INDEX UPDATE
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Not that Im a fundamentalist - sure the economy is good and we are still in a longer trend bull market, but here are some of the negatives:
1) 1st Call indicated that that the S&P growth was reduced to 3.7%. Correct me if I worded that wrong. Earnings are definitely dropping.
2) Interest rates just crossed 6%. If they go higher - simply more negativity to the market
3) Liquidity - heard for the last week or so that the inflows into the mutual funds have declined, and were less than same time period last year. If that is correct, tie that with stock prices being about 15-20% higher than last year same period.
4) The Asian issue is far from over. This is speculation, but what if China joins the mix, or Russia. From my contacts in China, its not that rosey over there.
Is the economy that good that the market will continue to discount the above and other factors.
Now from a technical standpoint, and the basic theory to my GUITAR, the stronger the guitar string is plucked that greater the oscillation in the opposite direction. Yes it is only a theory, but has had a fair rate of success.
The next support line for the DOW is 8200-8300, and hope it holds. I am suspecting that we will start to range trade, and for now I am calculating 8000-8600 as the extremes, for the time being.
What I feel will happen now is that the DOW will approach 8200-8300 range prior to MAR expiration, then attempt a rebound at the end of MAR/early April. As the earnings comes out, that will determine if we can continue up. If the earnings are bad we may see 7500 again or lower. A correction of 1000 points is not impossible - it happened in OCT.
I hope someone else heard the comments from the guy from 1st Call, today who indicated that the adjusted earnings for the semi's were actually for negative growth. Hope someone can confirm that. I believe that the SOX is the 2nd largest NAZ sector behind the NDX. It will be very hard for the NAZ to set new highs again without some help from the SOX. This may be the highs for the NAZ until the 3rd/4th quarter. And for the DOW to hit 9000-10000 without the NAZ setting new highs will also be very difficult.
I am not a doom and gloom guy, but I can remember when I first got into the market in 1996 and that summer when good companies were reporting good/better numbers and they were still going down. Knock on wood - please dont say that it cant happen again.
Just trying to be realistic. I will still play both sides of the market for the time being. |
