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The S&P 500 is still struggling to turn positive YTD as battles with resistance at 3,230, so the index remains mostly in a consolidation phase, according to Randy Frederick from Charles Schwab.

Key quotes

“From a growth standpoint, Q2 EPS is -10.5% y/o/y; Q2 revenue is -11.6% y/o/y. This compares to -8.1% and +0.9% respectively in Q1. As of the end of Q2, the consensus estimate was that earnings growth would be -44% relative to Q2 2019.”

“While earnings season beat rates have been quite strong thus far (mostly due to lowered expectations) earnings and revenue growth are still quite negative. Other than the massive amounts of liquidity that have been thrown into the economy due to the various monetary and fiscal programs, there are few reasons for optimism. And with no deal yet in Congress to replace the expiring enhanced unemployment benefits, that too may be ending soon.”

“With resistance at 3,230, the S&P 500 continues to struggle to go positive YTD, even as the Nasdaq Composite (COMPX) is now up more than 18% YTD. With plenty of weak economic reports still coming in and little progress being made to contain the virus, I do not currently see a catalyst for an upside breakout.”