David Moenning's Daily State of the Markets: 7/16 Jul 16, 2009 09:50AM

Upside Surprise

Up until three days ago, the bears had investors convinced that something on the charts called a head-and-shoulders formation along with a whole bunch of worry about the economy spelled doom and gloom for the stock market. However, after a couple of upside surprises on the earnings front and some economic data that clearly shows improvement, the Dow and S&P are back to within spitting distance of their June highs while the NASDAQ actually finished at a new cycle-high on Wednesday.

Earnings from Intel (INTC) got most of the credit for yesterday’s melt-up, which took the indices up 3% or more across the board. The world’s leading chip manufacturer reported a pre-EC fine of $0.18, which was a heck of a lot better than the Reuters estimates of $0.08. It is worth noting that the sequential increase in the Q2 earnings was the best since 1988. Traders also ...