• Market approaching short term high
• Focus will shift to earnings and guidance
• Look for more take overs and stock buy backs

The market continues to follow my script (see previous three Bull Bear Reviews), as it has broken to new all time highs on the Dow Industrial and S&P 500 averages and to a new 52-week high on the NASDAQ composite. The S&P 500 is at the low end of my upside target, 1,566 to 1,600, and it’s extended in price and will likely make a short term high sometime between today and next Tuesday (October 16). Following this high look for a two- to four-percent correction down through the end of October. The extent and degree of this correction will give some indication to the amount of upside to expect in November and December.

Third quarter earnings season started this week. Market participants will likely change their focus from economic numbers to the health, or lack there of, of corporate America. Expectations are low so I look for the majority of the earnings “surprises” to be to the upside.

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Posted by Michael Chapman at 12:00 PM PDT