Friends
The seesaw week in the markets continues as the Dow Jones Industrial Average suffered a 72 point loss. The S&P 500 finished the day down 15 points to close at 1209. Once again stocks ran into resistance early this morning when the S&P traded up near the 1230 level. Stocks spent the rest of the day in retreat mode as the focus continues to be on Europe. Oil was down more than $2 to the $86 WTI level and gold was down about $10 to close near $1642.
On the earnings front, Apple had a difficult day, after disappointing yesterday after the close, as its shares traded down more than 5% for the day. The financials have had decent earnings compared to the expectations, but the stocks still can’t get out of their own way. We are getting pretty good earnings reports from other areas as many companies are meeting or beating analyst’s estimates in various market sectors. As we often point out though, how shares react to the news is indicative as to what was already priced in. You may see the shares of some companies sell off on what seemed to be good earnings. The problem was, that the good earnings were already factored into the price. On the other hand, you can see shares rally even when you get a disappointing report from a company which would indicate that all the bad news was built into the price. This phenomenon can be applied to the overall market also. When stocks go up on bad news, you can interpret that as a bullish sign, indicating that there are simply no sellers left. Of course, when we see stocks fall, even though you are getting good economic news, you are likely near a top in the market as there is no one left to buy.
Anyway, back to the macro grind as we continuously wait for the “bailout” plans to come out of Europe. We are not likely to get any sustainable direction in stocks until the Europeans provide their roadmap to solvency. In the meantime, the volatility continues.
Have a nice evening everyone.
