Market's on a Precipice [= Markt ist an der Klippe - A.L.]
By Rev Shark
Street.com Contributor
1/29/2007 8:24 AM EST
§
"Expect the best. Prepare for the worst. Capitalize on what comes."
-- Zig Ziglar It is always important that market participants be ready to move quickly, but this week it will be particularly important. The market is very ripe for some fast moves and we'll have to be on top of our game if we hope to profit.
The technical action last week has set the stage for some drama. A breakout move in the DJIA and S&P 500 on Wednesday was totally reversed on Thursday. That is a clear negative because it
indicates the bulls may have used up a good amount of buying power and don't have the ability to follow through. That gave the bears the clear edge on Friday and with the addition of Microsoft (MSFT) earnings providing a classic sell the news opportunity, the bears had the opportunity to make some downside progress. However, once again the bears proved impotent and were incapable of taking advantage of the situation, and the bulls battled to a standstill on Friday.
As we kick off the new week, the technical situation, while still intact, is showing signs of erosion and the mood surrounding earnings has not been particularly upbeat. The stocks that have driven the market during the rally off the July low have not fared well this earnings season. The best stocks on earnings have been the laggards like Yahoo! (YHOO).
This week we have two primary catalysts to consider, both of which occur on Wednesday. First is the FOMC interest rate decision. Much of the recent rally was attributed to hopes the Fed would cut rates sooner rather than later but the hope has been steadily declining as economic conditions remain firm and inflationary pressures fail to dissipate. Any signal from the Fed that its stance is becoming more hawkish could have a significant impact on the market.
Google (GOOG) should be a very interesting earnings report because, like Apple (AAPL) and some others, expectations for a big quarter are quite high. That has been a problem this quarter, leading to a sell the news reaction and that will be on the minds of many.
Other issues to watch this week are a continued rebound in oil, the launch of Microsoft's Vista, and a slew of earnings reports. The bulls have some heavy lifting to do but they have proved up to the task quite nicely for quite a while. Will this be the week they slip?
We have a slightly soft open on the way despite the fact that overseas markets were mostly positive and oil and gold are trading down.
Werbung
.
.
