Via Market Watch:

Goldman Sachs raised its rating on large banks to attractive Monday morning. Improved earnings, stronger balance sheets and bigger assets following a year’s worth of acquisitions at several large banks have raised some analysts’ views of the sector going into the quarterly reports. Gainers on Monday included Wells Fargo, up 1.81, or 6.9%, to 28.09; JP Morgan Chase, up 1.94, or 4.6%, to 43.80; and Capital One Financial, which increased 2.74, or 8.3%, to 35.93.

The financial sector, propelled by Goldman’s upgrade (conflict of interest, maybe?), pushed the S&P 500 up past the 1040 range, and in turn, erased most of last week’s losses. While this may seem like a huge positive and the end to the mild market correction, any unwarranted optimism may be short-lived. The S&P needs to break resistance at the 1050 level, right at or around the midpoint of the bollinger bands, in order for this market to continue its march forward:

If it fails to do so, it will most certainly test the 50-day moving average once again, and we might not get that beautiful bounce the second time around.

Another ominous sign: Keep in mind that the two trend lines, drawn connecting each peak (and trough) with one another, are converging. When the value of the index is sandwiched between the two, this usually precedes a huge market move, whether it be up or down. In my opinion, with 3rd quarter earnings fast approaching, this may not be too positive. Upside surprises in profits or revenues will be hard to come by, as estimates have been readjusted following better-than-expected numbers in the previous quarter. To put it plainly: No one is going to be surprised this time around, unless the economy has completed a full 360.