The test of the rally has begun and the guidance from the next few weeks of US corporate earnings reports will answer the question: Has this been a bear market rally? There has to be profit-takers who will lead the market down and could lead the charge to buy if the guidance comes in more positive than the consensus is currently pointing to.
The previous low to watch on the S&P 500 is 666, and as you can see we are a long way from this level. If the market goes down but turns around before the low level, then it could be argued we are in the bottoming process.
Yesterday a US banking analyst put the mockers on US banks for window dressing and today the IMF is said to reveal that toxic assets between banks and insurers will hit $4 trillion! However, other analysts think US banks will surprise on the positive side when they report.
Locally, we get the latest Consumer Sentiment report, which should be insightful, followed by the latest unemployment numbers on Thursday.
Not surprisingly the Oz dollar, which tends to track the ups and downs of Wall Street, is down to 71.12 US cents.
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