Quiet Day....May Need A Bit More Consolidation

When markets blast up you get short-term oscillators overbought, which normally will lead to a period of some consolidation. We saw that today with a light volume selling episode that helped unwind things just a bit. The market may and even should spend a bit more time consolidating, but, thus far, the action is what one would expect after the run up off the ECB decision yesterday that promised QE of sixty billion per month through at least September 2016 and likely far beyond. Today saw the usual attempts by the bulls to get us green and stay there, but they did a smart thing by not pressing on things. You don't want to get ridiculously overbought, and you do want those overbought MACD's and RSI's to calm down. So today was a good day on that front. Too overbought too long isn't great, so we'll take what we can get with today's slight selling episode.

The market does continue to teach some difficult lessons when it comes to holding stocks into earnings. The great United Parcel Service, Inc. (UPS), a fabulous company and stock that no one thinks can ever get hurt, sent another bad message about the state of the real economy. A major warning on the future, and the stock paid a price no one would have believed possible. The market blasted up yesterday, so many think it's safe to go in and hold these stocks in to earnings, only to learn a nasty lesson no one should have to learn if they'd just lose the greed aspect of things. The stock was annihilated and never came back after the huge, nearly 10 percent, gap lower. The market always seems to find a way to nail the masses.

Even in good times too many suffer needlessly. Please remember that for yourselves. Do what feels right to you, of course, but understand the risk involved with these reports. To me it seems best to stand aside and pick up the pieces later on. To be blunt, the majority of earnings reports this quarter have been poor. About the worst I've seen in a long while. No wonder rates stay at zero and no wonder the ECB took the amazing action they put forth yesterday. If you separate the market from the real world you'd recognize just how desperate our fed global governor's really are. Things are not good with deflation the big culprit. Heaven forbid the fed global governor's let the stock market actually trade without interference. It would not be pretty.

Market risk remains. At least respect what's possible, if things trade on reality, which for now they're not. Froth is still out of control while the weekly and monthly charts remain terrible bearish looking. The fed actions will probably win out over reality, but in my mind, I have to respect what's not good. It's likely we'll trend higher, but nothing is a guarantee. Be aware of all the possibilities. Adapt and adjust as we move along. Nasdaq 4815 would be strong resistance. S&P 500 2093 the same.