INETS- TECHs - OUT = Commodities IN ????
WALL ST WEEK AHEAD - Can bulls climb earnings peak?
Sunday April 18
By Jennifer Shaw
NEW YORK, April 18 (Reuters) - The U.S. bull market will attempt to scale
the peak of the first-quarter earnings season even as investors seek to
reestablish their balance after a choppy week of trading.
Markets were unsettled last week as a ''sector rotation'' saw investors
back away from the technology and growth stocks that drove stocks' upward
climb and into the economically sensitive arena of cyclical issues such as
heavy machinery, paper and commodity-based issues.
How that rotation plays out, either as the next leg of a bull run or
perhaps the start of a correction, will be a key focus.
''Earnings will be the No. 1 concern, but No. 2 will be the market
itself,'' said Hugh Johnson, chief investment officer at First Albany
Corp.
''The big question that will face the markets next week is the
follow-through. Will the market successfully shift to stocks that are
overvalued to stocks that are arguably undervalued?'' Johnson said.
Certain market indicators, like the ratio of advancing to declining stocks,
improved last week even as major averages paused. While analysts had
fretted over how few stocks were participating in the rally in weeks past,
not all were convinced the broadening would by itself spark new gains.
''Market technicians had been pulling their hair out because of the
narrowness of the rally,'' said Scott Bleier, chief investment strategist
at Prime Charter Ltd. ''Now the market is broadening out but without the
market heading to new highs.''
''That is a sign of a pending near-term top,'' Bleier said. ''It suggests
we're faced with a sideways market through the summer months with more of
this furious rotation and volatility.''
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