9:00am (EST)

“With all the jet-setting events taking place, it does feel like some kind of stimulus package is coming but we doubt the Fed will act alone, if at all.  They will meet on Tuesday and any statements they make will be released along with the FOMC Rate Decision at 2:15pm on Wednesday.

We do have to keep an open mind that the Fed could team-up with the ECB which would be music to the bulls’ ears.  If some kind of joint-package were to come from this week’s meetings, then the market could set new highs in August.

The ECB will meet on Thursday and there was a report over the weekend that the head of the Eurogroup, Jean-Claude Junker, said the ECB will act soon to save the euro.  He was quoted as saying “we will decide in the coming days which measures to take”.

We lean more to the technical picture when analyzing the market and the major indexes but we do follow headlines because trend changes and new chart patterns can develop very quickly.  However, we try not to get too excited (or nervous) until we have a clear breakout or breakdown.

Earnings have been lousy but the talking heads are spinning the profit beat per share and not the revenue miss and lowered guidance.  There have been a ton of sectors and individual stocks that have seen their market cap crippled on the misses and we still believe it will only be a matter of time before the major averages catch-up.  However, that doesn’t mean the indexes can’t go higher.

So how do we see the week unfolding?

The bulls will likely push the upper-end of resistance:  Dow 13,250; S&P 1,400 and Nasdaq 3,000; Russell 820 – into the early part of the week.  The market will likely be flat heading into Wednesday’s Fed news.  If the Fed comes out blazing guns and says something regarding quantitative easing these targets could be met.  It would then leave the possible market breakout in the ECB’s hands.

If they fail to do nothing or the market doesn’t buy the latest kick of the can down the road, look for a huge sell-off and for the bears to break through the bottom of the current trading range.  Yes, it will that ferocious if all of the knuckleheads who run the printing presses cried wolf again.”  (from 7/29/2012 Weekly Wrap/ Monday Morning Outlook)…

The bears had a 4-session win streak going into Friday but the bulls used a better-than-expected Nonfarm Payroll report to rally back and win the week.  At least that is what the headlines will say.  The 2% pop pushed the major indexes back to the top of the trading range and have the bulls looking for a breakout.  However, as you will see in the charts, the bears are right there and aren’t going anywhere without a fight.


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