What a great showing for the bulls this week. As more earnings reports came in, they seemed to reaffirm that the end of the world is not at hand. Even with poor earnings from the financials, we're seeing recoveries (as in Merrill Lynch and Citigroup). Most impressive was GOOG, which basically destroyed any bearish thesis by proving that they were not suffering from a slowdown in paid clicks. Yesterday I told a friend when GOOG was at 501 that it could rally 100 points today, and it almost did. Next stop on the upside is in the 560 area.
Next up is BIDU's earnings report next week. The gap between BIDU and GOOG closed to an all time low yesterday, with BIDU at 327 and GOOG in the 440's. Today we are back at a 200 point gap. I still think we're going to see a closure, but not this week as expected. Earnings season continues in full force the next few weeks, we'll continue to see a lot of volatility. Have a great weekend.
Friday, April 18, 2008
Friday, April 11, 2008
GE earnings pulling us down
As mentioned before, no matter how well the market behaves, bad earnings and guidance will drag us lower, and currently the dow is down nearly 200 points on GE's earnings miss/guidance. Next week we have many more reports coming in and quite frankly I don't think they are going to be pretty. Maybe we'll price them in today, but long term I don't see a solid bottom here.
Tuesday, April 8, 2008
Market Consolidation
Looks like over the past few days, the market has been consolidating its gains. This is quite normal considering how volatile the environment has been.
Things to be aware of
1. Oil continues to go higher
2. Wamu raises 7 billion to remain above its required reserve ratio - Moody's upgrades outlook to "stable", for now.
3. Solar is still hot - FSLR just hit a new high yesterday of about 291+
4. BIDU continues to gain on GOOG
Earnings season comes in full swing in the next couple of weeks. I think the we've been in a holding period until we have more indications. If we find that companies reporting less than expected numbers continue to rally higher, it will be a great sign for the market. I expect that we'll see a large move in the market soon, due to the recent limited volatility. Short term, it looks like we want to go higher, but it's important to maintain a balanced perspective.
Personally I continue to be wary of any positive momentum we see here, however. Our financial system remains caught in a liquidity crisis, and I don't believe that recent moves by the Fed can truly repair the damage so quickly (repercussions will follow). Credit has been and will continue to be the lifeblood of today's economy - the rapid loss of credit continues to bear down on every segment of society. Although we're holding up pretty well, the data continues to be bad. Remember that stocks are moved by earnings and guidance. No matter how oversold we might be and no matter how "calm" things seem, bad earnings and guidance WILL drag the market down. What we're seeing here could be a flushing out of short sellers (as an anecdote, I'm seeing that a few unshortable stocks have become shortable, which means supply is back). Markets never bottom out because of short sellers, they bottom out because people truly give up on stocks. I haven't felt any sentiment of this nature since last August yet.
Things to be aware of
1. Oil continues to go higher
2. Wamu raises 7 billion to remain above its required reserve ratio - Moody's upgrades outlook to "stable", for now.
3. Solar is still hot - FSLR just hit a new high yesterday of about 291+
4. BIDU continues to gain on GOOG
Earnings season comes in full swing in the next couple of weeks. I think the we've been in a holding period until we have more indications. If we find that companies reporting less than expected numbers continue to rally higher, it will be a great sign for the market. I expect that we'll see a large move in the market soon, due to the recent limited volatility. Short term, it looks like we want to go higher, but it's important to maintain a balanced perspective.
Personally I continue to be wary of any positive momentum we see here, however. Our financial system remains caught in a liquidity crisis, and I don't believe that recent moves by the Fed can truly repair the damage so quickly (repercussions will follow). Credit has been and will continue to be the lifeblood of today's economy - the rapid loss of credit continues to bear down on every segment of society. Although we're holding up pretty well, the data continues to be bad. Remember that stocks are moved by earnings and guidance. No matter how oversold we might be and no matter how "calm" things seem, bad earnings and guidance WILL drag the market down. What we're seeing here could be a flushing out of short sellers (as an anecdote, I'm seeing that a few unshortable stocks have become shortable, which means supply is back). Markets never bottom out because of short sellers, they bottom out because people truly give up on stocks. I haven't felt any sentiment of this nature since last August yet.
Thursday, April 3, 2008
Back from a break
Apologize for the lack of posts - been very busy with other things lately. Still involved with the market however.
We've been rallying on no news/bad news, which is always a good sign. As mentioned before, the low set by the bear stearns incident and the ensuing rally was a signal for a possible bottom. We also had a couple of huge follow through up days, which is also bullish. Pullbacks have been on low volume. Overall it's "safe"r again to be on the long side in the near term.
We are seeing some major divergence between goog and bidu again, and as earnings approach, i'm becoming more and more convinced we may see share price parity between the two within a couple of months.
We've been rallying on no news/bad news, which is always a good sign. As mentioned before, the low set by the bear stearns incident and the ensuing rally was a signal for a possible bottom. We also had a couple of huge follow through up days, which is also bullish. Pullbacks have been on low volume. Overall it's "safe"r again to be on the long side in the near term.
We are seeing some major divergence between goog and bidu again, and as earnings approach, i'm becoming more and more convinced we may see share price parity between the two within a couple of months.
Subscribe to:
Posts (Atom)