Can Bulls Stampede Over Debt Ceiling Debate and Fiscal Cliff 2?

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Earnings reports will focus on Bank of America, Citigroup and American Express as the financial sector (NYSEARCA:XLF) earnings parade continues.

Most analysts say that earnings reports should be generally well received as expectations have been significantly lowered ahead of this quarter’s earnings season.

Overseas, Europe remains mired in recession as German GDP was forecast to decline and the World Bank yesterday reduced growth forecasts for the developed world.  However, the financial crisis appears to have stabilized for now as Spanish 10 year bond yields are in the 5% region, well below the recent, red hot 7% level that is the zone where bailouts come into play.

Bottom line: U.S. ETFs and stock indexes continue to tread water as earnings roll out and the debt ceiling debate and “Fiscal Cliff 2″ approach.  Technical levels are in play, and a break above the current 1470 on the S&P 500 (NYSEARCA:SPY) could trigger a quick rally to 1550-1570.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.

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