On Wednesday the Federal Reserve announced that it plans to keep its short term interest rate target at zero through 2014—nearly three more years. The stock market liked that news, but blue chip American stocks gave back some of those gains today. In contrast, European equity ETFs have risen for the past two days. Our models remain bullish. I view this as good news for stocks for the next few months. However, stock and bond investors would do better over the next three years if the Fed allowed interest rates to rise.

On Thursday morning, the company announced disappointing earnings and lowered its guidance. The shares were trading lower in the pre-market hours, but POT was higher by early morning. If you're bearish, you can't like that reaction.

U.S. stock futures pointed to slightly higher start for Wall Street on Friday as investors focused onearnings to come from Ford Motor Co. and Procter & Gamble Co., along with fourth-quarter growth data and a key gauge of consumer sentiment.

Today, we have seen 3M beat estimates and reaffirm its outlook. Raytheon beat estimates and delivered a better profit than a year ago, but on a 6% decline in revenue. The big boy of the day, Caterpillar, not only beat estimates, it upped its guidance and projected “another good year of growth”.

ETF Model Portfolio: Current Holdings 1/27/12 1) Schwab Inv MF 2) PEY 3) DHS 4) DLN 5) IOO 6) PID

This morning AMGN announced that they are buying MITI for $11 per share, or about a 50% premium to yesterday's close. MITI is developing cancer drugs for leukemia and solid tumors. Also CELG is buying privately held Avila for $350 million. Avila is also developing cancer drugs.

The shares are already up 20.7% this calendar year, and the technical outlook is promising. OPEN has rallied above the $45 area, which previously acted as resistance back in December. It looks like this region will now serve as support for a move higher.

U.S. stock futures rose Thursday, as investors mulled a prior-day low-rate pledge by the U.S. Federal Reserve and awaited data including weekly jobless claims and durable goods orders. Earnings from Caterpillar Inc., AT&T Inc. and others were also in focus.

Recently, knowing how market bottoms have formed has been key. We know, for instance, that market bottoms are a process, not an event; you will almost always see multiple re-tests, shakeouts and sideways periods after a huge selling wave. The reason is simple—it takes time for investor psychology to change, which shows up in the charts via choppy action in the indexes, and base-building action among individual stocks.