Short-Term Key: Neutral Long-Term Key: -16 (Neutral)

 

Last week's 512 point gain on the Dow managed to wipe out the losses from the previous week, returning the market to the trading range it's been mired in since last September and assuaging fears of a bigger sell-off ... for now.

 

But before we breathe too big a sigh of relief, let's keep in mind that the market will probably take its short-term cue from corporate earnings, the most recent reports of which will start to come in this week. Expectations are high this time around, with most analysts predicting the S&P's overall earnings will be 33% higher than last year.

 

That's a pretty tough bar to hit. With many of the economic statistics still lackluster, we wouldn't be surprised if earnings fall short of expectations. If so, it means a downward bias to stock prices could emerge for the next few weeks. We don't expect a big correction, but neither do we expect a bullish leg up.

 

In addition, small cap stocks have begun to lag their large cap cousins.