Stock Market Outlook For January 9, 2012

It could be all about earnings and the Euro next week. Early in week the EURO will be in the for front as it looks ready for a technical bounce here. This may lend itself to help some limited broader market advance, but later in the week we should see a pullback to coincide with the phase low. The strength in the market should be viewed as positive going forward and drops will be buying opportunities. When we see a nice pullback, probably in the 3%-4% range, it would set up a nice formation to get some early calculations for the duration of this up trend. So far, it looks to continue out till early June. However, it is to early to set in stone as of right now. Currently, we have elevated bullish sentiment indications which are seen as a contrarian view. Odds favor the downside right here and will be looking for oversold reading to signal a good entry point. Right now looks like they want to squeeze the shorts out, which can have the opposite reaction for an even bigger pullback opportunity. Many stocks have gone parabolic and will need to be digested. For example AAPL and the nasdaq have over extended themselves and should see their stocks react similar to what has been seen in GOOG. Markets are also pricing in earnings with high expectations and if they do not exceed this could add fuel to the pull back. Be cautious with such bullishness around.