Catalyst for rally might be a stronger than expected employment report coming on the heels of end of warnings
Updated: 03-Jul-01
General Commentary
One word to describe Tuesday's holiday-shortened session - quiet... As we expected, Nasdaq opened the session on a weak note due to a barrage of pre-open earnings warnings... Decline never gained much momentum, however, as selling was generally confined to the software group... Encouraged by the relative resilience of the chip and networking stocks, and by fact that first support in the 2120 area held, buyers tentatively stepped back in... The result being a very modest, single-digit loss.
We hate to sound like a broken record, but market's ability to shrug off earnings warnings should be viewed by investors as an intermediate- to long-term positive... Shows that the indices have discounted much of the bad news already in the market... Given favorable rate backdrop, declining energy prices, bullish tape action and boatloads of cash sitting on the sidelines, this is a market straining to break out to the upside... At this point what's needed is a catalyst.
Maybe it will come from this week's employment data... A stronger than expected report, on the heels of the NAPM data, could get more investors thinking that the economy has bottomed, and that the numbers going forward will show improvement... Data will be received just prior to the news cycle on earnings turning from negative to positive... Combination, if it occurs, likely to trigger a run at the May recovery high of 2328.
Clouded earnings/economic picture suggests that any such move will be littered with occasional pothole... But if we are correct and sentiment remains bullish, then dips will be perceived as buying opportunities.
HAVE A HAPPY & SAFE 4TH!
Robert Walberg |
