Should I Stay or Should I Go

The question asked by everyone this past week is, "Is the rally for real?" I have addressed this question a couple of posts ago. However, conditions change constantly and questions have to be reposed and answered again. It is clear we are in a rally. The S&P has risen 25% in exactly one month. So, yes we are playing with a substantial gain right now. The new question becomes, "How long can we sustain this rally?"

Wells Fargo suggested it has a record gain in earnings this past quarter which did wonders for confidence and the market. Will other banks provide the same assurance? A couple of consumer discretionary companies have surprised with their earnings. While earnings have still been down, they have been better than expected suggesting a turning economy. Technology companies will start reporting next week. What we really have to pay attention to is earnings. These numbers will dictate where the market will be for the next month. Even more importantly is expectations of where this earnings will go next quarter. Any improvement will certainly be taken in full strides along with the market. Earnings will be the sole driver in the market for the next couple weeks. Pay attention to major banks and discretionary companies. They will show where consumer confidence is headed. Any good news is essentially cash money.