Earnings reporting season kicks off with Alcoa after the bell…

Stocks opened modestly higher this morning ahead of the much anticipated fourth quarter earnings reporting season. The Dow Jones Industrial Average (chart) opened up 20 points, the Nasdaq (chart) +6 points, the S&P 500 (chart) +3 points and the Russell 2000 (chart) +3.5 points.

Aluminum producer Alcoa (NYSE: AA) unofficially kicks off the fourth quarter earnings reporting season by issuing their quarterly earnings report after the bell. Analysts expect the company to earn a penny a share amid falling aluminum prices and industry oversupply. In the banking sector all eyes will be on global bank J.P. Morgan (NYSE: JPM) which is scheduled to report on Friday.

The first day of the trading year the S&P 500 (chart) broke above the 1280 level which certain market technicians looked at that mark as a breakout point. However, in my previous blog I eluded the need for the S&P to trade above that level for an extended period of time in order for a true breakout to be confirmed. So far we have not got that and I am afraid the bulls are going to have to be more patient to see this through.

The concern I have regarding the markets lifting much higher is if corporate earnings are not strong enough to please the markets or if companies give weak guidance. If either of the two dynamics occur, we could see a triple top on the S&P 500 (chart) and find ourselves back in this protracted 100 point or so trading range of the S&P that we have been for multiple months now. Time will tell where we end up and earnings reporting season should provide the answer. Good luck to all and have a great week.