The market divergence between the Nasdaq and S&P futures remains in place so it possibly sets up a nice bearish move if earnings are similar to Johnson and Johnson's this morning, plus Meredith Whitney (sound and logical financials bear) downgraded Goldman Sachs since it hit her bullish price target. That's interesting because everyone is now looking toward financials to lead the market higher, and Goldman Sachs is the premier financial institution that tends to lead the financials. So if Whitney downgrades them right before they're posting their earnings, it could be interesting if by some incredible longshot Goldman Sachs posts not so good earnings. This would be amazing though as they tend to break records whenever they announce, but what's more important, especially as an elliottician, is the reaction to the announcement. Earnings may be bullish but the reaction is to sell heavy.
As long as the mild market divergences are in place, it's possible for a top to be in and a selloff to ensue. Bullish underpinnings still cling to this market though and the path of least resistance still points up.
We'll see.
I remain short with long dated options and have small bullish position with a call spread on the XLF with a November 2009 expiration.
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