Stocks continued last week to seek some firmer footing, as prices found some support and volatility hit some resistance, and a flight to safety of global capital benefited long-term Treasury bonds -- the very assets that are supposed to be selling off in a secular “Great Rotation” into equities.

This week could be very telling in what to expect from the markets in the first quarter and the rest of 2014 as a number of important companies report Q4 and 2013 year-end earnings. Today brought in some stock moving releases from Caterpillar Inc. (CAT), Apple Inc. (AAPL), Seagate Technology (STX).

CAT reported better-than-expected earnings before the market opened along with a $10 billion buyback program. 

There is no sugar-coating what happened to stocks on Friday. All around the world, stocks really took it on the chin as the usual support mechanisms that bulls have enjoyed failed to materialize. The S&P 500 sliced through firm support at 1800 on high volume like it wasn’t even there. But market participants had become convinced that a long-overdue correction was imminent, so they quite simply were looking for a reason to sell.

David Brown is on a speaking tour on behalf of  the Baker's Dozen Unit Investment Trust (UIT).  Publication of "What the Market Wants" will resume next week.

Stocks continue to trade in a sideways technical consolidation just below their highs. With the start of earnings season underway, investors appear to be looking for a catalyst for some renewed buying that can launch a bullish breakout.

The first full week of the New Year was uneventful. There seems to be some trepidation among U.S. equity investors after such a strong finish to 2013. On Friday, the jobs report was disappointing, but investors quickly shook it off as nothing more than an anomaly given the prior trends and closed the week on a high note. Among the business sectors, the big winner last week was Healthcare, but Technology also showed signs of life.

Despite a positive Factory Orders report of 1.8% compared to an expected 1.6% and last month’s drop of 0.5%, the market opened up briefly; however, light volume gave way to selling pressure caused by a slightly negative ISM Services Report of 53.0, less than last month’s 53.9 and an expected 54.8 reading. All major markets closed slightly lower, making for the third consecutive low-volume, negative market day to open 2014. 

With plenty of wind in their sails, bulls coasted comfortably into year-end to close out 2013 with a stellar performance, as Santa made his widely-expected appearance on Wall Street. In fact, stocks saw one of their best years ever and the strongest since 1997, with the S&P 500 boasting a total return around 30% while closing the year right at its all-time high.

Well, Fed Chairman Bernanke has proved me wrong by dipping his toe into the dreaded tapering of QE3. In retrospect, I suppose he preferred to take this first step on his own rather than put the onus (and any associated fallout) on the back on his successor.

Backed by positive economic announcements from the Empire Manufacturing Index and Industrial Production, along with much improved growth from Europe, the market broke its string of four losing sessions with the S&P gaining 0.6% and the recently weak Russell 2000 up a sturdy 1.2%. Virtually all sectors did well, led by Energy, Industrials and Financials.  Energy was up by more than 1%.