Market V or W

This week is the start of earnings season with Alcoa reporting on Wednesday. There are a lot of bears out there right now thinking that Q3 earnings are going to miss expectations, but I see it a different way. For almost the entire third quarter the dollar was weak which will help top line revenue. Also the bar is still set very low, I think that this is going to be an okay earning season. I can guarantee one thing; that we will see big up days and we will see big down days in the coming two weeks.

I have also been hearing that the rally is over and that we are about to double dip and the "V" is now a "W". I have a very mixed opinion on this idea, first bonds are rallying which suggest that money is shifting from equity to fixed income. Bond yields are getting less and less attractive which might keep money on the side lines. But I think the dollar will continue to get weak over the next couple months, which will help most multinational companies. Also the seasonality of the market over the next few months is bullish. The sentiment is also very mixed right now. But the most important thing is that the trend is still up and that is the way I will trade till it is clear that the trend has changed.