E-Mini S&P500 ( ES )-SOLD 1092.25 at 8:25pm

Most likely scenario will be several Doji in the Daily Chart before the breakdown.

Earnings releases are now flooding in, and market observers note an interesting pattern that has developed over the past few sessions: A number of very positive earnings releases have been met with a 'sell-the-news' reaction by investors. Case in point, after the close today, IBM reported highly positive earnings and boosted its outlook but its stock sold off roughly 4%. Earlier in the day, Goldman Sachs (which reported large gains from its bond trading operations) had suffered a similar fate, with its shares trading down roughly 2% today. Staying with the financials, Citigroup saw its stock decline by 5% today, after reporting billions of dollars in failed loans. Finally, a reminder that we are still in recessionary times: Safeway reported a decline in third-quarter profits of 35%, attributable to frugal shoppers and to falling grocery prices.

The fact that even stellar earnings releases are being sold down (at least in after-hours trading), is perhaps not all that surprising, with the S&P 500 up on eight out of nine sessions and making new highs for 2009 on an almost day to day basis this month. In such an environment, profit-taking is becoming very enticing. Intel, which reported surprisingly strong results several days ago, also saw a sell-down shortly after its earnings release.

Google was an exception, with its stock rallying in after-hours trading following that company's earnings release today; it featured the 11-year-old company's largest profit ever. Early on Friday, more key earnings releases will follow, for example from Bank of America, and from General Electric.

Economic news releases are currently taking a backseat to earnings releases. Today's data featured a 0.2% increase in consumer prices in September as well as in core consumer (CPI) prices. Initial jobless claims for the week ending October 10 were slightly below consensus, down 10,000 from the previous week. Continuing claims also came in slightly better than expected, dipping below 6 million for the first time since March. Finally, the Empire State Manufacturing Index for October was reported to be at 34.57 (consensus estimate: 17.25), and the Philadelphia Fed Index for October came in at 11.5 (roughly in-line with expectations). The Philadelphia Fed index has now produced three consecutive positive readings, a first in approximately two years.