Stocks closed strong last week despite the widespread low expectations that investors have regarding this earning’s season. The fact that the weekly and daily NYSE A/D lines are leading prices higher (see chart) is bullish as it typically will be followed by the major averages also making new highs.
The S&P futures are lower before the opening as the Spyder Trust (SPY) needs a close above $211.50, or so, to make those on the short side nervous. The S&P 500 A/D line did make a new high last week, which is a positive sign.
As was evident from last week’s winners and losers, it still may be a very treacherous earnings season as often times when stocks miss expectations the selling is brutal. Of course, trading or investing in individual stocks gives you the potential for a greater reward if you are willing to accept the higher risk.
Most stock market veterans realize that the primarily fundamental Wall Street equity analysts of the largest firms do not have a good record of picking winners and losers. Some may have noticed that, frequently, when a stock suddenly drops 10-15%, the rating is then changed from Buy to Hold.
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