Are All-Time Stock Market Highs Ahead?

ETFs and stocks put in a good week and look ahead to all time highs, earnings reports and Congressional action on the deficit.

For the week, ETFs and stocks put in a mostly positive performance as the Nasdaq Composite (NYSEARCA:QQQ) gained 0.3%, the S&P 500 (NYSEARCA:SPY) gained 1% and the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1.2%.

spy, dia, qqq, iwm, earningsiscal cliff, etfsSignificant stocks in the technology sector (NYSEARCA:QQQ) include Apple (NASDAQ:AAPL) which gained 0.53% on Friday and remains in a significant downtrend and Google (NASDAQ:GOOG) which declined 0.96% on Friday and is set to report earnings this week.

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General Electric (NYSE:GE) jumped 3.47% on Friday on good earnings results and Goldman Sachs (NYSE:GS) helped push the financial sector (NYSEARCA:XLF) higher with a gain of 2.44% in the company stock.

On My Wall Street Radar

spx, spy, etfs. S&P 500, nysearca:spy

In the chart above of the S&P 500 (NYSEARCA:SPY) we can see how the RSI for this index and its ETF is currently nearing overbought levels, indicating the possibility of a short term correction, however, all of the other major indicators have turned bullish.  The S&P 500 (NYSEARCA:SPY) broke major resistance at 1470 which now becomes major support and the next major resistance level is the 1550-1570 zone and the all time nominal highs…

Significant moving averages like the blue 50 and red 200 day are turning upwards and momentum is positive for index ETFs.  A continued run higher from here towards the all time highs is quite possible at which point a huge double top awaits as this level was also reached at the peak of the bull market in 2000.

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Last week’s economic reports were mixed with retail sales rising while the Empire State Index posted a huge miss, coming in at -7.8 compared to a forecast -2.8.

Industrial production showed a small gain, the home builders index was flat and the Fed Beige book showed moderate economic activity in its 12 regions.

Weekly jobless claims dropped sharply to 335,000 from last week’s 372,000 and housing starts were substantially higher while the Philadelphia Report joined the Empire State with a sharp decline to -5.8, dropping sharply from last months 4.6.

On Friday, the University of Michigan Consumer Sentiment Index declined to 71.3, down from last month’s 72.9 and missing expectations…

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This week brings important earnings announcements for major players in the tech sector (NYSEARCA:XLK) including Microsoft (NASDAQ:MSFT) Apple (NYSEARCA:AAPL) Google (NASDAQ:GOOG) and International Business Machines (NYSE:IBM)

Eyes will also be on Congress as the House of Representatives is going to vote on a three month increase in the debt ceiling to give more breathing room to work up a budget.

This is a controversial move that Congresswoman Nancy Pelosi blasted as a “gimmick,” and so this is a drama that likely has more acts to follow.

Other earnings news will come from McDonalds, (NYSE:MCD) Proctor and Gamble (NYSEARCA:PG) and Starbucks (NASDAQ:SBUX) in the consumer ETF sector (NYSEARCA:XLY)

Economic reports will focus on home sales, weekly jobless reports, the Markit Flash PMI and December leading indicators on Friday.

Bottom line: Stocks and ETFs break significant technical resistance levels and move higher, supported by earnings and the diminishing threat of an immediate budget showdown in Congress.  Moves to all time highs are possible at which point ETFs and stocks will face the ultimate test of  breaching all time highs and a double top stretching back thirteen years.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.