S&P 500 Finding Support

The market continues to look for direction in the face of the negative news related to sovereign debt issues in Greece. Tuesday's market advance came on the back of a potential resolution of the debt crisis with the EU maybe stepping in to provide some support. The downside to this is the lack of moral hazard. As noted in a recent issue of The Economist magazine,

A messy Greek default would harm almost everybody. As markets and governments know only too well, behind Greece stand others: Portugal, Ireland, Spain and even Italy, the world’s third-biggest sovereign debtor.

Back to the market. The S&P 500 Index (SPX) is attempting to find support around the 150 day moving average. The 200 day moving average is around 1,020. Since late January, the downside volume has been steadily decreasing with volume on up days staying level or trending slightly higher.

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The market does appear oversold in the short run. The percentage of S&P 500 stocks trading above their 50-day moving average has declined to 22%. At the beginning of the year, this percentage reached nearly 95%.

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Earnings reports for the 4th quarter have been coming in relatively strong. Rightfully so, the market has been focused on top line revenue results. Revenues have been coming in ahead of expectations, but still below year ago levels.