Futures are pointing to a higher market open on Monday, in part based on encouraging comments from Meredith Whitney who recommended buying shares of Goldman Sachs for the first time since January, 2008.
Friday was essentially a half-hearted trading day, probably a bit due to summer doldrums – but to a greater degree a reluctance to get too involved with earnings season swinging into high gear essentially on Tuesday of this week. Technology, which may well be a leader when the market recovers, performed okay, but all in all there simply was little of note.
In considering the total picture, though, it seems that the Bulls have a tough battle ahead. Recent momentum has more and more shifted in favor of the Bear’s camp across the board. And for the Bulls to defend their current position or even gain ground, they desperately need a whole lot of good ammunition, some very terrific earnings reports.
Cost-cutting measures helped last quarter. The bar is set pretty low with respect to earnings expectations. And we definitely go into this earnings season with the charts really quite mixed – some have held on quite well despite the general market, while others have become tremendously oversold. And speaking of oversold, there may be situations where unexpected positive earnings and guidance will result in short squeezes. Oils and precious metals are, of course, oversold, but they have been in No Man’s Land lately.
So there is the potential for a lot more action this week. Some pretty significant reports are on the agenda. And we will see how the earnings season begins to shape up – and how much of the individual results seem already priced in. Guidance will be critically important.
Some companies to watch that will undoubtedly grab headlines will be, of course, Intel (INTC), Goldman Sachs (GS), and Johnson and Johnson (JNJ) reporting on Tuesday – and Google (GOOG) and JP Morgan Chase (JPM)on Thursday -- and General Electric (GE), which just had a pretty tough week, on Friday.
Be careful – and if you plan to step into the battle, keep a watchful eye on just how the battle is shaping up. If it looks like the enemy is starting to gain traction, be quick to step out of the line of fire.
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