Earnings Excitement Lifts the Market but Not the Reporting Companies

Excitement over earnings almost trumped technicals today. The S&P 500 tipped over and then faded back ever so slightly from its 50-day moving average (DMA). Earnings news typically trumps technicals, but I was pretty convinced looming overhead resistance would hold firm no matter then news given the weak buying volume coming into today. Buying volume today was higher than the past several days but still relatively weak (Chart not included this time, but click here to review a chart from StockCharts.com).

Strangely enough, and perhaps ironically, today’s excitement in the general market diverged from the excitement over the major companies that reported earnings results for this morning’s consumption. CSX Corporation (CSX) ended DOWN for the day after fading from the open. Fastenal (FAST) opened down, rallied back to even, and then faded to even lower prices for its close. Alcoa (AA) faded straight from its open to close flat on the day; of course, for AA, this is typical post-earnings behavior.

This trading action is enough to make me skeptical and become more convinced that this rally will find a sudden and swift end by early next week. However, in after-hours, Intel (INTC) is soaring on its earnings report, and the general indices are following. A significant break of resistance tomorrow could motivate a new swell of buying and short-covering. I will next be looking for the June highs at around 1138 to hold if the downtrend and major moving averages give way. Given my bias, I will not be surprised if the market gaps up tomorrow and then closes flat or down for the day.

Be careful out there!

Full disclosure: long SSO puts, long FAST puts, (sold AA)

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