Same old bear or brand new bull? I’m afraid the answer is “Yes”
Has the stock market rally that has seen the Standard & Poor’s 500 index climb 44% off the March 9, 2009 low ended the bear market that began in October 2007?
Or is the bear still fully in charge and the recent rally merely a typical bear market rally?
Deciding what to do now with your portfolio hinges on how you answer that question. If this is a new bull market, then you should be fully invested, no? But if it’s still a bear market, it’s no time to back off the conservative, cash-heavy stance of the last 18 months.
So which is it, bull or bear?
Unfortunately, I think the answer is: “Yes.” This is both a bull and a bear market, depending on what time period you choose for your analysis. That isn’t going to make anyone looking for a simple answer happy, but, hey, sometimes reality isn’t simple and investors who want to make money just have to deal with it.
So, let me explain how a market can simultaneously be a bull and a bear and give you a strategy for coping with that ambiguous reality. Read more
Buy Microsoft MSFT: This is as bad as it gets
Nothing like shooting yourself in the foot while the global economy is pushing you toward a cliff.
That’s the pretty picture that Microsoft (MSFT) painted when it reported fiscal fourth quarter earnings on July 23.
And that’s exactly why I’m buying shares of Microsoft for Jubak’s Picks with this post. If you’ve been waiting to see when this classic growth stock would become a value stock, well, the moment has arrived. Read more
What to look for today July 24: The traditional Friday selling after a rally
Thank God it’s Friday.
After moving up so strongly–aother 4% gain on the Standard & Poor’s 500 stock index from Monday to Thursday–the stock market is almost certain to retreat tomorrow.
But because it’s a Friday–and the market almost always sells off on a Friday is stocks have been rallying in the first part of the week–and because Microsoft (MSFT) , Amazon.com (AMZN), and American Express (AXP) delivered bad earnings news after the closing bell, the market can sell off tomorrow and nobody will think much of it.
A sell off tomorrow won’t change investor sentiment or stock market momentum and we’re likely to be off to the races again on Monday.
Friday selling works like this. Investors–well, traders really–who have made good money over in the week tend to sell on Fridays. It’s part human nature and part risk management. Who wants leave gains exposed to the unpredictable nature of the news flow over a weekend when you can’t even trade if something goes against your positions. (The opposite tends to happen on Fridays after a losing week. Traders who have made money betting against the market during the week buy on Friday to bring their portfolios nearer to neutral.)
After a Thursday when the Dow Jones Industrial Average broke 9,000 again–a level not seen since December–and when the S&P 500 index took out its June 12 high–I’d certainly expect selling on that Friday.
Any normal Friday selling that we might have seen anyway will be strengthened of Friday July 24 by the disappointing earnings news announced by Microsoft, Amazon.com, and American Express late Thursday.
Microsoft managed to meet Wall Street earnings projections but revenue fell by 17.3% and wound up almost $1.3 billion short of Wall Street estimates.
Amazon.com disappointed by reporting exactly what Wall Street expected on earnings and revenue and then not saying anything about business improving in the September quarter
American Express beat estimates on earnings by a penny, but came ujp $400 million short on revenue. Revenue fell by more than 18% from the same quarter of 2008.
If stocks go down this Friday, no one will think much of it–it’s just a Friday correction. If they go up, against pattern, investors will read this as a sign that the rally has further to go.
All in all, TGIF.
and Especially since the earnings reports after the close
