Market Update – stocks spent most of the day in the red but rallied into the bell as a trio of headlines hit the tape in the last 20 min of trading

Market Update – stocks spent most of the day in the red but rallied into the bell as a trio of headlines hit the tape in the last 20 min of trading: 1) the SEC said it would make a major announcement Thurs afternoon (@ 4:45pmET), which people took to mean would involve a settlement w/Goldman (after the close, CNBC reported that a settlement had in fact been reached and the NYT said GS would pay ~$550MM, which is less than St expectations of $1B+); 2) BP commenced testing of its new well head containment cap and managed to stem all the flow into the Gulf – BP said it wasn’t clear if this would continue once the testing was over, but said it was “very encouraged” w/the preliminary results; 3) Bloomberg reported (citing sources) that Apple wouldn’t be announcing a product recall during its press event tomorrow.  Also this afternoon – the Senate officially passed fin reg reform, an action that was widely anticipated, but one that does remove an overhang for financials.  For the day up until 3:30pmET (when the SEC news first crossed the tape), equities were taking a breather following the very robust rally that really kicked off back on Jul 1 (when we traded down to and bounced from 1010); some soft eco readings (the Jul Empire and Philadelphia surveys, along w/the China GDP), along w/some less-than-stellar earnings, prompted profit taking early in the day; however, the tone of the tape remains much improved vs. a couple weeks back.  There has been a lot of focus in the last few days over how strong earnings (i.e. results coming in ahead of St print expectations) are being met w/selling pressure (INTC, CSX, AA, MAR, LSTR, etc); however, this has to be considered in the context of the last 1.5 wks (STT/Samsung’s earnings preannouncements on Jul 7 caused the tape to rally and set the bar high for subsequent reports out this week).  Technically, we are running into some difficult resistance areas (the 50day, which stands at 1092; 1100; the upper-end of the months-long trading range of 1110-1120; and the 200day MA @ 1112), which is preventing people from chasing stocks on the upside (we bounced today at 1079-1080, which is support).  On the desk today, there was some profit taking earlier, but the selling pressure wasn’t aggressive and large shorts haven’t been that active in laying out exposure.  Dips are being viewed as a buying opportunity.  As we head through earnings, the risks are still viewed as being skewed to the upside.