We are in the thick of earnings season, and so far the general trend has been as anticipated: modest if any top-line growth and more earnings beats than misses (albeit versus a low bar). But forward guidance has been the big decider on how the stock trades post-earnings, and the message has been decidedly mixed, as many companies have had to reduce guidance or otherwise failed to make the grade in other important growth metrics.

Small caps, mid-caps, Financials, Telecom, and Consumer Discretionary were among the market segments that hit new highs this week, even as bearish sentiment and short interest have risen, and there is still plenty of idle cash on the sidelines looking for a home.

Earnings season is now officially underway, but the Fed is still holding the limelight, as traders anxiously awaited on Wednesday the FOMC minutes from the June 18/19 meeting. Although several members are pushing to begin tapering off this fall on asset purchases (bonds and mortgage-backed securities), which spooked the markets, in fact it now appears that the controlling opinion is that the U.S.

I suspect there is no greater example of “summer doldrums” than the week surrounding the Fourth of July, especially when the holiday falls mid-week. From my standpoint, I certainly have received my share of “out of office” auto-responses on emails. For bullish investors, this is usually a time for caution, as any apparently dominant psychology of the market can be misleading. For bearish traders, it’s hard to get much momentum going.

The world has been watching every peep, sniffle, or innuendo associated with any voting member of the FOMC. What is the future of the latest in their ongoing market manipulation, in which money is printed to buy bonds to hold down interest rates, spur corporate borrowing, and artificially inflate stocks? Lately, that’s all investors have cared about.

Stock investors are protecting gains and holding off on deploying cash as concerns abound about central banks, including the Federal Reserve, tapering off on their stimulus programs, i.e., money printing. Low-interest policies and quantitative easing have been the driving force for economic recovery while pushing return-hungry investors into equities by default.

Here in Santa Barbara, we refer to the annual summer ritual of heavy marine layer engulfing the coastline for much of the day as the “June gloom.” It can be frustrating to beach-going visitors since there are otherwise no clouds, and the inland areas are brilliantly sunny.

The market went through some gyrations on Wednesday in reaction to Fed Chairman Bernanke’s testimony before the Joint Economic Committee. He first defended continued quant easing by warning, “A premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.” Stocks dutifully rallied and all major indexes hit new intraday highs.

It seems that every Tuesday in 2013 since January 8 has been positive on the Dow. And this past Tuesday was no exception. Now that sounds like a trend to put money on -- buy the SPDR Dow Jones Industrial Average ETF (DIA) at the close each Monday and close out the position late on Tuesday.

The S&P 500 is up 14.5% year-to-date through Wednesday, and the defensive sectors like healthcare, consumer staples, and utilities have done even better. But so far in May, the leaders have been industrials, consumer discretionary, energy, materials, financial, and technology.