Well...what could have been a good day turned out to be a bad day. On the back of disappointing earnings results the market opened weaker and it looked like we were poised for further losses. However, within half an hour the market found support and started trading higher. We made higher highs for most of the day. The last hour of the day brought aggressive selling in and all of the earlier gains were erased and the Dow closed in the negative 82 points or - 1.1 %.
Today's down close was a hard fought battle. Stocks zigzagged on a couple of occasions throughout the day. Earnings from Wells Fargo (better than expected), JP Morgan Chase (worse than expected), the apparent suicide of the CFO of Freddie Mac as well as GM's announcement that they will not make their June interest payment on outstanding bonds made for a volatile session.
Combine this with the expected earnings announcement of Apple for later today as well as Amazon and Amgen for tomorrow...there was plenty to worry about.
The market's ability to trade higher throughout the day despite all the gloomy news seemed to suggest for a while that bad news did not seem to matter much. This is until the last hour arrived and the Dow lost almost 2 % from its earlier highs.
I am still neutral on the market and do not expect significant gains from current levels. I believe that the Dow will test at least the 7500 level and would wait for a possible reentry there.
Positive earnings by Apple might lead the Nasdaq to new multi month highs tomorrow. If the broader market then fails to follow through we are looking at a potential divergence which would indicate that a more severe correction could emerge.
Tonight's and tomorrow earnings might matter in the short run but I cannot shake the feeling that we will see another leg down. Perhaps as early as tomorrow.
Let's see what happens,
Yours
Steve Benger
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment