Good Morning, Traders. Split day yesterday which left the "top line" figures divergent with some minor gain in the Dow and S&P and a small loss in the Nasdaq. Market just felt like it was waiting on Alcoa all day to officially kick off earnings season for Q1. After the bell, the aluminum behomoth reported that profits more than doubled, on revenues that were ahead by 16%. Not bad. The question is how the market will react. Over the past couple of years, we have seen an increasing disconnect between news and broad market activity. Gold and oil going through roof and stocks stay resilient. Rates rising and stocks stay resilient. Etc, etc. etc. So this coming earnings season which will start in earnest this morning is extremely important due to where the markets are at this juncture. Remember that earnings and more importantly the hope of subsequent quarter by quarter increases in said earnings are the number one catalyst that move equities. So, what we want to do at this juncture is watch closely over the next few weeks to see what the quality of earnings is. If we see good numbers and the market moves sideways or down, then we can surely expect a lower market by the end of spring/early summer. Today will be the first litmus test. At the time of this writing AA was 35.10 (up 2.34) in Monday's aftermarket and the last tick on the SPY was 129.77, up 16 cents over Monday's close. As astute traders know, what happens in the real market is often very different from the action in the pre or post market. As you can see from the snapshot below, it will be very interesting to see if indeed positive earnings news takes the S&P away from this current pivot point at prior highs and lows as illustrated by the blue circled areas. Friday's violent selloff which was followed by yesterday's sideways move would indicate that the pivotal area will not hold but that remains to be seen. If the technicals trump the fundamentals and sellers dominate today then we won't have any support on the S&P below us until the trendline at 1287. We have mentioned this area before due to the 50ma (red) support which also resides in this area. Overall bias remains upward with near-term bias sideways to down as we head into earnings season which is a time that more caution should be given to new entries. Always check earnings calendars first before putting on new positions. Trying to jump the gun anticipating a strong announcement is usually not a good idea. You miss nothing waiting for the first pullback if the stock breaks out post earnings on huge volume.

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.