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BILL, Earnings have started pouring in and will continue to do so in the next two weeks. The majority of the "big six" (INTC, MSFT, IBM, GE, CPQ AND DELL)will find a way to match or beat street expectations (GE and CPQ already in (2 for 2)). One theory which is very plausible is that if the earnings come in, this should provide another leg up for the market. And you can come up with many reasons until your blue in the face why this is true. As a sidenote, even as the unfolding of events takes place, there will still be stocks to trade higher as the market begins to turn (INTC about to pull another mix of CPQ and PG (buy the rumor prior to the report and sell into the news (before or after depending on how brave you are) and ("play the pre-split game"). IMHO,it is this "increased level of expectation of a continuation to beat or match the #'s" that will propell the winds of change to a market correction of potentially 15% to 20% very dramatically from current levels. Am I early in this assessment. Absolutely. But I would rather speak now and be early before its too late and all the "hindsight is 20-20 experts say "oh, but the signs were all there" mumbo-jumbo. Problem is, at that point it may or may not be too late and the pain thresh-hold will be challenged to the 'nth degree. Below is a brush-stroke of the reasons why the time is now at hand:....... 1)Earnings are a "lagging indicator" and do not factor in future plans for growth, revenues, margin expansion or incressing pricing pressures in an ever competitive environment. 2)Computer price-war has now commenced with CPQ announcing lower desktop PC's to the tune of almost 20%. HWP has already responded w/equivalent reductions and IBM, DELL and DEC plan to follow suit next week. This will lead to pricing pressures, net margin reductions and problems in future stock prices of these "bigs" in the immediate future. 3) Drug and Bank stocks have pulled back from their recent parobolic upside blow-off from recent strong advances and need to hold at these support levels for any continued rally. Their have been pockets of recent strength (WLA) and weakness (WFC) in this micro-dichotomy. Needs to be monitored very closely. Please forgive me for this lengthy piece, and thanks for your patience as I continue next post. JT |
