Weighing the Week Ahead: Can Earnings Season Spark a Big Year-End Rally?

After last week’s avalanche of economic data, the calendar is back to normal. More important is the onset of earnings season. Recent data have reassured many observers about the health of the U.S. economy. The period of seasonal weakness is ending. Expect people to be asking:

Can this earnings season lead to a big year-end rally?

Last Week Recap

My expectation for last week concerned the relationship between economic and stock market strength. That discussion might come another day, but last week’s attention was focused on Las Vegas.

The Story in One Chart

I always start my personal review of the week by looking at this great chart from Doug Short via Jill Mislinski. She notes the gain of 1.18% on the week, as well as other key comparisons. Once again, it was a week of very low volatility.

Doug has a special knack for pulling together all the relevant information. His charts save more than a thousand words! Read the entire post for several more charts providing long-term perspective, including the size and frequency of drawdowns.

Personal Note

Next week I am off for a weekend jaunt to celebrate Mrs. OldProf’s birthday. I’ll try to post an indicator update, and maybe a bit more.

The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

The economic news remained quite positive. New Deal Democrat’s weekly update of high frequency indicators shows what is going on in various lead times. “The last few months have been boringly consistent, but in a good way!”