The Big Fundamental Question

On a morning where Tim Duncan, (or, as Shaq nicknamed him, "The Big Fundamental") is retiring, it is interesting to see stocks make new all-time highs on the S&P 500 Index even as plenty of well-versed market pundits note we remain in the midst of an "earnings recession."

The market can often be seen as a forward discounting mechanism, which means the bull read here is that the earnings recession has already been sufficiently discounted. Moreover, the market, in its infinite wisdom, is now peering into the future and sees a sound recovery in corporate earnings. However, at inflection points the market can be deceptive, such as October 2007. 

In reality, all we can do is trade the actual market before our eyes, since we yet have sufficient evidence of a head-fake on these new highs. 

Software continues to be a very hot sector not just for tech plays, but in the market as a whole. We have catalogued several intriguing setups in the sector. 

And when we look at a multi-year chart for BroadSoft, below on the monthly timeframe, the Maryland-based global communications software firm may not have even started its move up and out of a five-year dead money basing period. 

Alcoa kicks off a new earnings season tonight, which should shed some light on the big fundamental question. But in terms of technicals we know where to look, in terms of the most attractive and deep sectors in the market--Software and a few others we have discussed and updated regularly for Members.