Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Stock Market Commentary 7-16-2009 Manipulation?
All the indexes put in major advances Wednesday, and in every case, the gains broke through prior technical lines of resistance. The up/down ratio reached the 10 to 1 level which indicates a longer-term uptrend. The volume also confirmed a follow-thru. This should mean stocks are a buy, if the economy returns to its old growth rate.
Market sentiment swings like a pendulum. When the DOW was at 14000 the pendulum had swung to the extreme right. As the market corrected, the pendulum also corrected. By design, the pendulum did not stop when it reached the middle, but continued to over correct to the similar extreme to the left. That was the 6500 level. Now, the pendulum is in the middle (neutral), along with the DOW at 8500 (neutral). Trading should oscillate back and forth around the 8500 mean.
The problem with buying after the run-up of the last three days is you are late to the party, and will probably be losing money before the end of next week.
That is why this rally smells of manipulation. The market makers have been filling the other side of the trade for the last four weeks. They are choking on inventory from higher levels, and need this reversal to make money. After options expire on Friday, they can start with a clean slate next week, and the market will have a new four week option period, and another three months before the third quarter earnings.
To invest in stocks this early in the earnings season, is a crapshoot. We do not have enough earnings announced at this time to quantify any target for the near term.
The earnings released, and the future projections have been all over the place.
For instance, we all know INTC was very good, but was still lower than the year ago quarter. Their conference call indicated the strength was on the business side, and that the consumer side was weak and looked weak for the next year or two.
DELL warned its earnings and revenues were weak.
GS had strong numbers, geat for financials, but Fedex and YUM brands are seeing continued weakness, bad for the consumer.
GOOG is expecting weaker revenues.
Even CSX, the railroad, reported earnings that “beat the street, but were still more than 20% lower than last year“. They must have lowered earnings by half.
No rally goes straight to the moon; there will be pullbacks and opportunities to enter trades at cheaper prices.
Be patient.
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