As the effects of the earnings being to wind-down, the big-boys have a tendency of forgetting the healthy profits, and allow geo-political, macro-economic forces to corrupt their view of the market. This is why I still think the "
swimming in it" post is in play.
Since the post, the macro conditions highlighted did not go away. They were simply ignored by the awesome earnings. However, European CDS rose quite a bit (
Spain,
Italy,
Ireland,
Greece,
Portugal), and market complacency is setting in (even though some valuations are still pretty compelling).
The earnings rally has helped the SP500 push to its upper limit channel range, around 1340.
With last week's move, the VIX has collapsed. The collapse is in relation to the current rally's (since March 2009) trading dynamic.
With a lot of earnings coming in better than expected the market looks very inexpensive. The downside may be more limited then previously stated. However support all depends on how severe the level of negativity becomes. The 1300 level may act as support, but I do not expect the 150SMA (via the daily) to be breached.
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