The coming week might show that it may not be two steps but three or more backward if the results of the 60 or more S&P companies due to be declared do not make the cut. Out of these 10 percent or more are results of Dow Jones component. The earnings and revenue have to be excellent , good won’t suffice to sustain the fully valued or over valued shares. If there are issues with some of the major players and their earnings we could see Dow correcting to an extent of 10 percent. S&P could even retest 1770 level seen last December, if the support at 50 DMA is taken out.
The companies which did report their earnings are showing an earnings growth of 7 percent or lower instead of the forecasted 7.6 percent. This makes things difficult for the further growth of S&P and Dow. One needs to keep in mind that the taper has begun and companies are now flying solo without immediate help.
This would mean that the market is more likely to fall on negative report than rally on positive reports, guess it is time to get that excess fat off… and some of the smart kind could go to Europe where the markets there look lean and mean , ready to be fattened.