In spite of the weak finish to the market on Friday, most U.S. equity indices ended higher on the week. The Dow Jones Industrial Average and the S&P 500 Index finished the week up .5% and .4%, respectfully. The NASDAQ though declined 1.2% as many momentum related stocks experienced the brunt of the sell off. Economic data is pretty light this week with FOMC minutes being released on Wednesday, jobless claims on Thursday and PPI and consumer sentiment on Friday. One article in this week's magazine notes forward four quarter earning estimates for the S&P 500 Index are rising. Additionally, one of our articles notes the low bar that has been set for earnings in the first quarter. If earnings are accelerating and we start seeing a number of earnings beats for S&P 500 companies the market could be setting itself up for a rebound.
At a recent market seminar, Ned Davis Research provided a sentiment trading chart that notes trading sentiment has moved into the extreme pessimism zone. Certainly there are seasonal hurdles to overcome as we are nearing a potentially weak market period that has occurred during mid term election cycles. Below is the link to this week's magazine.