As earnings season begins once again, JP Morgan’s (JPM) earnings report allowed markets, and banks overall, to launch a rally boosting indexes. Once again earnings beat lowered expectations which is the game most analysts play every quarter. This allowed for the headline beat bulls love and also allowed financials (XLF) and banks (KBE) to rally.

J.P. Morgan Investors Relieved Despite Slip in Profit (WSJ)

Banks Lead Rally in Stocks (WSJ)

Despite the previous high correlations between oil (USO) and the S&P (SPY) that didn’t hold true on Wednesday as oil prices fell (on higher supply) but stocks rallied. “Risk on” was the overall mood this day as most safe-haven plays (GLD, XLU, IYR, XLP) and so forth were weak.

Weak economic data was ignored once again as the mantra “Bad News is Good” remains to keep low interest rates fixed for a lengthy period. That news featured a decline in Retail Sales (-0.2%), PPI (-0.1%) and Business Inventories (-0.1%). Attention overall was focused on better exports from China surged to 11% which might be the joke of the day. Most data from the country is believed to be a fiction from the country’s leadership.

Away from all this led to positive feelings as Facebook (FB) weakened but was ignored once again, as ad revenues fell a stunning 18%.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume was quite light on this price ramp while breadth per the WSJ was positive.

Chart Of The Day

Light volume shows a lack of participation. The last few months on the other hand have seen massive distribution. So where is everybody? In cash probably despite the low yields since the markets are now in the hands of trading algos which is a turn off for many.

Thursday still doesn’t see much economic data that bulls can ignore but more earnings news will be featured. Friday is the day with the most economic data.

Let’s see what happens.