The rally of late Thursday, and Friday seems largely based on expectation of another Fed cut coming very soon (like next week). If it happens, the rally could sustain for awhile, and probably raise the bottom up to 7700. If not, I think those gains will be given back quickly. I also don't think good earnings next week will be as important as the forward looking statement. Bad earnings, of course, will be punished severely. I guess this is nothing new, though.
Its also possible that 7400-7500 is the bottom. This is second time we've bounced off of it. Seems that fund manager are willing to deploy cash here. Question is, are they willing to deploy at 8000, 8500, etc, in order to sustain a real rally. I don't see it yet. All the same global issues still exist. This is a market for the nimble to make money. The good companies will tend to ping-pong with the market. I think longs will continue to tread water for the time being. Questionable stocks should be let go. You'll know these by the fact that they didn't rally to well on Friday. People very willing to buy DELL, MSFT, INTC, CSCO, ASND, etc. Not so willing to buy CIEN, PAIR, XYLN, FORE, NN, etc. One must seriously question why no one wants these smaller companies, which all appear SO cheap, and are all takeover candidates to boot.
Merger Monday? If you mean LU buying ASND, I don't think so. I don't see this type of mega-merger until after ASND earnings, at the earliest, and probably not until the market gets a little more solid to the upside.
Gary |
