Watching Earnings, Oil

The pre-earnings optimism rally is kicking in, which is going to set up some very interesting dynamics when the reports roll out next week. What is particularly interesting is that the internals are weak.

Breadth was flat on the Nasdaq, and negative on the NYSE, although the senior indices were in the green and small-cap indices were flat. A narrow rally into significant news is a situation that can turn quickly, unless the news turns out to be better than expected.

Oil continued its stunning free fall and continues to do little to support the market, as would seem to be the logical course of events. After all, lower oil helps the consumer and reduces inflationary pressures.

So far, the fall in crude has done little to support the market, and next week we are forecast to have the first really cold weather of the winter. I'm watching the energy group closely in the next few days for trade opportunities.

Genentech (DNA) earnings after the close tonight came in better than expected, with good guidance. The stock is trading up on the news and it will be interesting to see how it acts tomorrow. Alcoa (AA), which reported good numbers last night, traded well today and that is a good sign for the bulls.

Have a good evening. I'll see you tomorrow.

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James "Rev Shark" DePorre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. He also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children.Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.