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We're not getting back to all-time highs any time soon: trader

Keith Bliss

By Keith Bliss, Cuttone & Co.

Another heavy week of earnings is upon us as volumes continue to dry up

The first-quarter earnings parade will continue this week with several hundred companies coming up, including highly-watched new economy names such as Alibaba (BABA), GoPro (GPRO), and Tesla (TSLA), as well as old stalwarts such as Pfizer (PFE), CBS (CBS), and Merck (MRK).

Tech (XLK) was battered last week with many of the bell weathers reporting a mediocre to down quarter. Facebook (FB) and Amazon (AMZN) were saviors, but not enough to save the Nasdaq Composite (^IXIC) from shedding 3% in last week’s trade. 

Will we see a better performance from the tech sector this week? We probably won't be able to answer that until Wednesday, when Priceline (PCLN), Zynga (ZNGA), and the aforementioned Tesla report. One thing we know for sure: Given the dominance of tech in the broader market, any hopes of getting back to all-time highs in the short-run are now gone.

Market posture and the week ahead

Coincident to the reporting overload is a market that has suddenly gone very quiet with volumes hitting yearly lows and the indexes stalling as a result. It certainly feels like market participants are waiting for the next shoe to drop on the downside. They are getting antsy—and defensive—about the future.

Asset flows from last week support that notion, as utilities (XLU) garnered the biggest relative inflow and tech took the prize for the greatest outflows. Over the last three months, energy (XLE) (the best performing sector YTD) has acquired the greatest inflow and financials (XLF) have lost the most.

This is a market that is worried about growth and has determined that a low-interest environment is here for through the end of 2016 at least. Meanwhile, the broader indexes have traded into a narrow, neutral range, which is leaving all of us guessing about direction at this time.

For this week, the same rules apply: Companies that beat Wall Street estimates on the top and bottom will rally. Those that don’t will sell off. It’s that simple.