't mean that the market will crash tomorrow, but they are both warning signs that a sell off could be coming soon. With earnings season underway and no news out of Europe, any sudden negative news could reverse this latest uptrend. That said...I'm not going to try to pick a top. I've tried that a couple of times over the last few months. The overall trend in the markets is still up. Even though Apple reached a new all time high today, the price action is starting to look bearish as well. All of the leaders in the market are looking more bearish...even though the market continues to move upward. I can see a scenario where we gap up or move up strongly within the next day or two, then suddenly reverse downward. We are about 108 points away from 12,500 on the Dow. I'll be interested to see how we trade if we reach that resistance area. We'll see what happens. I'm still not recommending anything yet...not until the market confirms its next likely move.