Shakeout Before a Breakout?

That major averages were able to hold on to last week's gains was a pretty good indication that a test of the market's September highs wasn't far off. After Thursday's bullish performance -- with closes near highs in decent volume -- it raises the likelihood even more. There's a lot to like about this market at the moment. Headed into Friday, the S&P 500 was about 2% from its September 21 intraday high of 3,197. The S&P 500, meanwhile, closed 2 points underneath its September 14 intraday high of 1,474. Hopefully, more institutional money will move in from the sidelines. It's what the market needs at this point, and it was seen in spades when the Nasdaq Composite gapped up on January 2. Keep in mind that when an index or individual stock gets into position for a breakout attempt, it's not uncommon to see a brief pullback which serves to shake out the last remaining seller. Frankly, it wouldn't be a bad thing for the market at this point considering the amount of extended stocks that dot the market landscape at the moment. It would give market-leading growth stocks like ARM Holdings

a chance to catch their collective breaths after big moves. If it happens, new entry points will be seen in many cases. A better-than-expected fourth-quarter earnings season will most likely be the catalyst for additional market strength from here. Expectations certainly aren't high for earnings with S&P 500 profits only expected to be up 3% from a year ago with sales up 2%. As always, there will be plenty of bright spots in earnings season, especially from emerging leaders still in the early stages of growth. Results should be strong from LinkedIn

when it reports on or around February 7. LinkedIn joined the breakout party Thursday, clearing resistance at $117.33. Headed into today, it was still within buying range. Shares closed Thursday at $118.04, up 3.9% in strong volume. The online professional network now boasts 200 million registered users. There's a legitimate growth story going on at LinkedIn. Quarterly profit is expected to rise 50% from a year ago to $0.18 a share with sales up 66% to $278.4 million. Full-year earnings should be up 106% from 2011 to $0.72 a share. In 2013, profit is seen rising 78% to $1.28 a share. Finally, get ready for an avalanche of earnings in the financial sector in coming days. Wells Fargo

got things started today. Earnings and sales growth exceed expectations but the stock traded slightly lower in pre-market trading. Fourth-quarter profit rose 25% from a year ago to $0.91 share, $0.02 above the Thomson Reuters consensus estimate. Sales rose 6% to $21.9 billion, well ahead of the consensus estimate of $21.3 billion. Wells Fargo cleared a bullish cup-with-handle pattern Thursday, rising 2% to $35.40 in good volume. Next week, watch for earnings from Goldman Sachs

, J.P. Morgan Chase & Company

, Bank of America

and Citigroup

.