Can Bulls Stampede Over Debt Ceiling Debate and Fiscal Cliff 2?

U.S. ETFs and stocks stay stuck in the mud on Wednesday.

etfs, spy, dia, iwm, qqq, stocksFinancial earnings and economic reports failed to excite investors on Wednesday as major U.S. ETFs and stock indexes traded sideways for another day.

Major markets and their ETFs remain just below significant resistance levels after the recent rally and now need to break through current levels to confirm and continue the uptrend.

For the day, the Dow Jones Industrial Average (NYSEARCA:DIA) lost 0.17%, the S&P 500 (NYSEARCA:SPY) rose 0.02%, the Nasdaq 100 (NYSEARCA:QQQ) climbed 0.43% and the Russell 2000 (NYSEARCA:IWM) fell 0.26%.

In other major markets, oil (NYSEARCA:USO) rose 0.72% to $94.12/bbl. and gold (NYSEARCA:GLD) rose 0.08% to $1680/0z.

Boeing (NYSEARCA:BA) was hammered by its Dreamliner problems and Apple (NASDAQ:AAPL) showed some renewed strength today with a gain of 4.15% to $506.09.

All of this took place in a low volume, generally lackluster day on Wall Street.

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In earnings, JP Morgan beat estimates with its fourth quarter earnings report and Goldman Sachs reported positive earnings news, as well.

Economic reports were mixed with December industrial production beating expectations but still below November’s reading, the home builder’s index was flat and the Fed’s Beige Book of Manufacturing activity was mixed with three Fed regions showing a drop in factory output.

Tomorrow brings economic reports including weekly jobless claims, housing starts and the Philadelphia Federal Reserve report…

Earnings reports will focus on Bank of America, Citigroup and American Express as the financial sector (NYSEARCA:XLF) earnings parade continues.

Most analysts say that earnings reports should be generally well received as expectations have been significantly lowered ahead of this quarter’s earnings season.

Overseas, Europe remains mired in recession as German GDP was forecast to decline and the World Bank yesterday reduced growth forecasts for the developed world.  However, the financial crisis appears to have stabilized for now as Spanish 10 year bond yields are in the 5% region, well below the recent, red hot 7% level that is the zone where bailouts come into play.

Bottom line: U.S. ETFs and stock indexes continue to tread water as earnings roll out and the debt ceiling debate and “Fiscal Cliff 2″ approach.  Technical levels are in play, and a break above the current 1470 on the S&P 500 (NYSEARCA:SPY) could trigger a quick rally to 1550-1570.

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