9:00am (EST)
“Europe was relatively quiet but Greece said it would need more money last week and Spain brought the pain on Friday. With earnings entering their third week and the bottom line-up of heavy hitters reporting, Apple and FaceBook (FB, $28.76, down $0.24) will be the last bullets the bulls can use to power Tech higher. Apple is in a transition quarter so there could be a surprise miss, but even if they beat expectations we doubt it will be enough momentum to carry the Nasdaq higher all week. FaceBook could provide a little pop if they announce great results but we think they are still trying to figure out how to make money on their 900 million users.
The eurozone countries will once again take center stage this week and into August and we mentioned Spain’s problems on Friday. They are at the point where they will soon have to ask for a national bailout as Valencia was the second Spanish region to seek help. Spain is the fourth largest country in the eurozone and is considered too big to fail or bail however you want to look at it.
The week after option expiration is usually pretty bearish and the momentum the bulls were enjoying came to a complete halt on Friday. We mentioned last week that Monday was the sixth consecutive down Monday the Dow had finished lower and a deeper look at the numbers also show only 4 out of the last 7 Friday’s were up days.
We usually like to see back-to-back weeks of Friday/ Monday negative closes for a market breakdown. If there are consecutive positive M/F closes it means the bulls could be controlling the action. Mixed M/F closes lead to trading ranges.
With Apple set to report this week, expect a big move not only in Tech but the overall market as the stock is heavily weighted in a few indexes. The euro hit a 2-year low following Friday’s drop to 120.90 and caught a lot of traders off guard. This could lead to panic selling over the next few weeks as Greece, Spain and soon-to-be Italy will continue ask for bailout loans. The ECB has stated that Spain’s bonds cannot be used as collateral so look for them to hit double-digits soon which means nobody will be buying them. This will make it harder for Spain to sell debt..” (from 7/22/2012 Weekly Wrap/ Monday Morning Outlook)…
The market fell for the eight-straight Monday and the bears pushed support into Tuesday before a huge ambush by the bulls that lasted the rest of the week. Friday was an up day, obviously, and the mixed Monday/ Friday closes are another reason we have been stuck in 3-month trading range.
The market got some renewed energy midweek after ECB Chairman, Mario Draghi, vowed to keep the euro afloat “no matter what it takes”. The bulls were able to push resistance by Thursday and needed Friday’s economic news to come through in spades if they were going to get the weekly win.
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