Market Momentum Quickly Shifts Back to Bulls, But..

Sun, 07/25/2010 - 09:10 EDT  in
 

Dr. Duru submits: With tongue reaching for the cheek last week, I declared the market both extremely undervalued and very overvalued, guessing that “as earnings season grinds on, I suspect the near-predictable pattern of post-earnings fades will finally wear thin, giving way to more bullish behavior.” I did not expect the turn to happen so clearly and dramatically within a day or two. The 3-month violent seesaw between bears and bulls took a very favorable swing for the bulls last week. For seven straight days, the S&P-500 failed to crack resistance at the 50-day moving average (DMA). The index finally broke through on Thursday. On Friday, it actually printed follow-through strong enough to set new highs for July. The last downtrend has now ended. Two key lines of resistance remain overhead. If the market conquers these, the July low will quickly become a distant memory, a milestone to revisit another day further in the future. My vote goes with the October earnings season. The November elections are too much a potential game-changer for me to even dare hazard a guess for market direction: a Democratic survival would no doubt send Republicans into a steep and sustained depression, weighing the market down in the process; the stock market could rally long and strong in anticipation of or in the aftermath of a Republican victory. Regardless of the outcome of these elections, the reality that BOTH of our major parties are sources of major problems will smack us in the face soon enough in 2011 and onward.Complete Story »

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DJI: 10447.93 1.22% |S&P 500: 1104.51 1.3% |FTSE: 5428.15 1.05% |Nikk.: 9114.13 0.56% |DAX: 6134.62 0.83% |HSI: 20971.50 0.49% |
FX: EUR/GBP: 1.1992 | USD/EUR: 1.2894 | JPY/USD: 84.425 | Commodities: Gold: 1247.00 | Crude - CLH09.NYM: 0.00 |