Futures were showing a higher open throughout the night as they were up ahead of the European open and got stronger before the start of trading here at home. The bulls have managed to push resistance that was prior support as the indexes are up nearly 0.75%, on average.
We had a checklist for the bulls coming into the week and all year long they have managed to push the market higher just as it appears ready to fall off a cliff (pun intended). Coming into the week, the bears were thisclose to pushing a new leg lower but we warned the bulls have been resilient.
We have also talked about volatility pickin up and we are starting to see that with the 1% daily swings. The week is still early so expect more of the same as the real battle is just beginning.
We have been mums on the overseas developments this week because there hasn’t been much to talk about except Spain’s pending bailout. The zombies on the other side of the pond will start a 2-day summit on Thursday and Spain has to ask for the bailout before the ECB (European Central Bank) can start buying their bonds. Spain is trying to hold off as long as it can before asking for the bailout because it comes with more strings attached and instead might seek a “credit line”.
Another curveball the market might have to deal with this week besides earnings will be the economic news, not only here at home, but China’s as well. Questions and growth rates remain a hot topic of debate and China has been known to report some funny numbers to make things look better than they are. Expect more of the same when they report their GDP (Gross Domestic Product) numbers.
As far as the happenings here at home, company earnings will also play a big part of the news with some heavy-hitters reporting this week. Friday is October options expiration and the last 6 years and 7-of-the-last-8 have resulted in a lower Dow. Friday is also the 25th anniversary of the Monday, October 19, 1987 stock market crash that saw the Dow fall over 22% in a single-day. (continued…)
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