Earnings from the big name companies cannot seem to keep the markets floating any longer. By 10:00am ET, the SPDR S&P 500 ETF (NYSE:SPY) hit a high of $129.17. Since then, they have fallen all the way back to new lows of the day at $128.30. This is extremely unusual for a light volume market on a Friday and must peak ones interest. Over the last three months, the markets have floated non stop higher, especially on Fridays and even more so when the U.S. Dollar is weaker, like it is today. So what gives?
Other signals that the market is near a top are amazing earnings, being released by such companies as Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM) and Google Inc. (NASDAQ:GOOG). All three of these mega market movers reported stellar results, all of them gapped higher but only IBM held the gains for the entire day. In addition, even IBM could not push the markets higher as we have seen a stall out.
The problem here is simple. The markets are up over 20% in the last few months. Even the best earnings, perfection on all levels cannot justify the recent gains. Institutions are looking to sell for now, take profits and evaluate their positions. This is creating a market that looks much different than what was seen just a week ago. In addition, let's not forget options expiration and the sneaky institutions wanting to push some key stocks lower, to have the plethora of calls they sold expire worthless. When options expire worthless, the institution enjoys the entire premium as a pure profit.
Bottom line is, this market is acting differently these last few days. This must be watched as a top could be near.
Gareth Soloway
InTheMoneyStocks
