Saturday, July 14, 10:30 a.m.

Until yesterday, the Dow was down for 6 straight days, during which it declined a total of 370 points. It was down 4 straight days this week, during which it declined 200 points, and so was down 1.5% for the week as of Thursday’s close.

It then closed up 203 points yesterday to close up 3 points for the week, putting it right back where it was at the end of last week.

As of Thursday’s close, the Dow had dropped back beneath the rally’s support at its 21-day m.a. for the first time since it did so at the late April top.

Yesterday’s big rally day was enough to pop it back above the m.a., but leaves it still beneath the trend-line drawn through its previous rally peaks.

It puts the Dow roughly halfway between its April high and its early June low, frustrating for bulls who are still down since April, and bears who have given back gains from the correction.

Its enough indecision and whipsawing that few are participating, as indicated by the low trading volume. The indecision can also be seen in the latest poll of its members by the American Association of Individual Investors, which shows 30.2% bullish, 34.7% bearish, and 35.0% neutral.

Next week may break the log-jam of indecision.

Not only does the 2nd quarter earnings reporting season shift into high gear next week, but it will be a packed week of potential market-moving economic reports, including Retail Sales, Industrial Production, both the Empire State (NY) Mfg Index, and the Phila Fed’s Index, Existing Home Sales, New Housing Starts, and more. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

In addition, the Fed will be adding to the mix, with Ben Bernanke giving his semi-annual testimony before the House Financial Services Committee beginning at 10 a.m. on Wednesday, and the Fed releasing its ‘Beige Book’, providing the economic assessments of the Fed’s 12 individual regions, at 2 o’clock on Wednesday.

Might want to cinch up your seatbelt for considerable volatility after this flat week.

As of the end of the 3rd quarter last year, Wall’s Street’s estimates for 2nd quarter S&P 500 earnings this year were for an increase of 14.3%.

As the reports begin to be released, the estimates have plunged to consensus expectations of a rise of only 5.8%.

But John Authers points out in a Financial Times report this morning even that picture is skewed to the positive side by the earnings estimates for the big banks.

John points out that financial firms took big earnings write downs for bad debts last year, which will make it easy for them to show big year-over-year earnings increases this year. But what does that say for the rest of the earnings reports?

He notes that just excluding Bank of America’s expected earnings reversal from the big loss it experienced last year to settle a lawsuit, would bring the net estimates for the quarter down to an increase of only 0.3%.

And Thomson Reuters says that if the estimates for the entire financial sector were excluded the estimate for 2nd quarter S&P 500 earnings would come down to a 0.6% decline.

Wall Street had better hope it has its estimates ratcheted down enough on individual companies so it will still be able to hype those individual reports as having ‘beat Wall Street estimates’.

To read my weekend newspaper column ‘The Banking Industry/Regulations Time-Bomb!’ click here.

Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this morning’s blog, there is an in-depth Markets Signals and Recommendations update from Wednesday in the subscribers’ area of the Street Smart Report website. And the next issue of the newsletter will be out on Wednesday.

A big rally day that almost saved the week.

The Dow closed up 203 points, or 1.6%. The S&P 500 closed up 1.6%. The NYSE Composite closed up 1.6%. The Nasdaq closed up 1.5%. The Nasdaq 100 closed up 1.6%. The Russell 2000 closed up 1.4%. The DJ Transportation Avg. closed up 2.2%. The DJ Utilities Avg closed up 1.0%.

Gold closed up $23 an ounce to close at $1,588 an ounce.

Oil closed up $1.03 to $87.11 a barrel.

The U.S. dollar etf UUP closed down 0.4%.

The U.S. Treasury bond etf TLT closed down 0.3%.

European markets also closed up nicely yesterday.

The London FTSE closed up 1.0%. The German DAX closed up 2.2%. France’s CAC closed up 1.5%.

An oddity. This week the U.S. market was quite negative through Thursday, and then had a big rally day yesterday to close it not quite as negative. Last week on Saturday we noted how the market was quite positive through Thursday and then had a big down day on Friday to close it not quite so positive. So a low volatility quiet market for two weeks on a weekly basis, thanks to two straight Friday’s that reversed the week’s trend.

The blue chip averages in the U.S. closed basically flat, but the Nasdaq and Russell 2000 down, for the week.

European markets were up for the week, mostly also thanks to their big rally day yesterday.

Asian markets were down sharply for the week, after closing for the week Thursday night, and may catch up Sunday night to the upside rally on Friday in Europe and the U.S.

Once again in Europe and the U.S. very small moves for the week in spite of the daily volatility.

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Next week will be a heavy week for potential market-moving economic reports, including the first look at the housing industry in several weeks. The reports will include Retail Sales, Industrial Production, Housing Starts, Existing Home Sales, etc. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

The week will also see 2nd quarter earnings reports pile in, and Ben Bernanke’s testimony before the House Financial Services Committee.

To read my weekend newspaper column ‘The Banking Industry/Regulations Time-Bomb!’ click here.

Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this morning’s blog, there is an in-depth Markets Signals and Recommendations update from Wednesday in the subscribers’ area of the Street Smart Report website. The next issue of the newsletter will be out on Wednesday.

I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.

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