After four straight weak closes it makes sense for the market to switch things up and give us a strong finish on Friday afternoon. The market beast always does its best to confound market players and a strong close after a series of intraday reversals and poor action is a good way to do that.
We had a very high level of nervousness all week as we reacted to the struggles in Europe and the political battle over the debt ceiling. We have been highly sensitized to macro matters lately and that has made for some very choppy action.
The good news is that GOOG kicked off earnings season with a very good report which should help to turn the focus back to individual stock picking as the news rolls in over the next couple weeks. We still have the potential for some landmines to hit as the European sovereign debt issues continue to go unresolved.
Sooner or later we are going to see some sort of deal on the US debt ceiling, but it is likely to go down to the wire and there will be many scare tactics and predictions of doom that may spook the market. The market has had a rather sanguine response to the moves by the rating agencies this week and that is because most market players think a deal will eventually be done.
For the next couple weeks, earnings will dominate the action.