Although markets logged losses for the week, market breadth continued to improve. As of Friday afternoon, 264 stocks within the S&P 500 had positive technical momentum, while only 28 names had negative technical momentum. This has been largely influenced by the positive earnings picture.
Of the 355 stocks within the S&P 500 that have reported fourth quarter earnings, 70% have beat earnings estimates and 65% have beat revenue expectations. On average, revenue increased 7% year-over-year, while earnings rose 11%. As a result of the broad market breadth, equal weight ETFs outperformed their market-cap-weighted counterparts for a fourth week in a row.
The trade
Expect volatility to climb again this week, especially for small-cap stocks, who take center stage in earnings reports this week. If the Nasdaq fails to break the 3,200 level on Monday, consider taking some profits in the sector or at the very least buying some puts on technology and small-cap positions.
This week's market-moving events
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Monday: Loews Corporation report earnings, as will over 100 small-cap companies.
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Tuesday: Cliffs Natural Resources, Coca Cola Enterprises and Goodyear Tire are set to report earnings.
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Wednesday: Retail Sales and Import/Export Prices will give investors further insights into the state of our economy. Cisco Systems, John Deere and Duke Energy are among widely held stocks reporting earnings today.
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Thursday: GM, Molson Coors, Apache and PepsiCo report earnings
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Friday: Consumer Sentiment, Industrial Production and The Empire State Manufacturing report could make Fridays' trading volatile.
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