It was a calm day untill the final hour. Markets opened weaker, briefly swung into the positive and fell back into negative territory. The final hour of the day saw a reversal in fortunes and the market climbed throughout its last 60 minutes. All of the major averages went out on the highs of the day and the Dow closed + 109 points or + 1.38 %.
The Fed's Beige Book report was released today. The 12 districts surveyed showed either a slowdown in economic activity or stabilization of economic activity at reduced levels. Overall the report made clear that there is some kind of bottom to the economic slowdown. The situation, as reported, is not good but does not seem to significantly deteriorate anymore.
The Nasdaq was dragging down the market today. Intel's earnings announced yesterday after the close soured the mood. The numbers were actually better than expected but Intel's inability (or unwillingness) to provide guidance for the rest of the year was a strong reminder that business conditions are still tough.
Markets are holding their breath for tomorrow mornings earnings release of JP Morgan Chase. Better than expected results by Wells Fargo last week lit a fire under stocks and there is hope that JP Morgan will also hit it out of the ballpark. Conversely...an earnings disappointment by JP Morgan would most certainly bring out the bears in big numbers.
I am still moderately positive on stocks and expect the Dow to hit 8250 and, as a secondary target 8450 to 8500. A break below 7750 in the Dow would alter my view and I then would look towards 7500 and 7150 as the major support area.
This week has been rather uneventful thus far, so there is a good chance that we are setting up for a big move as early as tomorrow or Friday. JP Morgan's earnings announcement tomorrow might be the catalysts the market needs to move.
Till tomorrow,
Steve Benger
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