This will be an easy one to call.
Other than our exciting spike up on Friday, we've been on a big downward spiral along the declining 50 dma lines and even our ill-gotten gains have only taken us to our expected resistance lines on the Big Chart. As usual, we have a pre-market pump job sending us higher but what matters is what sticks in actual trading and, as you can see – the volume is simply too lame to get us over significant resistance points.
Today is day one of Ben Bernanke's "Humphrey Hawkins" testimony on Capitol Hill where he will tell Congress the recovery is moving very slowly (but still recovering) and it's up to Congress, not the Fed, to step in and do something more.
Then the Congresspeople of each party will attempt to score political points for their respective parties and then the farce will end and we'll do it all again tomorrow – as if it matters. What really matters is tomorrow afternoon's Beige Book from the Fed along with a lot of housing data to finish the week and, of course, earnings – which have been a fairly mixed bag so far.
Goldman Sachs (GS) reported this morning with a substantial beat of .60, giving them $1.78 of earnings per $97.50 share – so a beat of low expectations buy 4x $1.78 is less than $8 and we've got a p/e of 12 for a company who's income has gyrated wildly – to say the least. STT also beat by a bit with MTB putting in a win as well. INTC is out later and that one will move the Nasdaq but expectations are a very low .52 per $25 share – about the same p/e as an investment bank.
Earnings are nice but, as you can see from the chart on the left – it's ALL about the Fed. As we discussed last week – pretty much the entirety of our "recovery" since the March, 2009 lows has been based on anticipation of Fed action – the rest is just noise. This has been going on since the Fed went activist in 2001 and, as you can see – the effect has been magnifying since then as MORE FREE MONEY cures all ills – until it doesn't, of course.