EmailTuesday's trading session looked similar to Monday's trading session. How similar? On Monday the S&P 500 dipped 4.58 points. On Tuesday it dipped 4.74 points.
In the same vein, the trading action had the clear look of consolidation to it as the major averages petered through most of the day with losses, never giving up too much but unable to mount a convincing charge to the upside.
There is a trading basis for some upside action today. The question is, will participants take the news and run with it or will they keep their buying distance?
Alcoa (AA) did no harm with its report, posting an in-line profit of $0.06 per share on higher-than-expected revenue (although its revenue was actually down 1.5% versus a year ago). The aluminum company also said it sees global aluminum demand growth of 7% in 2013 versus 6% in 2012.
More notable in our estimation is the word from Danaher (DHR) that it expects Q4 earnings to be above the high end of its prior guidance range of $0.80-0.85 (Capital IQ consensus is $0.83), with higher than expected core revenue growth in the quarter. Like Alcoa, Danaher is a multinational company. Its market cap, however, is three times as large as Alcoa's market cap.
Other good earnings news was shared by Constellation Brands (STZ), which beat by eight cents and raised its FY13 guidance above the consensus estimate. Separately, both Seagate Technology (STX) and Stryker (SYK) indicated that they expect December quarter revenues to exceed current consensus estimates.
This is good news, yet the S&P futures are little changed. At their current level, they are trading 0.2% above fair value. That suggests the cash market will start the session only slightly higher.
That, too, has the earmark of a consolidation trade after a big run in a short amount of time.
A sideways demeanor is understandable as the market awaits policy decisions from the ECB and the Bank of England tomorrow, as well as economic outlook speeches on Thursday from two, new voting FOMC members this year (Bullard and George) known to be less enamored with the additional quantitative easing than many of their cohorts are.
So, there is a bit of a wait-and-see feel to the market right now. That could change noticeably next week, though, when the economic and earnings reporting picks up considerably.
