The Bulls have a slight advantage over the Bears going into trading next week. Ultimately though, I think SPY and the other major indices will be range bound as we move through earnings season.
With the Federal Reserve no longer spiking the punch bowl, and the big slowdown in the U.S. economy caused by the end of QE, traders are going to be focused on fundamentals like earnings.
Earnings are expected to decline by the most since Q1 2009 as the U.S. economy slows. The Fed and other market cheerleaders continue to predict a robust rebound in economic activity in the second half of 2015. Beyond reading tea-leaves, there is no sound logical reason for this optimism in my opinion. Low gas prices? What a lie that was. Gas prices began falling about a year ago and yet we still have not seen an improvement in consumer spending.
The Bulls have a slight advantage over Bears but I think markets will continue to be range bound as traders stay cautious as they digest the negative effect of a rising U.S. dollar on corporate earnings next week.