The S&P futures made the confirmation we were looking for on Thursday, propelling from our 2nd tier uptrend line well beyond the psychological 950 level. The futures are leveling off today as investors take some profits amid disappointing earnings from the likes of MSFT, AXP, and AMZN. The markets have also received some disconcerting results from WFC and MS this, week along with fast food giant MCD.

However, the 2nd quarter earnings season has been altogether positive, and the mixed results show winners are separating themselves from the losers (AAPL vs. MSFT, EBAY vs. AMZN, YUM vs. MCD, GS vs. MS). Investors are encouraged by the fact that there are winners this time around instead of just losers. Investors also continue to ignore the negative data emanating from the EU and Britain over the past couple weeks even though the EU’s PMI data was positive this morning. As for the U. S., even though weekly unemployment claims experienced a bounce higher, existing home sales and today’s consumer sentiment data points reveal a slight improvement.
Therefore, the roots for an economic recovery have grown a little even if medium-term risks persist. Investors are acting upon what they have right now instead of their predictions of what might happen in 6 months.

Thursday’s gain in the S&P came on large buy side volume, showing investors feel more comfortable putting a second leg in the pool since corporate earnings are giving us a clearer picture of fair value. While yesterday’s movement was exciting for the uptrend, the EUR/USD, GBP/USD, and gold didn’t participate due to disconcerting data releases from the EU and Britain.

Furthermore, today’s negative earnings are taking some air out of the balloon. Therefore, the S&P futures may finish off the week on a mild note with the possibility of a slight pullback towards our 2nd tier uptrend line. Meanwhile, investors will be looking for the 2nd quarter earnings to finish on a positive note as the season begins to fill out next week.

We’ll also receive some heavily-weighted economic data throughout the week, including new home sales on Monday followed by the HPI and CB consumer confidence data points on Tuesday. Even though momentum is clearly in favor of the bulls right now, the 1000 mark isn’t so far away all of a sudden. Investors better believe the psychological 1000 area will be a though psychological barrier to deal with should it be reached. Therefore, the S&P certainly has its work cut out for it. 

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