Market Bulls Gaining a More Audible Voice
By Christopher Beebe

The market lost over 6% of its value during the first half of 2010, and the "I told you so" bears have been roaring, especially since the incredibly volatile month of May. The European debt crisis as well as the American budget deficit has given the bears fodder without much in the way of resistance, and it is easy to make the bear argument when every week it seems the market has a day where is gets absolutely crushed. The seven day losing streak from June 24 to July 2 had the bears dancing on the grave of the 2010 edition of Mr. Market.

The arguments made by the bears have validity; if Europe is unable to stabilize their financial situation, if China stunts their economic growth for fear of a popped bubble, if the United States cannot rein its over 9% unemployment rate, the market's reaction will most likely be one of depressed mood. Fear causes money to withdraw from the market, and all the above factors are anxiety provoking.

It's is admittedly easy for the bulls to emerge from under their desks after the market jump of 5.3% the week of July 6-9, which marked the best weekly return in a year. But there have been a few lone wolves who have been predicting resurgence with reasons to support their argument which are hard to counter. Notable experts such as James Paulson, Doug Kass, and James Altucher are not only bullish about the future, but are in fact positive about the last two quarters of this year.

Atlucher's optimism is more centered around America in general rather than the stock market specifically. Although it is difficult to tell someone who has been unable to find employment over the past year that things are better, he correctly asserts that the stimulus package has accomplished much in the way that is was supposed to, most notably in its effect of stabilizing our banking system.

Paulson and Kass also cite the economic growth of the United States and the improved health of corporations. This has led to an underlying base of strong fundamentals that are being concealed as the above stated fear factors dominate headlines and resonate in the psyche of investors.

Paulson and Kass have the bears on this one. The markets composite price to earnings ratio of 11 is not only far lower than the historical average of 15, but in times of low interest rates, this P/E ratio is absurd. When the market creates a big wave and either takes share prices up for the surf or dunks them underwater, this is referred to as a "correction". It seems that if some global financial stabilization coupled with some more encouraging news on the home front occurs, that fundamentals would then dictate market direction. A return of optimism, or at least a calmer collective nerve could trigger a prosperous correction upward.

Who will end up saying "I told you so" at the conclusion of 2010? We will have to wait for that answer, but I do believe that even if the bears resume dancing, that the contentions of Atlucher, Paulson, and Kass will be ultimately proven correct, perhaps just in the context of a longer time frame.

Christopher Beebe is an advocate of the "Rule #1" method of value investing. He is the author of the blog http://wonderfulbusinesses.com/blog

Article Source: http://EzineArticles.com/?expert=Christopher_Beebe
http://EzineArticles.com/?Market-Bulls-Gaining-a-More-Audible-Voice&id=4646424

EEE on radar current ask $.15,possibly a good trade to the $.21 mark. EEE was tanked down on some selling to under the .13 mark, it popped back up and ended up down under .13, this stock moves up and down well for it's share price,with any buying pressure this could easily fly as their is not many sellers on the ask.

Morning Briefing

Traders' Fears and the S&P by Mark Sturdy

Some analysts have alarmed bulls by pointing out the relative underperformance of the Nasdaq and the Russell indices, the failure to make new highs in key S&P leadership stocks and, yesterday, the 14day RSI registering its highest overbought level since 1971...

We think a pause is possible even a small set back but note that major patterns are still driving the market forward and don't look exhausted - yet.

The Technical Trader's view:

WEEKLY CHART The chart illustrates the period of the credit crunch - the fall to the 2002 low of 767.

There market got down there and then, eventually, having formed a Head and Shoulders Reversal, bounced.

The reward was the rally throughout 2009 and on (with a blip) into 2010.

Notice that the minimum move indicated buy the pattern is still somewhat higher that present levels.

There is life in the market yet.

Observe too, that the 1219 minimum target is very close to a horizontal resistance so that will be difficult to break up through - when the market gets there.

DAILY CHART If the medium and long-term charts still have life in them, so too has this daily chart.

But, the small, badly-formed, Head and Shoulders Reversal has almost achieved its minimum target of 1175.

That target is not a resistance level but is frequently accompanied by a pause at the very least.

The bulls will also rightly point to the way the market has superseded the Prior High at 1141 - bull trends ratchet themselves better by finding Prior Highs to be good support. Which incidentally, it already has been.

DAILY CHART

Bears of the market may not have had all their anxieties allayed.

But the path of the VIX over the whole credit crunch period (nearly a mirror of the long-term S&P) has led to levels close to pre-crisis levels.

(Indeed, the March 10 contract fell steeply yesterday to 17.45.)

So downside protection is cheap and may get cheaper still.....

The Macro Trader's view:

Last week was mainly dominated by two events: - The strong US retail sales report out last Friday, and - The FOMC rate decision and policy statement released on Tuesday this week.

The retail sales report was important because it showed strength despite some of the worst snow storms to hit the US for a very long time and bodes well for Q1 GDP due to be released next month.

The FOMC rate decision and policy statement re-assured markets that the Fed still intends holding policy at current low levels for an extended period, even though policy makers see clear signs of improvement in the economy.

So what does all this mean for the markets and especially US equities which are our focus for this week?

We judge the correction that hit the S&P in the early part of this year is now over. The sell off was driven mainly by fears arising from the Greek government debt crisis. That crisis began to be tackled by the Greek government implementing a tough austerity package backed by pledges of financial support from other EU/Euro zone leaders. And although that assistance still looks vague, traders have relaxed and turned once more to riskier assets, namely equities.

But the S&P also benefited from two further developments: - The run of US data has turned stronger after a period of ambiguity, and - Concerns have abated that a Greek debt default could have led to a domino effect on other highly indebted developed economies, including the US and UK.

So now we have an US environment in which consumer spending is holding up well, business spending is improving and the labour market could be on the brink of turning.

Add to this a benign inflation environment as evidenced by Wednesday's PPI report which showed that the Fed does have the luxury of time. Time to wait before monetary policy needs to be tightened.

Although we currently think that tightening could begin later this year, low interest rates and strengthening growth should provide the back drop for the S&P to rally further.


Copyright (c) 2010 Seven Days Ahead

Mark Sturdy writes exclusively for Seven Days Ahead.com a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our products and subscriptions at http://www.sevendaysahead.com

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Tuesdays U.S Closing Prices

MarketPrice% Change DJIA 10,194.29 -0.03% NASDAQ 2,203.73 -0.32% S&P 500 1,094.41 -0.42%

U.S. stocks lost some ground on Tuesday, trading little changed, as optimism about the economic recovery and earnings season was tempered by caution over the political landscape.Solid earnings and consumer confidence data were tempered by trepidation before major political and regulatory developments expected later in the week. source - Reuters.

Stocks were able to overcome a weak start, but their advance ran into resistance and rolled over late in the session. However, the slide was stopped short as support was secured at the lows set last week.

Tech emerged to trade with considerable strength for most of the session, thanks to Apple which posted upside earnings and a strong forecast. Support for the stock had been constrained initially as it was learned that accounting changes played a part in Apple's numbers, but the stock was able to brush that aside.

Advancing Sectors: Utilities (+0.4%), Consumer Discretionary (+0.1%)
Declining Sectors: Financial (-1.7%), Telecom (-1.2%), Materials (-1.1%), Energy (-0.5%), Health Care (-0.4%), Industrials (-0.1%)

source – briefing.com.

ASIA – Source Reuters

MarketPrice% Change NIKKEI 10,325.28 -1.78%

The benchmark Nikkei fell 1.8 percent to a five-week closing low on Tuesday, with exporters hurt as the yen rose broadly after China implemented a previously ordered increase in reserve requirements for some banks.

US DOLLAR INDEX closed at 78.48, Up 0 .37%

The USD Index measures the performance of the US Dollar against a basket of currencies: EUR, JPY, GBP, CAD, CHF and SEK.

(Nb. weaker USD generally tends to lead to stronger commodity prices)

COMMODITIES

Gold - closed at $1,097.60 per ounce, up 0.17%

Gold is viewed as defensive and is used as a safe haven in times of trouble.

OIL - US crude settled at $74.76 per barrel, down 0.67%

Oil is often viewed as a barometer for global economic health – a growing economy needs lots of oil!

WHAT MIGHT MOVE MARKETS TODAY

11.00 am - UK CBI Realized Sales

This number is an index based on the results of surveyed retailers and wholesalers- A higher than forecast actual would be viewed as positive for the UK economy while a lower reading would be negative - This data could impact the FTSE and GBP.

03.00 pm - US New Home Sales.

This data shows the number of new single-family homes that were sold during the previous month -A higher than forecast actual would be viewed as positive for the U.S economy while a lower reading would be negative - This data could impact the DOW,S&P and USD.

15.30pm – Crude Oil Inventories

This data shows the change in the number of barrels of crude oil held in inventory during the past week – A higher than forecast actual would be viewed as negative for the Oil price while a lower reading would be positive . This data will impact Crude oil.

07.15 pm - U.S Federal Funds Rate.

Interest rates are expected to remain on hold at 0.25%

Watch these released live on the event calendar in the getdealing.com dealing room.

Major companies reporting today. – source FT

Earnings

Banco Espirito Santo FY €0.46 (€0.49)
Boeing Q4 $1.36 (-$0.08)
Caterpillar Q4 $0.28 ($1.08)
Etrade Financial Q4 -$0.04 (-$0.50)
Renishaw H1 – (15.62p)
SAP Q4 €0.66 (€0.77)
Southern Company Q4 $0.29 ($0.26)
Tyco Electronics Q1 $0.39 ($0.22)
Vedanta Resources Q3 – (-$0.49)

Any other market moving breaking news will also be brought to you in the dealing room.

This article is for information purposes only and does not constitute an offer or solicitation for an investment product.

The information contained in this article is for informational purposes only and does not constitute financial advice.

Article Source: http://www.articlesbase.com/day-trading-articles/morning-briefing-1789191.html

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