Bear Market Rally, or No?

The ticker symbols that follow the broader macroeconomic environment are showing mixed signals of bullishness and bearishness. Equity markets and the major indices like the $SPDR S&P 500 ETF (SPY.US)$ are showing bullishness due to some of the fed officials less hawkish comments last week. And generally speaking so far most earnings reports have not disappointed yet. There have been a few exceptions like $Snap Inc (SNAP.US)$. It was a bloodbath after their earnings release. It was not pretty unless you were holding shorts. This week will be the biggest week for earnings this earnings season with many of the major allocations in the S&P 500 reporting. Tuesday and Thursday more specifically will be very important with the biggest names $Microsoft (MSFT.US)$ and $Apple (AAPL.US)$reporting respectively. If there is any type of bear market rally then at this point it will all depend on earnings.
VIX is showing signs of downward movement which is good for equities. If there are some positive earnings reactions this week then investors might unload some of their short positions and bring VIX down further.

The dollar is forming a wedge formation and it appears that it wants to break out of the wedge to the downside. Possibly if we get some rally good earnings this week then we will see investors leaving the dollar and entering into more risky equities. If there is a true bear market rally then most equities will participate. Especially those big names that have taken a beating over the past few weeks like $Tesla (TSLA.US)$.

The macro market indicators are still not completely bullish at the moment. Even yields are not falling like they should for equity markets to be more bullish. So a bear market rally is not on the table yet. In my opinion the only factors that could catalyze a bear market rally at this point are solid earnings releases from the big names in $SPDR S&P 500 ETF (SPY.US)$. The Fed provided a little bullish sentiment by providing relatively less hawkish statements before going into lockdown. They are much less likely address the public until their next rate hike meeting. So there will be less Fed officials moving the intraday markets until then. Economic data world wide showed slowing PMI data Monday morning. This can be used as a leading measure of inflation. This surely added to the bullishness Monday. Jobless numbers and GDP data coming out on Thursday might move markets a bit. But I think Thursday will be mostly dominated by the earnings release from $Apple (AAPL.US)$ an d $Amazon (AMZN.US)$.

I should mention that the $SPDR Dow Jones Industrial Average Trust(DIA.US)$ looks like it is in full rally mode and the bear market rally is under way. Not so much for the $Invesco QQQ Trust (QQQ.US)$. The S&P 500 is right in the middle of the road. This shows you that investors still like the security of the value companies in the value heavy Dow Jones. Whatever the market decides to do nobody knows for sure. But this earnings week will almost undoubtedly be the catalyst in either direction.